Order Code RL30099
CRS Report for Congress
Received through the CRS Web
Veterans Issues in the 106th Congress
Updated February 22, 2000
Dennis W. Snook
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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ABSTRACT
This report focuses on policies, programs, and benefits of interest to veterans during the 1st
Session of the 106th Congress. It was periodically updated during the 1st Session for
legislative events, and this concluding version reflects final actions occurring before
adjournment of the Session. A similar version of this report will be prepared for the 2nd
Session, to be updated from time-to-time to reflect developments in veterans legislative issues.

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Veterans Issues in the 106th Congress
Summary
FY2000 Budget. P.L. 106-74 provided $44.3 billion for the Department of
Veterans Affairs (VA) for FY2000. Included in the bill was a $19 billion
appropriation for VA medical care, which was a $1.7 billion increase above FY1999
and $.7 billion more than requested by the Administration (whose initial FY2000
budget request for VA entailed a freeze to medical care funding). Congress also
provided $225 million for federal construction projects for VA, and $115 million for
extended care facilities and veterans cemeteries operated by the states ($50 million
more than requested for extended care, and $14 million more than for cemeteries.)
In later action (P.L. 106-113), Congress enacted language requiring a 0.38% cut
to most discretionary spending, including VA medical care. Effect on VA programs
of this across-the-board reduction will remain unclear until further review of the
Administration’s budget for FY2001.
Veterans Millennium Health Care Act of 1999 (P.L. 106-117). The new law,
enacted in the 1st Session, expands long-term care; increases home health care; gives
higher priority access to long-term care to severely disabled veterans and to those
needing care for service-connected conditions; provides higher priority access to
veterans awarded Purple Hearts and certain military retirees; authorizes VA to
increase copayments for pharmacy benefits used for treatment of nonservice-
connected conditions; and authorizes emergency care coverage for certain veterans
without health insurance. The law also guides VA’s approach to making major
changes in the management of underutilized VA buildings and other capital assets, by
setting conditions and limitations upon the disposition of the properties. Other
provisions of P.L. 106-117 make eligible for compensation, surviving spouses of
certain totally disabled former prisoners of war; extend authorization for homeless
veteran programs; and, provide borrowing authority for the American Battle
Monuments Commission so that work can begin on the WWII memorial.
Cost-of-living adjustment for compensation programs. Congress also
enacted H.R. 2280 (P.L. 106-118), a cost-of-living adjustment (COLA) of 2.4% to
the compensation paid to veterans of service-connected disabilities and for
Dependency and Indemnity Compensation (DIC) paid to survivors of such veterans.
Other Veterans Issues. Legislation has been enacted (P.L. 106-50) to provide
expanded Small Business Administration assistance to veterans owning or beginning
small businesses. P.L. 106-169, a bill to improve foster care programs, included
language giving Supplemental Security Income (SSI) benefits of 75% the normal rate
to certain Filipino veterans (who served under US command during WWII) who
return to the Philippines. The FY2000 National Defense Authorization Act (P.L.
106-65) provided additional payments (up to $300 monthly) to disabled military
retirees with VA compensation ratings of 70% or greater. Legislation (S. 1928) to
establish eight demonstration projects to examine the feasibility of reimbursing VA
for medical costs incurred by some veterans with Medicare (called Medicare
“subvention”) was reported by the Senate Finance Committee, but work on the bill
was not completed in either House during the 1st Session of the 106th Congress.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Veteran Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Organization of the Department of Veterans Affairs . . . . . . . . . . . . . . . . . . 1
Spending Trends for Veterans Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VA Budget and Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FY2000 Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
VA Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Capital Asset Fund (proposed legislation) . . . . . . . . . . . . . . . . . . . . . . 6
Veterans Issues Continuing in the 106 th Congress . . . . . . . . . . . . . . . . . . . . . . . 7
Veterans Medical Services: More Efficient, Greater Access . . . . . . . . . . . . 7
Introduction: Historical Trends and Modern Challenges . . . . . . . . . . . 7
Reforming Va Medical Care to Meet the Challenges . . . . . . . . . . . . . . 7
Medicare “Subvention” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Millennium Health Care Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Other Veterans Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Veterans’ Benefits Improvement Act of 1999 . . . . . . . . . . . . . . . . . . 14
Cost-of-living Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Increases for Retired Military with Severe Service-connected
Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Arlington National Cemetery Burial Eligibility Act . . . . . . . . . . . . . . 15
Veterans Entrepreneurship and Small Business Development Act of
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Benefits for Filipino veterans of World War II . . . . . . . . . . . . . . . . . 16
The Insurance Dividend: A Hoax Reappears on the Internet . . . . . . 17
Transition from Active Duty to Civilian Life: Are Readjustment Programs
Inadequate? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Commission on Servicemembers and Veterans Transition Assistance 19
All-Volunteer Force Educational Assistance Programs Improvements
Act of 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Ongoing Issue of Presuming Service Connections: The Relationship
Between Risk Exposure and Subsequent Disabilities . . . . . . . . . . . . . 20
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Recent Presumption Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
List of Tables
Table 1. U.S. Department of Veterans Affairs Appropriations . . . . . . . . . . . . . 4

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Veterans Issues in the 106th Congress
Introduction
Federal policy toward veterans recognizes the importance of their service to the
nation, and the effect that service may have on their subsequent civilian lives. The
Department of Veterans Affairs (VA) administers, directly or in conjunction with
other federal agencies, programs that provide compensation for disabilities sustained
in military service; pensions for disabled, poor war veterans; cash payments for certain
categories of dependents and/or survivors; free medical care for conditions sustained
during military service, and for other conditions under a priority system that results
in most care being provided to low income veterans; education, training,
rehabilitation, and job placement services to assist veterans upon their return to
civilian life; loan guarantees to help them obtain homes; life insurance to enhance
financial security for their dependents; and burial assistance, flags, grave-sites, and
headstones when they die.
The Veteran Population
There were about 24.4 million veterans as of July 1, 1999, of whom 19.3 million
had served during at least one period defined as wartime. The number of veterans is
declining, and their average age increasing. The median age of veterans was 57.7
years; 36% were over 65 years of age; about 4.6% were female. The VA projects a
decline of about 26% in the number of veterans between 1990 and 2010, down from
one of four men in 1994 to one of eight in 2010, half of whom will be over age 62.
Decline in the size of military forces, and the corresponding effect that decline
has had on the number of persons entering veterans status, means relatively stable
numbers of compensated veterans and fewer veterans seeking readjustment for
postservice education and training. The number of disabled wartime veterans
receiving pensions is declining because of the deaths of existing beneficiaries and
because veterans who might once have depended on VA pensions as a social safety
net now have other sources of social insurance, primarily Social Security, that bring
their incomes above the VA pension eligibility levels. However, the increasing
average age of veterans means additional demands for medical services from eligible
veterans, as aging brings on chronic conditions needing more frequent care and
lengthier convalescence.
Organization of the Department of Veterans Affairs
The VA is divided into three administrative structures: The Veterans Benefit
Administration, the Veterans Health Administration, and the National Cemetery
Administration. VA programs are funded through 22 appropriations (including six

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revolving funds receiving appropriations), nine revolving funds not receiving
appropriations, two intragovernmental funds, one special fund, and seven trust funds.
The cash benefit programs, i.e., compensation and pensions (and benefits for
eligible survivors); readjustment benefits (education and training, special assistance
for the disabled); home loan guarantees; and veterans insurance and indemnities are
mandatory (entitlement) spending, although required amounts are annually
appropriated. Veterans entitlement benefits were once increasing rapidly, but now are
a relatively stable federal obligation to a declining population of eligible beneficiaries,
and constitute about 53% of VA spending.
The remaining programs, primarily those associated with medical care, facility
construction, and medical research are annual discretionary appropriations, as are
funds for the costs of administering VA programs. Unlike the ratio of entitlement
spending to discretionary spending in the rest of the federal budget, the entitlement
portion (income security, mostly for disability compensation, pensions, and education
benefits) of VA is declining as a percent of total VA spending. In FY1976,
entitlements constituted 73% of VA’s budget, with the remaining 27%, discretionary
appropriations for VA health care, administration, and construction. By FY2000, VA
discretionary spending has risen to 47% of VA’s total budget. For the entire federal
budget, about one-third of spending is discretionary.
Cash benefit programs. Under entitlement programs, definitions of eligibility
and benefit levels are in law. During FY1999, about 2.3 million veterans drew an
average of $542 in monthly compensation for service-connected disabilities; about
303,000 of their survivors averaged about $955 in monthly payments. Pensions for
388,000 veterans averaged about $508 monthly; 283,000 survivors of veterans
pensioners averaged about $212 monthly. About 38,300 veterans received
readjustment education benefits, averaging $3,074 annually.
Medical care. VA operates the nation’s largest health care system, with 172
hospitals, 132 nursing homes, 40 domiciliaries, 206 readjustment counseling centers
(Vet Centers), 73 home health-care programs, and over 800 outpatient clinics. The
FY1999 caseload was projected to increase by 160,000 veterans served over FY1998,
with 54,000 more expected in FY2000; the number of different patients served by VA
is projected to reach 3.6 million by FY2000. VA health care continues to place
increasing emphasis on outpatient care: according to VA projections accompanying
the FY2000 Budget, the inpatient caseload will be 728,000, a decline by over 50,000
patients. In contrast, outpatient visits will increase by 2.5 million to 38.3 million.
Spending Trends for Veterans Programs
Using the latest congressional estimates, federal appropriations for FY1999 for
veterans programs under VA administration totaled $42.6 billion. VA spending
(outlays in current dollars) increased 103% during the period FY1977-96. As a
proportion of total federal spending, VA costs are going down. In FY1977, VA
spending was 5% of total federal spending and 11% of spending for social welfare;
in FY1996, that percentage was down to 2.5%, 5% of social welfare. Compared to
the 98% increase in VA income security spending over the period, federal spending
for all other income security programs increased by 284%. While VA health care

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costs rose by 269%, other federal health program costs increased by 792% over the
20-year period. Appropriations for VA major and minor construction projects over
the 10-year period FY1990-FY1999 averaged around $500 million per year.1
VA Budget and Appropriations
FY2000 Appropriations (P.L. 106-74)
Congress provided $44.335 billion for VA programs during FY2000, an increase
of $1.71 billion above FY1999, and $1.8 billion above the Administration’s request.
During action leading to completion of the bill, the House approved appropriations
of $44.156 billion for FY2000, while the Senate approved $44.351 billion. The
Administration’s FY2000 budget requested $42.538 billion.2 Congress approved
$42.625 billion in appropriations for VA for FY1999 (P.L. 105-276), up from $40.98
billion for FY1998.
While the number of veterans is declining, VA entitlement spending will rise by
$18 million in FY2000, to $23.397 billion. Much of this increase results from
liberalizations during FY1999 to the Montgomery GI Bill, the primary education
program. Also, the enacted bill includes estimated funding for a new homeless
program under VA’s entitlement authority for veterans’ housing assistance. VA’s
discretionary spending is mostly for medical care programs. Appropriations for
medical care increased by $1.7 billion over FY1999.
FY2000 Congressional Budget Resolution. The Administration’s request for VA
medical care funding assumed the continuation of a freeze that had been adopted by
Congress and the President. The freeze was intended to force efficiencies in VA
facilities by causing a shift in resources from inpatient to outpatient care, thereby
permitting more veterans to be served while continuing to downsize VA hospital
capacity. Perceived adverse effects of the freeze prompted calls for increasing
funding, and the Resolution called for $1.7 billion more than the request.
Table 1 shows appropriations for VA programs for FY1999, and amounts
requested for FY2000, and included in House-passed and Senate-passed versions of
H.R. 2684, as well as the final FY2000 appropriations contained in P.L. 106-74.
1 Historical spending (outlays) data are from the Historical Tables, Budget of the United
States Fiscal Year 2000. Social Welfare is defined as budget function categories Education,
Training, Employment, and Social Services; Health; Medicare; Income Security; Social
Security; and Veterans Benefits and Services. Health is defined as the total for budget
categories Health and Medicare.
2 The VA Budget Submission for FY2000, uses different totals for FY1998 ($42.4 billion),
FY1999 ($43.7 billion), and the requested amounts for FY2000 ($43.3 billion) than are shown
in congressional documents supporting the appropriations process. One reason is that each
new set of projections incorporate reestimates of mandatory spending for VA entitlements.
In addition, there are occasional differences in accounting for carryover funds in VA home
loan programs, and for receipts of the Medical Care Collections Fund (MCCF). Tables in this
report use recent congressional sources.

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Table 1. U.S. Department of Veterans Affairs Appropriations
($ in millions)
FY1999
House
Senate
(P.L.
FY2000
H.R.
H.R.
P.L.
Program
105-276)
request
2684
2684
106-74
Income security
Comp.; pensions; burial
$21,857
$21,568
$21,568
$21,568 $21,568
Insurance; indemnities
47
29
29
29
29
Education, training, and rehabilitation
Readjustment benefits
1,175
1,469
1,469
1,469
1,469
Msc. loan, admin. exp.a
1
1
1
1
1
Housing programs
Current (admin. exp.)a
159
157
157
157
157
Indefinite
300
282
282
282
282
Trans. Housing Loans
—
—
—
48
48
Medical programs
Medical care
17,306
17,306
19,006
19,006
19,006
Transfer from MCCFb
(583)
(608)
(608)
(608)
(608)
Medical research
316
316
326
316
321
Med. admin. and misc.
63
61
61
61
60
Construction
Major construction
142
60
35
70
65
Minor construction
175
175
102
175
160
Other
Gen. Operating Expenses
856
912
886
913
913
Office of Inspector Gen.
36
43
39
43
43
Capital Asset Fund
—
10
—
—
—
Grants, state nurs. homes
90
40
87
90
90
Grants, state cemeteries
10
11
11
25
25
Nat’l Cemetery Admin.
92
97
97
97
97
Mandatory (entitlements)a
23,379
23,348
23,348
23,397
23,397
Discretionary (exclud.. MCCF)
19,246
19,190
20,808
20,954
20,938
Total VA Appropriations
$42,625
$42,538
$44,156
$44,351 $44,335
Source: H.Rept. 106-379
Note: rounded-may not add
a. Mandatory spending includes program payments for income security; education, training and
rehabilitation; and subsidies in the home loan guarantee programs. Administrative expenses
for these programs are included in totals for discretionary spending.
b. The Medical Care Collections Fund (MCCF) receives reimbursements from private insurers
(whose health plans cover certain veterans who are treated by VA for nonservice-connected
conditions), and copayments and deductibles from veterans ineligible for free care. This
amount is not included in the totals for this table.

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For additional information on VA appropriations for FY2000, see CRS Report
RL30204, Appropriations for FY2000: VA, HUD, and Independent Agencies,
Dennis Snook, Coordinator.
VA Cash Benefits. For FY1999, the current estimates are that VA paid $23.38
billion in mandatory appropriations for VA cash entitlement benefits, mostly service-
connected compensation, pensions, and Montgomery GI-Bill education payments.
Spending for the VA cash benefit programs is mandatory, and the amounts requested
by the budget are based on projected caseloads. Definitions of eligibility and benefit
levels are in law. For FY2000, current estimates indicate mandatory spending levels
will reach $23.4 billion.
Veterans Housing Benefits. Historically, the opportunity for veterans to have
home loans guaranteed by the federal government was a significant contribution to the
national goal of increasing the number of families who owned their own homes.
Because of the guarantees, lenders are protected against losses up to the amount of
the guarantee, thereby permitting veterans to obtain mortgages with little or no down
payment, and with competitive interest rates. These guarantees, and certain direct
loans to specific categories of veterans were obligations of the federal government
that constituted mandatory spending; administrative expenses are discretionary
appropriations transferred from the home loan programs to the General Operating
Expenses account.
Guaranteed Transitional Housing Loans for Homeless Veterans Program
Account. P.L. 105-368, the Veterans Programs Enhancement Act of 1998 established
a pilot project to expand the supply of transitional housing for homeless veterans.
The program was authorized to guarantee up to 15 loans with a maximum aggregate
value of $100 million, with no more than 5 loans guaranteed during the first 3 years.
These housing plans must enforce sobriety standards, as well as provide various
supportive services, such as substance abuse counseling and job readiness skills
workshops. Residents would pay a reasonable fee to reside in the project homes.
P.L. 106-74 includes an estimate that $48.25 million for program costs for the
program will be required during FY2000, based on the loan limitation of $100 million.
Medical Care. The Administration requested $17.306 billion for VA medical
care for FY2000, the same level as appropriated for FY1999; the Administration
raised this initial request by $1 billion after the budget had been submitted. P.L. 106-
74 included $19 billion in funds for medical care programs. In addition, the Balanced
Budget Act of 1997 (P.L. 105-33) gave VA authority to retain net receipts of the
Medical Care Collections Fund (MCCF), allowing the funds to be spent for medical
services to veterans rather than be transferred to the Treasury as under previous law.
Current estimates are that the change added an estimated $583 million in spending
authority in FY1999, and are projected to add $608 million in FY2000.
P.L. 106-74 includes $321 million for medical research for FY2000. The
FY1999 appropriation for medical research was $316 million; the President’s budget
requested the same amount for FY2000.
VA Construction. P.L. 106-74 includes $65 million for major construction, and
$160 million for minor construction (projects with an estimated cost under $4

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million). The Administration requested $235 million for new construction projects,
comprised of $60 million for major construction and $175 million for minor
construction. Many of the minor construction projects would continue VA’s overall
strategy of expanding outpatient access.
Most of the larger proposed projects will improve existing facilities: $13 million
recommended by the Administration for a surgical suite to be added to the Kansas
City facility was rejected by the House, but endorsed by the Senate, and accepted by
conferees; $17.5 million proposed by the Administration for spinal cord injury
treatment and rehabilitation capabilities at the Tampa, Florida hospital was adopted;
$10 million to facilitate additional planning for the disposition of underutilized hospital
space or otherwise superfluous capital assets was also included.
For FY1999, Congress provided $317 million in new construction project
funding. For FY1998, Congress appropriated $353 million for new construction, and
redirected to outpatient access projects, $32.1 million that had been previously
authorized and appropriated for a new hospital in California.
Program Administration. P.L. 106-74 provides $913 million for General
Operating Expenses (GOE), and $60 million for administration of the medical care
programs. Congress provided $856 million for GOE, and $63 million for medical care
administration, for FY1999. For FY1998, Congress appropriated $786 million for
GOE, and $60 million for medical administration.
VA Employment Estimates. The Administration projected overall VA
employment will average 197,909 in FY2000, down from an estimated average of
205,413 in FY1999, and 207,066 in FY1998. Most of the decline will be in medical
staff: VA estimated 176,000 medical care slots for FY2000, down from an estimated
182,000 in FY1999, and 185,000 in FY1998. Medical care staff positions will have
declined by 14% from a high of 204,000 at the end of FY1993, if these estimates are
matched with experience.
Capital Asset Fund (proposed legislation). The Administration included a
legislative proposal in its FY2000 budget, for the creation of a 5-year pilot Capital
Asset Fund (CAF) that would allow VA to “sell, transfer, or exchange excess and
underutilized properties,” collecting the proceeds in this asset fund for use in the
disposal or conversion to other uses of superfluous assets, primarily hospital facilities.
Ten percent of the CAF proceeds would be transferred to HUD to be used for
homeless assistance programs. VA estimated that the CAF would receive $18 million
annually from 2001 through 2004, and requested $10 million in start-up funds for
FY2000. Neither House included the proposed CAF, but conferees did accept the
Senate’s proposed $10 million for capital asset planning as an earmark in the major
construction account.
For further information on FY2000 appropriations for VA, see CRS Report
RL30204, Appropriations for FY2000: VA, HUD, and Independent Agencies.

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Veterans Issues Continuing in the 106 th Congress
Veterans Medical Services: More Efficient, Greater Access
Introduction: Historical Trends and Modern Challenges. The VA medical
care system is experiencing a steadily increasing number of veterans seeking care in
VA facilities. VA estimates that its medical services will be given to 3.6 million
different patients in FY2000, up from 2.7 million in FY1997. For the most part, these
additional VA medical care services were provided without substantially increasing
appropriations to VA for its medical care programs. While the number of veterans
served in FY2000 is projected to have increased by one-third since FY1997,
appropriations increased by less than 2% through FY1999. (Congress appropriated
$19 billion for FY2000, $1.7 billion above the Administration’ initial request, later
amended upward by $1 billion.)
To meet the challenge of serving more veterans within budget constraints, VA
is seeking greater efficiencies in the treatment of specific cases, increasing the number
of outpatient access points, distributing resources from underutilized facilities to
under-served areas, and identifying non-appropriated funds that could be used to
expand medical capabilities.
Potential Conflicts Between Medical Judgements and Administrative
Practices. VA medical care professionals and VA administrative staff are attempting
to treat more veterans by achieving greater efficiencies, and without sacrificing quality
of care. However, these potentially competing objectives may be difficult to
reconcile, especially because the responsibility for meeting the objectives are handled
differently by medical personnel and administrators. How efficiently and effectively
can VA administrators manage health care resources, when resource decisions are
often made by medical staff with differing objectives?
Clearly, if all 25 million veterans sought care in VA facilities, the system would
be unable to meet all of the demands thereby placed upon it. On the other hand, the
provision of care to specific patients depends on the access such patients have to the
services of individual providers. VA medical care personnel can operate with enough
flexibility in the number of patients they see, and the amount of time they spend with
each patient, so that the total amount of access that can be provided over a period of
time is largely indeterminable.
Reforming Va Medical Care to Meet the Challenges. The VA hospital-based
medical care system is traceable to the end of World War II, and rapid construction
of VA hospitals to meet the expected medical needs of returning troops. Over the
years, however, advances in medical care made it possible to have needed services
available through clinics and other outpatient venues. VA was slower to adapt to
these changes, but in spite of rules that seemed to encourage hospitalization of
veterans in order to assure their treatment, VA began to find effective care could be
more efficiently provided on an outpatient basis, especially with the development of
self-administered drugs to treat many conditions. To accommodate these changes in
medical practice, a combination of administrative and legislative decisions made major
changes to the VA health care system.

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Eligibility Reform. The 104th Congress reformed the rules governing access to
VA health care. Until P.L. 104-262, many veterans had clear rights to acute care but
not to basic services, leaving many veterans uncertain as to the medical benefits
available to them, and arguably resulting in inefficient use of resources. Substantial
evidence existed that demands for VA health care differed from one region to another,
and the distribution of medical resources around the country did not match that
demand.
Managing Access. Theoretically, access to VA health care is governed through
a system in which veterans are enrolled in health plans according to a schedule of
priorities. These priorities are based on eligibility criteria intended to preserve
sufficient resources so that high priority veterans (primarily those with service-
connected conditions, or who have disability compensation ratings for such
conditions), can be assured of receiving all care that might be medically indicated.
However, the medical profession views the treatment of patients’ medical
requirements to be the primary purpose of their decision-making process, a
professional commitment sometimes in conflict with the administrative imperative of
priority use of medical resources. Thus, there is always a potential conflict between
the objective of medical staff to see all patients with complaints about their health, and
the objective of administrative staff to manage resources to stay within budgetary
constraints, while preserving resources to meet the medical needs of veterans with the
highest priority for medical services.
Veterans seeking appointments may sometimes be discouraged by VA
administrative staff from having their medical needs served through VA, and
encouraged to seek health care services elsewhere in the community. In practice,
however, all veterans presenting health complaints to VA medical facilities are
screened to determine their medical condition; the disposition of most cases occurs
simultaneously with that screening.
For instance, a veteran complaining of a sore throat asks to see a doctor; VA
medical staff examine the patient, diagnose an infection, prescribe an appropriate
antibiotic, which is then filled at an on-site VA pharmacy. If, during this screening,
a patient is discovered as having an “emergent” condition (a condition, that left
untreated, could threaten the health of the patient), the medical staff can be expected
to initiate an appropriate course of treatment without regard to eligibility status.
In the event that the medical staff commitment to address all complaints was to
come into conflict with resource limitations, VA’s medical care professionals would
allocate the services they could provide according to the traditional triage model:
applicants would be given access to care based on the urgency and type of conditions
presented, and those veterans most in need of care would be given high priority for
services regardless of those veterans’ overall place in the priority schedule
administered by VA health care resource management.
This potential sharp contradiction between medical and administrative priorities
has not occurred. Appropriated resources, and the shift of more services from
inpatient to outpatient settings has allowed VA to serve all veterans applying for care,
without denying care to any particular veteran with a medical need identified by VA

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medical professionals. While some veterans have complained that services are not
given to them in the same manner or location as they had previously experienced, this
change is not itself a denial of care, but rather a byproduct of the efficiency efforts.

Yet, some areas of the country continue to feel the pinch of reduced VA medical
resources, as programs dependent upon inpatient capacity give way to outpatient
services. Shifting resources from underutilized inpatient care to outpatient clinics
increases the number of veterans who can be served by the same number of VA
medical personnel; 75% of the VA medical care budget funds medical care personnel,
either as federal employees or through contracted care. At the same time, this shift
in resources can result in the termination of programs that often rely upon inpatient
capacity, especially those concerned with mental health and substance abuse
programs. VA patients tend to be “older, sicker, poorer, and more likely to have
social problems and mental illness than persons using private health care facilities.”3
Regional Administration. The VA reorganized the medical system into 22
regional entities, called Veterans Integrated Service Networks (VISNs). Each VISN
manages all resources within the region, consolidating and integrating service
capabilities to avoid duplication and increase efficiency. Annual evaluations guide the
allocation among VISNs, and among units within VISNs. VA is developing unit/cost
data to more accurately assess patient costs, and to identify differences in efficiencies
across regions.
To provide veterans with a clearer sense of the medical benefits they could
expect to receive, each VISN established health plans to administer veterans’ health
care — these plans began enrolling veterans October 1, 1998. Currently, all veterans
applying for enrollment are accepted; this practice will continue at least through
FY2000. Veterans can enroll in advance of seeking care; severely disabled are exempt
from enrollment, as are veterans in a current treatment program; all others can enroll
at the time they are seeking medical services.
Reallocating Resources to Achieve Efficiencies and Improve Access. A
system for measuring the relative needs for resources among VISNs, called the
Veterans Equitable Resource Allocation (VERA), guides the shift of resources
according to a methodology that identifies underutilization and rewards efficiency.
According to the General Accounting Office (GAO), the objective of VERA is to
provide “... comparable resources for a comparable workload ... so that veterans
within the same priority categories have the same availability for care, to the extent
practical, throughout the VA healthcare system.” VERA is predicated on the
assumption that reallocation is necessary when “... one network is allocated more
funds per veteran than another network.”
New Sources of Funds Instead of Additional Appropriations. To make up the
difference between appropriated funds and projected increases in medical care costs,
the Administration’s budgets for FY1998, FY1999, and FY2000 assumed revenues
from new sources of funds. VA estimated that by FY2002, about 10% of the medical
care budget could be derived from cost recovery, Medicare reimbursement, and
3 FY2000 VA Budget Submission, v. 2, Medical Programs, p. 2-8.

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revenue from leases and service agreements. (The FY2000 Budget revised this figure
downward to 7.6%, largely because the original assumption incorporated revenues
from Medicare that have not been authorized.) Together with individual patient
efficiency savings of 30%, VA estimated that the reforms could permit serving a 20%
increase in caseload without an increase to annual appropriations. The FY2000
Budget reported that the Administration remains committed to this “30-20-10" goal.
Medical Care Collections Fund (MCCF). Veterans whose nonservice-
connected conditions are treated by VA, and who are not eligible for free care4 for
such conditions are obligated to pay copayments and deductibles.5 Also, third-party
insurers, who would be obligated for at least a portion of the costs of a veteran’s
medical care costs if the veteran were to be treated by providers outside the VA
system, are obligated to pay VA a portion of the cost of that care.
In the past, VA’s MCCF fund (previously called the Medical Care Cost
Recovery fund) received all medical care cost collections. Each year, VA transferred
the funds to the Treasury, after subtracting the cost of administering the collection
procedures. To enforce discipline on the program, and to encourage medical
facilities to be more aggressive in pursuing funds VA had authority to collect, the
Balanced Budget Act of 1997 requires VA to bear the costs of MCCF collections, but
lets the medical program keep the funds. According to the Administration’s budget,
$667 million were collected during FY1998; current estimates are that MCCF will
collect $583 million in FY1999, and $608 million in FY2000.
Sharing Arrangements and Enhanced Use Leases. VA medical centers have the
authority to enter into sharing agreements with other health care providers in the
communities in which they are located. VA is authorized to obtain services by
contract whenever such contracts would be more efficient than for VA to provide the
services directly. In some instances, specialized services are available from VA that
other community providers seek, and VA is authorized to collect and retain fees for
those services. This authority extends to support services, and some VA facilities
partially offset their costs by selling such laundry or ambulance services to other
health care providers.
4 Under current law, VA provides care free to all but about 4% of the patients it serves. Care
for the treatment of all service-connected conditions is free. Care for nonservice-connected
conditions is free for veterans meeting certain criteria, and most veterans with service-
connected conditions can receive free care for nonservice-connected conditions as well. The
largest category of veterans eligible for free, nonservice-connected care (but subject to
resource limitations) have limited assets (below $50,000) and income below an annually
adjusted standard (in 2000, $22,887, single; $27,468, one dependent; $1,532 each additional
dependent). Veterans (single, no dependents) with incomes above $8,989 in 2000 are expected
to pay $2 for each monthly outpatient prescription filled through the VA pharmacy system.
5 For inpatient care, the amount is equivalent to the Medicare cost-sharing schedule. For
2000, veterans pay a copayment of $776 for the first 90 days of hospital care during any 365
day period, plus $10 per day; each additional 90 days requires a copayment of one-half that
initial copayment, plus $10 per day; the nursing home charge is equal to the full deductible,
plus $5 per day. Copayments for outpatient visits are $50.80 in 2000.

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In addition, VA has temporary authority (extended by P.L. 106-117 until
December 31, 2011) to enter into “enhanced use” leases, in which VA facilities and/or
services can be contracted by other entities. After taking into consideration how the
leasing arrangement would affect local commercial and community interests, VA can
enter into leases of up to 75 years if it determines that the activities would not
interfere with VA programs, and would in some way serve the interests of veterans.
These leases may be additional sources of revenue to the facilities, and may serve to
increase the use of capacity that would otherwise be underused.
Medicare “Subvention”. Many veterans advocates have suggested that VA
should also be reimbursed for nonservice-connected care VA provides veterans who
are also covered by Medicare. (Medicare subvention, meaning a transfer or subsidy
from the Medicare trust funds, is the term by which this proposal is known.)
If Medicare were to transfer funds to cover the cost of VA’s services to its
existing caseload of patients who are also covered by Medicare, Medicare program
outlays could increase, and VA would experience an increase in spending authority.
On the other hand, if VA served additional veterans whose care is currently paid by
Medicare, and if VA provided that care less expensively than providers who would
otherwise be reimbursed through Medicare, then real savings could be possible, both
to taxpayers and to Medicare. Offset against this potential savings would be any costs
accrued by VA for services to additional patients, and for benefits that VA provides
that Medicare does not cover for its participants, such as prescription drugs. If
subvention caused the government to provide more in total services than would
otherwise have been provided, overall federal spending would increase unless savings
in the cost of providing those services through VA instead of through Medicare
reimbursement of private health care providers equals or exceeds the cost of the
additional services.
The 105th Congress considered Medicare subvention bills, but ended with no final
action. One bill (H.R. 3828), to authorize a pilot project at three locations for 3
years, was reported by the House Committee on Ways and Means, with approval of
the House Committees on Veterans Affairs, and Commerce. The pilot project would
have permitted veterans in those three locations, whose priority status requires them
to share in the cost of their medical care (called Category C veterans in the bill), to
enroll in a VA plan and have their Medicare benefits provided through that plan.
Medicare would then pay VA the same rate, per covered person, that it would pay for
those persons to enroll in a similar private prepaid plan approved by Medicare. The
bill would also have permitted veterans who live in “geographically remote areas”,
and who have high-priority access to VA health care (called Category A veterans in
the bill), and who are also covered by Medicare, to receive their Medicare benefits
through one of VA’s VISN health plans.6

6 There is no Category B. Common practice in veterans health care discussions, divides
veterans into these two categories, one of which has access to free VA care, while the other
agrees to share in costs. Although the categories are not found in VA law, some years ago VA
law did categorize veterans according to access priority categories A, B, and C.

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This approach to Medicare subvention would require VA and the Department
of Health and Human Services (HHS) to coordinate the collection of data, which
would be analyzed to make sure that no Medicare-eligible veteran receives less in
medical benefits through VA than would be received directly through Medicare, and
that reimbursements to VA from Medicare do not exceed established limits. In the
105th Congress bill, Medicare would have been authorized to reimburse VA for up to
$50 million in the year 2000, $75 million in 2001, and $100 million in subsequent
years for care provided to Category A veterans, and $50 million for each of 3 years
for the Category C veterans.
The approach had bipartisan support (with 92 cosponsors), but the 105th
Congress ended with the bill not acted upon by the full House. The substance of H.R.
3828 was included in H.R. 4567, which passed the House on October 10, 1998, but
no action was taken in the Senate before the end of the 105th Congress.
On February 24, 1999, the Senate passed S. 4, a bill to improve pay and
retirement equity for members of the Armed Forces. Attached to the bill was an
amendment to establish Medicare/VA subvention demonstrations in up to 10 sites.
The proposed pilot projects would meet criteria for providing Medicare benefits
through VA health care plans for certain veterans with coverage under the Medicare
program. These plans would be regarded by the Medicare program as qualified
Medicare providers.
On November 16, 1999, the Senate Finance Committee reported the Medicare
Subvention Demonstration for Veterans Act of 1999 (S. 1928; S.Rept. 106-222),
which would establish up to eight demonstration sites to deliver Medicare-covered
services to certain Medicare-eligible veterans. VA would be authorized, upon
agreement with the Department of Health and Human Services (HHS), to establish
an equal number of coordinated care and fee-for-service plans, one of each of which
must be located within a predominately rural area. VA would provide, at a minimum,
Medicare benefits equivalent to those benefits received by Medicare beneficiaries in
other plans.
The Medicare Trust Fund would reimburse VA for Medicare services it provides
to these dually-covered veterans by up to $50 million annually. VA would serve the
Medicare-covered veterans in these plans in the most appropriate venue, whether in
a VA facility, or through contracts with private health care providers. Unlike the
House bill of the 105th Congress, only Category 7 veterans (those ineligible for higher
priority, free VA care) could join the demonstration projects. (The House bill of the
105th Congress would have allowed enrollment in the demonstrations by veterans
eligible for high-priority access to VA care, but who live in remote areas.) Other
requirements upon VA and the Medicare program are much the same as in the House
bill of the 105th Congress, and would be coordinated between VA and HHS.
For more on VA medical care issues, see CRS Report 97-786, Veterans Medical
Care: Major Changes Underway.
The Millennium Health Care Act. (P.L. 106-117) Near the end of the 1st
Session, Congress approved the Millennium Health Care Act (H.R. 2116). The new
law expands extended care services for veterans, including geriatric evaluation,

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nursing home care, domiciliary services, adult day health care, non-institutional
alternatives to nursing home care, home or residence assistance, and respite care. The
Act also authorizes VA to pay for emergency care on behalf of uninsured, enrolled
veterans who are within 2 years of having received VA health care at the time of the
emergency. The Act also authorizes the creation of such a capability to the level
sufficient to assure access to the services for any veteran who needs such care for a
service-connected condition, and to any veteran with a service-connected disability
rated at 70% or higher. Language in the Act instructs VA to increase emphasis on
mental health services, especially such services applicable to post-traumatic stress
disorder and substance abuse.
P.L. 106-117 grants high priority access to VA medical services for military
retirees, regardless of their placement in the priority system that governs the access
of all veterans to VA medical care. This change would have the effect of placing
priority access for military retirees ahead of veterans who do not qualify for free,
relatively high-priority care because they do not meet the standards for service-
connected free care, and they do not have incomes and assets below VA’s means-
tested threshold. Also, veterans awarded a Purple Heart would be given access to
free, higher priority health care. The bill would also authorize a pilot program for the
treatment of dependents of veterans enrolled in a VA health care plan.
The new law also raises the visibility and accountability of VA efforts to manage
its extensive capital stock of buildings and other permanent medical care capability
and support. VA would be required to consider alternatives and to draw upon funds
for furthering these alternatives, in any situation in which a building, wing, service
unit, or other facility is subject to closing. The purpose of the provisions would be
to enable VA, and the communities in which the facilities are located, to determine if
facilities threatened with closure could be used in some other manner to serve
veterans, such as for convalescent care or other assisted living arrangements, before
that building is liquidated by demolition or sale to the private sector. VA would be
permitted to retain any funds obtained through leasing or selling facilities, and use
such funds for the financing of other forms of disposition, including conversions of
the facilities for other veteran uses.
The new law authorizes VA to increase, from $2 monthly, the copayment
obligation on those veterans ineligible for free prescriptions; establish a maximum
monthly and annual amount for veterans with multiple prescriptions; and revise
outpatient care copayments for higher income veterans. VA is also authorized under
the Act, to establish nonprofit research corporations at VA medical centers to
facilitate research, education and training; to revise the priority system for the award
of grants under the programs assisting in the funding of “State Veterans Homes,” with
priority given to renovation, especially when considerations about patient safety are
involved.
Finally, P.L. 106-117 authorizes a number of construction projects, among which
are ones that would provide a domiciliary in Orlando, Florida; add a long-term care
facility at the Lebanon, Pennsylvania complex; complete renovations at VA medical
centers in Fargo, North Dakota and Atlanta, Georgia; and demolish surplus and
antiquated buildings at the Leavenworth, Kansas, medical facility.

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Other Veterans Issues
Veterans’ Benefits Improvement Act of 1999. (P.L. 106-117). As Congress
neared final consideration of the Millennium Health Care Act (H.R. 2116), the House
and Senate Veterans Affairs committees combined features of several other bills (H.R.
2280; S. 1402), and added the language–titling the final bill the Veterans” Millennium
Health Care and Benefits Act. In addition to the health care provisions described in
the previous section, the Act:
! Authorizes the payment of Dependency and Indemnity Compensation
to surviving spouses of certain former prisoners of war who died
with a service-connected condition rated 100%;
! Restores eligibility for certain medical, education, and housing
benefits to surviving spouses who lost eligibility for these benefits as
a result of remarriage. This language restores the benefits when the
second marriage ends, just as previous legislation (P.L. 105-178)
restored the primary cash payment in similar circumstances;
! Expands the authority for the American Battle Monuments
Commission to raise funds for the expedited completion of the World
War II memorial, and authorizes up to $65 million in loans from the
Treasury to begin construction;
! Directs VA to obligate a portion of FY2000 appropriations to
establish 4 new national cemeteries by 2008, and to contract for an
outside comprehensive assessment of future VA cemetery needs;
! Authorizes $100 million in appropriations during FY2000-2004, for
the Homeless Veterans Reintegration Program, administered by the
Department of Labor under the Stewart B. McKinney Homeless
Assistance Act;
! Includes courses that assist with preparation for college and graduate
school entrance exams for purposes of payments under the
Montgomery GI Bill readjustment program; and
! Authorizes a series of early-out incentives, including buy-outs of up
to $25,000, for employees of VA whose jobs are being phased out
during efficiency improvements.
Cost-of-living Adjustments. (P.L. 106-118). With the exception of the
service-connected disability and survivors programs, veterans cash programs are fully
and automatically adjusted each year for changes in the cost-of-living. As of January,
2000, VA disability compensation and benefits for dependents under the Dependency
and Indemnity Compensation (DIC) programs were increased by 2.4%, the same cost-
of-living adjustment (COLA) granted to most federal benefit programs, including
Social Security. P.L. 105-368 provided the cost-of-living adjustment (COLA) for the
service-connected disability compensation programs for CY1999, and an adjustment
of 1.3% was applied beginning with checks received in January, 1999.
Why these two important federal obligations are not also automatically linked
to the official measurement of changes to the cost-of-living is largely tactical: instead
of amending VA law to make COLA automatic, the strong commitment to these
programs means that legislation to provide an annual adjustment is sure to receive
procedural attention, even during the frantic days at the end of a legislative session

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when floor time to consider bills is at a premium. To facilitate the passage of other
veterans legislation when Congress becomes pinched for time, the House and Senate
Committees on Veterans Affairs report legislation each year that provides for an
increase to these programs equal to the increases automatically applied to most other
entitlement benefits, attaching to the bill other veterans legislation approved by House
and Senate conferees.
Increases for Retired Military with Severe Service-connected Disabilities.
The FY2000 National Defense Authorization Act (P.L. 106-65) includes a provision
that adds monthly payments for retired military personnel who have severe service-
connected disabilities rated by VA at 70% or above. Generally, military retired pay
and VA compensation are offset against each other, although VA compensation is not
subject to taxes on income and military retirement is taxable as ordinary income.
Some military retiree advocates have long argued that retirees with service-connected
compensation should be permitted to receive both. Opponents of concurrent receipt
argue that such individuals should not be compensated twice for the same period of
service–once as a retiree, and again as a compensation recipient.
P.L.106-65 provides taxable monthly payments of $100 for military retirees with
service-connected conditions rated by VA at 70% or 80%; $200 monthly for retirees
with 90% ratings; and $300 monthly for retirees rated as 100% disabled, provided
that these ratings were received from VA within 4 years after retirement from military
service.
For further discussion of this provision and of military retirement in general, see
CRS Issue Brief IB85159, Military Retirement: Major Legislative Issues, by Robert
L. Goldich. For further discussion of the issues involved in concurrent receipt, see
CRS Report 95-469, Military Retirement and Veterans’ Compensation: Concurrent
Receipt Issues, by Robert L. Goldich and Carolyn L. Merck.
Arlington National Cemetery Burial Eligibility Act. (H.R. 70; S. 1076).
Concerns about presidential discretion to waive restrictions on burial in Arlington
National Cemetery led to proposals to codify regulations on such burials. Under H.R.
70, only persons specifically covered by the bill’s language could be buried at
Arlington. The bill would eliminate automatic eligibility for Members of Congress,
Cabinet members, and ambassadors who would not otherwise qualify because of
military service. Close family members of eligible veterans could continue to be
buried in the same grave with that veteran without a waiver. H.R. 70 passed the
House on March 23, 1999. On July 26, 1999, the Senate approved S. 1076, with
language to accomplish similar purposes contained in the provisions of H.R. 70.
Veterans Entrepreneurship and Small Business Development Act of 1999.
(P.L. 106-50) On August 17, 1999, the President signed H.R. 1568, originally
reported from the Committee on Small Business, to assist veterans who own, or
would like to start businesses. The new law raises the profile of veterans assistance
in the Small Business Administration (SBA) by creating an office specifically charged
with veterans business assistance. The Office of Veterans Business Development will
now oversee technical and informational assistance, and will include service-disabled
veterans within the definition of “handicapped individual” for eligibility for SBA
business loans. The SBA is authorized to make loans to veterans who own

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CRS-16
businesses, and who are called to active duty. Veterans are now eligible for
participation in programs intended to give small business owners greater participation
in federal procurement contracts. SBA will become more involved in assuring that
veterans are not subject to discrimination in the startup and operation of small
businesses, and that they benefit from various programs intended to improve such
opportunities for veterans. Finally, SBA is required to collect data on veterans small
business opportunities and successes, and report annually on veterans and their
business ventures.
Benefits for Filipino veterans of World War II. During World War II,
Filipino citizens in the military forces of the Army of the Commonwealth of the
Philippines were drawn into that War under authority of U.S. Armed Forces, on the
basis of legislation enacted in 1934 preparatory to Philippine independence. Many of
these Filipino veterans believe that their service was active duty service in the U.S.
military that should qualify them for the same benefits as other veterans of active duty.
Legislation passed in 1946 specifically excludes such Filipino veterans from full
veterans benefits, and pressure to amend that exclusion has periodically surfaced since
that time.
Some of the Filipino soldiers were disabled during the course of their service
under U.S. Armed Forces command, and became eligible for service-connected
compensation from VA. Because of differences between the economies of the U.S.
and the Commonwealth of the Philippines, the compensation payments were provided,
under federal law, to these disabled Filipino veterans at a rate equivalent to 50 cents
for each dollar that would be paid to a similarly disabled veteran in the U.S. Armed
Forces, regardless of whether the Filipino veteran resided in the U.S. or the Philippine
Islands.
The disparity in payments for U.S. residents entitled to VA compensation has
been a recurring issue. Initially, it was argued before Congress by proponents of the
lower payments that the distinction was necessary to prevent the benefits from
becoming an inducement to seek residence in the U.S. solely for that purpose. Some
also argued that the Commonwealth would reach political stability more easily if these
disabled veterans remained in the Philippines during the post-war period.
In recent years, Filipino advocates have pointed to the large number of Filipino
veterans in the U.S. as legal residents, and have called for legislation to address their
claims for full benefits. The Administration’s FY1999 and FY2000 budgets have
called for legislation to pay disabled Filipino veterans and their survivors residing in
the U.S. the full rate, at an additional cost of $5 million during the first year, and $25
million over 5 years. Hearings in the House Committee on Veterans Affairs on the
subject were held July 22, 1998, but no further action has been taken.
The Senate approved S. 1076, which contains, among other things, provisions
to give burial rights to Filipino veterans. The House has not acted on similar
legislation.
Supplemental Security Income (SSI) payments for Filipino veterans who have
returned to the Philippines. P.L. 106-169 (The Foster Care Independence Act of
1999) contains incidental amendments to the SSI program. One such change permits

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the continued payment of SSI benefits to Filipino veterans of U.S. Armed Forces
service during World War II, when such veterans return to the Philippines. The
benefits will be paid at a level equivalent to 75% of the benefit level these veterans
would receive if they remained in the U.S. The 75% figure is intended to make these
Filipino veterans who return to the Philippines, financially about the same as they
would be were they to be eligible in the Philippines for wartime service pensions from
VA at the same 50% level paid for other Filipino benefits administered by VA.
Veterans who are totally disabled, and who have at least one day during a period
defined as wartime, are eligible for VA wartime pensions, which, like SSI, are means-
tested payments.
The Insurance Dividend: A Hoax Reappears on the Internet. The Internet
has made possible the dissemination through “chain letter” postings, of numerous
reports which give every appearance of being factually correct, but which are in fact,
totally false. One such disseminated false “report” tells of a supposed dividend that
Congress has recently enacted, and for which veterans are eligible if they apply.
Rumors of this “bonus” have surfaced periodically through various forms of informal
media for nearly 50 years, defying vigorous attempts by VA and Congress to
eradicate it from the common sense.
Origin of the dividend rumor. In 1950, VA paid $2.7 billion in special dividends
to 16 million World War II veterans who had National Service Life Insurance policies
with premiums paid to 1948 (the 1948 Special Dividend). From that point forward,
the possibility of dividends has led to periodic rumors that Congress has again passed
such a benefit (or is considering doing so).
For instance, in 1965, for unknown reason, some newspapers published stories
reporting of the special dividends that had been paid in the early 1950s, as if the
dividends were being paid at the time the stories were published. While VA
attempted to squash the misinformation with factual stories, each time the false
reports surfaced, the stories would take on a local circulation life, gradually drifting
to more marginal print media, such as newsletters, flyers, and local bulletins, and
sometimes accompanied by bogus application forms. At some points, VA received
as many as 20,000 inquiries per week about this supposed dividend, and in 1970 the
volume of requesters prompted Congress to enact legislation declaring steps to be
taken whenever VA was presented with such bogus applications.
The stories are false. There has been no recent legislation that would authorize
“special dividends.” Dividends are not payable to current service members insured
under the Serviceman’s Group Life Insurance (SGLI) or Veterans’ Group Life
Insurance (VGLI), both of which are group policies without dividend concepts
involved. VA does automatically pay dividends on some policies of other programs
that have that intended feature, but then only to veterans who have kept the policies
in force. In the event a veteran is due one of these dividends, it is paid automatically
on the anniversary date of the policy, and no application for the payment is necessary.

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Transition from Active Duty to Civilian Life: Are Readjustment
Programs Inadequate?
One of the traditional responsibilities of VA is to assist veterans in readjusting
to civilian life. Readjustment assistance is also provided to service-disabled veterans
to enable them to achieve maximum independence in their daily lives. As a result of
the decline in the numbers of veterans, the importance of these readjustment programs
is perhaps less evident than it has been during periods in which large numbers of
troops were demobilized. The Veterans Affairs Committees in both Houses of the
106th Congress are considering legislative proposals based on recommendations of a
recent congressional commission that examined these programs.
Most of the current programs originated with the GI Bill of 1944. Under the GI
Bill and subsequent additions and variations, the VA has spent over $65 billion
training or educating more than 20 million veterans. Over 14 million veteran home
loans have been guaranteed.
All veterans are also assured assistance in preparing for and finding employment.
Educational assistance, job retention rights, preferences in federal hiring (and with
employers having federal contracts of $10,000 or more per year), guaranteed direct
loans, and insurance for veterans are among the kinds of assistance provided veterans.
Some programs assisting in veterans readjustment are administered through
agreements between VA and other agencies, including the Departments of Labor,
Defense, and Transportation.
Educational Assistance. The original GI Bill was in part intended to help
alleviate shortages in trained manpower, as well as provide opportunities for veterans
to better adapt to civilian life. For many returning troops, the GI benefits assisted in
furthering education interrupted or postponed by war service, while for others, it
provided an inducement to seek training they might otherwise never have pursued.
The combination of policy objectives helped both society and veterans adapt to
postwar economic conditions.
The current version of the veterans education and training program, called the
Montgomery GI Bill (MGIB), meets a somewhat different objective. With the end
of conscription and the move to an all volunteer force, Congress enacted a program
that serves as a recruiting inducement to young people considering their opportunities
for future economic improvement. The Montgomery GI Bill provides educational
assistance to veterans who agree to have their military pay reduced by $100 per
month for the first 12 months of active duty. The money is not refundable if the
participant does not elect to enroll in eligible education or training.
When the period of active duty is completed, the MGIB participant is eligible for
monthly education benefits of $528 monthly for 36 months for a 3-year active duty
enlistment, and $429 monthly for enlistments of less than 3 years. Other amounts may
be added as inducements to join difficult to fill active duty job assignments. Other,
somewhat lesser amounts may be paid to reservists, and veterans whose eligibility is
traceable to an earlier program. Benefits of the MGIB program are granted a COLA
each October.

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Commission on Servicemembers and Veterans Transition Assistance. This
congressional commission examined programs that help veterans adjust to civilian life
after active duty in the armed forces, concluding that some programs “... have become
so outdated, and program management so ineffective that they break faith with those
who served, and currently serve, their Nation in uniform.” The commission’s recent
report goes on to recommend “... fundamental and far-reaching reforms” to veterans
programs and their administration.7
The commission’s proposals would enforce tight performance standards on
veterans employment and training programs; initiate a common framework between
VA and the Department of Defense (DoD) for the resolution of disability claims;
improve medical coverage for newly separating veterans; coordinate VA and DoD
medical care systems; increase home loan opportunities and establish a small business
loan program; and permit active duty military personnel to participate in the Federal
Employees Thrift Savings Plan (TSP) on the same basis as civilian federal workers.
A proposal to increase education benefits. Perhaps the major recommendation
of the Commission concerns the role VA education benefits play in recruitment of an
adequate supply of young and able military personnel. At issue is a key finding of the
Commission: While college attendance is a major goal of high school graduates and
their parents, the value of MGIB benefits toward a college education is relatively less
attractive than it once was. Other programs targeting the same population have
increased in scope and generosity, causing military service to be viewed “... as a
detour around college enrollment, not as a way to achieve it...Congress appropriates
billions of dollars for non-veteran education programs that are available to any
American without enduring the risks and sacrifices inherent in military service. A
veterans’ education conditioned on military service must offer a substantial advantage
over programs available to all Americans ....”
The Commission proposes a substantial liberalization of the MGIB, eliminating
its pay reduction in the first year of active duty, and providing a monthly stipend,
funds for books, tuition, and fees “... to attend any institution of higher learning in
America for which they qualify ...” to any veteran who has completed an enlistment
of at least 4 years. For enlistments of less than 4 years, the Commission recommends
an increase to $600 monthly, and providing the money at the beginning of an
academic term.
All-Volunteer Force Educational Assistance Programs Improvements Act
of 1999. On July 26, 1999, the Senate passed a bill (the House has taken no action
on the bill) containing many of the recommendations of the Commission. Among
provisions in the bill (S. 1402), are those which would:
! Permit benefits to be paid for preparatory courses for standardized
admissions tests for college and graduate schools;
7 Report of the Congressional Commission on Servicemembers and Veterans Transition
Assistance, transmitted to the Committees on Veterans Affairs, Armed Services, and National
Security of The Senate and House of Representatives of the United States, January 14, 1999.
The Commission was established by P.L. 104-275.

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! Allow continued eligibility when enlistment is interrupted to enter
Officers’ Training School (these first 2 items were enacted as part of
P.L. 106-117);
! Provide a 13.6% increase in Montgomery GI Bill benefits, from $528
to $600 monthly for 3-year enlistees, and from $429 to $488 monthly
for 2-year enlistees;
! Provide a 13.6% increase for survivors’ and dependents’ educational
assistance, from $485 to $550 monthly for full-time students, and
from $242 to $274 monthly for half-time students;
! Increase Montgomery GI Bill benefits for participants who elect to
increase their contributions to the program from the current required
$1200 to up to $1800;
! Authorize an opportunity to buy back (for $1500) into the program
during remaining active duty for those persons who had elected not
to participate when they first enlisted; and
! Permit VA to make payments at the beginning of a term for veterans
who would otherwise be paid monthly.
The Ongoing Issue of Presuming Service Connections: The
Relationship Between Risk Exposure and Subsequent Disabilities
Introduction. Some veterans and their advocates believe that exposure to
environmental toxins or unknown and mysterious diseases during military service has
left many veterans vulnerable to an array of disabilities later in life. In recent times,
Congress has considered the concerns of veterans with claims arising from service in
nuclear testing areas, Vietnam, and the Persian Gulf. Authority for VA to provide
medical treatment for diseases presumed linked to radiation has been made permanent.
Similar authority to receive high priority medical treatment for diseases presumed
related to exposure to Agent Orange (and other herbicides) in Vietnam expires at the
end of 2002. Authority for medical treatment for veterans who may have been
exposed to toxic substances or environmental hazards during the Persian Gulf War
expires at the end of 2001; authority to evaluate the health of spouses and children of
Persian Gulf War veterans expires at the end of this year.
Although major legislation is not expected in the 106th Congress, the issue of
presuming disabilities to be service-connected, and the implications of such
presumptions, is of ongoing concern to Congress and to veterans service
organizations. The following discusses the history and current status of this issue.
Giving veterans the benefit of the doubt. The nation has accepted an obligation
to veterans who incur injury, disease, or aggravate an existing condition (VA law calls
all of these disabilities) while in service to the country. Health services, cash
payments, and other benefits may be given to veterans who experience disabilities
traceable to a period of military service. These disabilities need not have occurred in
the line of duty, or even be related to active duty: for a condition to be regarded as
service-connected, veterans need show only that the condition occurred (or was
aggravated) as a result of military service, or arose during that period.

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To receive benefits for a service-connected disability, veterans are required to
document that their condition is related to their service. The claim is often clearly
documented by pertinent military records. However, with some disorders, evidence
of a service-connection is inconclusive. Congress has sometimes granted a
presumption of a service-connection, so that veterans can be treated, and given
appropriate compensation while scientific studies attempt to determine whether a
correlation can be found between risks the veteran encountered during military service
and the subsequent manifestation of a disorder.
Early in the 20th Century, these presumed service-connections permitted VA and
its administrative forerunners to treat veterans for a variety of little understood
ailments that they might have contracted during duty in far-off lands. While many
tropical diseases long defied routine diagnosis, more familiar diseases such as malaria
were diagnosed accurately, and the sporadic recurrence of its symptoms over time
were well known. The passage of time between a veteran’s exposure to risk, and
onset or recurrence of a specific disease made the use of presumptions an attractive
alternative to protracted examination of a claim that was necessarily difficult to
validate or rebut.
Recent Presumption Issues. Current concern that latent illnesses could be
related to toxic exposure during Gulf War service was preceded by similar concern
that certain diseases could be related to exposure to Agent Orange or other herbicides
in Vietnam. That concern was preceded by concerns that certain diseases could be
related to exposure to nuclear radiation during World War II or during atomic testing
in the 1950s. In these cases, policy objectives were based on the rationale that
veterans should be given the benefit-of-the-doubt as to the treatment of illnesses
potentially traceable to military service: (1) these veterans were sick with serious
diseases needing treatment; (2) they did serve their country, often in a wartime
combat zone; and (3) capacity to provide the services existed if they were given high-
priority access.
From a scientific standpoint, the evidence necessary for VA to conclude that a
particular presumption should be expanded to include additional diseases is not a
particularly high threshold. Generally speaking, the law excludes extending
presumptions to disorders in which scientific evidence has found no correlation
between exposure to a risk and the contraction of a disorder, or when the disorder is
attributable to another cause. Yet, other scientific evidence, even when inconclusive,
may be enough for the list of disorders with a presumptive service link to be
expanded.
Presumptions and Exposure to Nuclear Radiation. From 1945 until 1963, the
U.S. exploded approximately 235 nuclear devices in the atmosphere, potentially
exposing an estimated 220,000 military personnel to unknown levels of radiation.
Some of these veterans later claimed that low level radiation released during the
testing may be a cause of certain adverse health consequences they had experienced.
In addition, some veterans who had been among occupation forces in Hiroshima and
Nagasaki after the atomic bomb attacks on those cities also claimed that they had
experienced adverse health effects because of that occupation service.

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While carcinogenic and other health effects of high radiation doses was well-
known, scientific evidence about the long-term health consequences of exposure to
low levels was inconclusive. In 1987, Congress chose not to “... abide by its long-
standing tradition that benefits should be paid only where substantive evidence is
clearly available to establish that the disabling conditions existed while on active duty
or are clearly related to such period of service.” Instead, Congress accepted the
conclusion that because the evidence of exposure-level risk could not be verified, it
should depend instead on correlation of various diseases with radiation exposure.
P.L. 100-321 included language establishing a presumption that 13 diseases would be
presumed to be service-connected if they manifested in veterans whose service
histories included active duty in a “radiation-risk activity.”8
The VA opposed passage of the bill, arguing that existing law was sufficient to
permit awarding benefits in cases in which the evidence linking diseases to radiation
exposure was conclusive. At the heart of the objection to the bill, was the
Administration’s claim that the “... overwhelming majority of veterans covered by [the
bill] received very low doses of radiation, whether they participated in the weapons
tests or the occupation of Hiroshima or Nagasaki.” VA examined scientific data on
correlations between various cancers and radiation exposure at the level that had been
experienced by the veterans, and projected that of the 32,000 to 34,000 deaths from
cancer that would otherwise occur among the 200,000 veterans made eligible for the
presumption under the law, the additional exposure from their service experience
would lead to 10 additional deaths.
The Administration concluded that “... the issue really becomes whether the
federal government should presume that all 32,010 eventual cancers among atomic
veterans are service-connected in order to assure that the 10 possible excess cases
related to service are covered, or whether it is better public policy to look at each case
individually to separate the more deserving claims from those less deserving.”9 In
spite of the VA opposition, the bill passed, and subsequently has been amended to
include additional diseases.
Radiation-exposed veterans continue to have various illnesses considered for
inclusion within the presumption. On February 25, 1999, the Senate, before passage
of S. 4, amended it to include language offered by Senator Wellstone that increased
the number of diseases for which a presumption of service-connection would exist for
disabilities experienced by “radiation-exposed veterans.”
Expanding Presumptions to Include Exposure to Agent Orange. Congress
also granted priority medical treatment to veterans who had been exposed to the
defoliant Agent Orange. The active ingredient in that defoliant is the chemical dioxin,
for which there is some evidence of a disease-causing potential. By the time that
Congress enacted legislation authorizing the treatment of diseases possibly linked to
radiation exposure, increasing numbers of veterans of service in Vietnam were
8 H.Rept. 100-235, a report from the House Committee on Veterans Affairs to accompany the
Atomic Veterans Compensation Act of 1987 (P.L. 100-321).
9 Ibid., p. 10-11

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claiming a service-connection for disabilities that they believed were related to
exposure to Agent Orange.
When concern mounted that exposure to herbicides in Vietnam could have posed
a health risk, the Department of Defense examined its records to determine which
personnel may actually have been exposed and what level of exposure they may have
experienced. However, deployment records and troop movement data could not
pinpoint exposure with accuracy. Congress drew the conclusion that exposure to
Agent Orange (or to other herbicides, regardless of their toxicity) at sufficient levels
to be potentially disease-causing had to be presumed, given the widespread use of
herbicides. Because exposure to toxic herbicides was presumed for any military
personnel who served in Vietnam during the period in which Agent Orange was used,
science need only find some evidence suggestive of an association between a
particular disease and exposure to herbicides at any level in order to validate a
presumption that the disease is service-connected.
A Presumption for Spina Bifida. In 1996, Congress amended VA law to grant
the presumption of a service-connection, to claims on behalf of children stricken by
the disease spina bifida who are born to Vietnam veterans. Spina bifida is a birth-
related disease that can entail intensive and expensive assistance to the child for years.
The basis for this expansion was a National Academy of Sciences (NAS) report
reviewing studies of a correlation between toxic exposure of Vietnam veterans and
children born to them with spina bifida. While the scientific studies were inconclusive,
NAS did find some evidence suggestive of such a correlation.
Expanding Presumptions and the Persian Gulf War Syndrome. After
returning from service in the Persian Gulf War, some veterans began complaining of
illnesses that they thought might be attributable to their service there. Commonly
reported symptoms included fatigue, muscle and joint pain, severe headaches, and
memory loss. Media reports began to characterize the array of symptoms as the Gulf
War Syndrome, although no single illness with the multitude of symptoms has been
diagnosed, and no common characteristics of the veterans’ circumstances have been
identified other than Persian Gulf service, on land or at sea. Although a majority of
ill veterans have been diagnosed with a recognized disease, a significant number
remain undiagnosed, and appear to be suffering from multiple illnesses with
overlapping symptoms and causes.
Congress provided for all illness claims of Persian Gulf War veterans to be
examined at VA medical facilities, illnesses diagnosed whenever possible, symptoms
treated if necessary, and a data-base created to facilitate further research into causes.10
More than 100 federally-funded research studies pertaining to Gulf War illnesses are
underway. To date, clinical studies have not found an unexplained increase in deaths,
hospitalizations, or diagnosed diseases among the Gulf War veteran population. No
evidence has been found of a new or unique disease connected to Gulf War service.
10 The DoD Medical Registry and the VA Persian Gulf Health Registry have had some clinical
evaluation contact with about 100,000 of the nearly 700,000 Gulf War veterans.

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Evidence steadily emerges that Gulf War veterans were in a complex
environment, contaminated by multiple chemical substances, some of which had been
introduced to improve the safety and comfort of friendly forces. Perhaps as many as
25,000 American soldiers may have been exposed to chemical weapons; while they
were not actually used in combat, some believe the destruction of the weapons
released toxins that may have caused illnesses with delayed symptoms. So far,
medical experts report that no conclusive evidence has been presented that Persian
Gulf War illnesses are related to chemical weapons, but studies of the possible effects
of multiple chemical exposure, including the effects of low-level exposure to chemical
weapons are underway.
The Presidential Advisory Committee on Gulf War Veterans’ Illnesses. Finding
that”[m]any veterans clearly are experiencing medical difficulties connected to their
service in the Gulf War,” the Advisory Committee reviewed numerous studies of Gulf
War veterans and their health complaints. The Advisory Committee’s report, dated
December 31, 1996, concluded that scientific evidence had not produced “a causal
link between symptoms and illnesses reported by Gulf War veterans and exposure [to]
pesticides, chemical warfare agents, biological warfare agents, vaccines,
pyridostigmine bromide, infectious diseases, depleted uranium, oil-well fires and
smoke, and petroleum products.”
Nevertheless, the Advisory Committee recommended further research in several
areas, including the medical risks, especially long-term risks, that might be related to
multichemical exposure, low-level exposure to chemical warfare agents, and other
toxic substances with recognized carcinogenic potential that were known to be
present in the Persian Gulf War. Finally, the report of the Advisory Committee
emphasized the need to examine closely the relationship between wartime stress and
“the broad range of physiological and psychological illnesses currently being reported
by Gulf War veterans.”11
Priority Health Care. Authority to provide high priority medical care for
Vietnam veterans with diseases presumed linked to herbicide exposure expires
December 31, 2002. Authorization for priority health care for veterans with diseases
presumed linked to radiation exposure has been made permanent. P.L. 105-368
extended high priority health care for Persian Gulf veterans through 2001; expanded
coverage to include treatments for veterans’ dependents when their illnesses are
related to the veterans’ Gulf War service; and required VA to seek advice from the
National Academy of Sciences on ways in which these veterans could be more
effectively treated. The law also established an independent mechanism recommended
by the Academy, so that research into Gulf War illness claims could be evaluated
outside of the federal government.
Federal Research. The DoD, VA, and HHS, through the Persian Gulf Veterans’
Coordinating Board, have established a comprehensive research program to provide
information about the prevalence, distribution, and causes of illnesses among Gulf
War veterans. According to a GAO report, federal agencies spent a total of $37
million on research on Gulf War veterans’ illnesses through FY1996, and several
11 Report of the Presidential Advisory Committee on Gulf War Veterans’ Illnesses. p 125.

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additional projects are currently underway. (For additional information on federal
research, see CRS Report 98-21, Gulf War Veterans’ Illnesses: Federal Research
and Legislative Mandates.)
Potential for Adverse Effects of the Persian Gulf Presumptions on Future
Scientific Studies. In the absence of firm scientific evidence to the contrary,
Congress has given veterans of the Persian Gulf War the benefit-of-the-doubt that
their ailments may be connected to their military service. However, the basis for
establishing scientifically a link between an exposure to risk and the incidence of a
disease could be further eroded. Persian Gulf War veterans were potentially exposed
to a large number of toxins, and are now authorized to receive priority treatment for
a virtually unlimited list of symptoms. Researchers caution that it may be impossible
to identify the causes of illness in many Gulf War veterans because of the absence of
baseline data on the health of military personnel, and the lack of reliable data on levels
of exposure to potential risks in their wartime environment. In effect, because both
exposure to a toxic risk and the presence of a disorder are presumed, the statistical
relationship between the risk level for one and the incidence of the other may be
indeterminable.
Overcoming a Presumed Service-connection: Tobacco Related Illnesses. In
the 105th Congress, action was taken to prevent a service-connection to a toxic risk.
After several years of study, in 1997 VA had concluded that nicotine addiction is a
disease that could be linked to tobacco use that began during military service. Thus,
if nicotine addiction has its origins in military service, then “secondary” diseases linked
to tobacco use were arguably service-connected. While there are no actual data on
the number of total possible claims, the potential number of claims was in the millions.
Moreover, the “echo” of service-connected claims could have continued for decades,
through compensation automatically paid to the dependents and survivors of veterans
who die from service-connected conditions.
At issue was the government’s responsibility when its military personnel made
unwise health choices, which were at least facilitated if not openly encouraged by
government actions. Some argued that American taxpayers should not be held liable
for illnesses caused by veterans’ decisions to use harmful tobacco products.
However, as a former VA official pointed out during a recent hearing, “our veterans
were in many cases provided that first cigarette by our government as part of their
daily food ration or as part of a comfort pack ... clearly, the government was the agent
that ultimately gave those cigarettes to our veterans.”
While some veterans advocates vigorously opposed changing the law, others
focused on securing some of the savings for veterans benefits. A provision restricting
VA from paying compensation to veterans for adverse effects of tobacco use was
included in P.L. 105-178, the Transportation Equity Act for the 21st Century (TEA-
21). A similar proposal in the President’s FY1999 budget estimated the 5-year
savings at $16.9 billion; $15.4 billion of that estimated savings were used to offset
spending for highway projects, and the remainder was directed toward improvements
in various veterans benefits.
For further information on this issue, see CRS Report 98-373, Veterans and
Smoking-Related Illnesses: Congress Enacts Limitations to Compensation.

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For further information on veterans issues in the 105th Congress, see CRS Report
97-266, Veterans Issues in the 105th Congress.
For issues in the 104th Congress, see CRS Report 96-141, Veterans Issues in the
104th Congress.

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