However, there is a problem. The increased rates proposed by either H.R. 5250 or H.R. 5488 would be effective from the first day of the first calendar month which begins after the date of enactment. The increase in military pay proposed by H.R. 5555 would be effective October 1, 1963, or the first day of the first month after enactment, whichever is later. Enactment of H.R. 5555 would require adjustment of widows' dependency and indemnity compensation rates, as would enactment of H.R. 5250 (or H.R. 5488). Thus, it would be desirable administratively to have both measures effective from the same date. If this were done, both adjustments in dependency and indemnity compensation rates for widows could be accomplished in one operation and one notice to payees would suffice, thus eliminating duplication of administrative cost and effort which would otherwise result. I recommend favorable consideration of either H.R. 5250 or H.R. 5488 with an amendment which would give either bill the same effective date as the military pay bill. (The VA report on these bills follows:) VETERANS' ADMINISTRATION, OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS, Hon. OLIN E. TEAGUE, Chairman, Committee on Veterans' Affairs, Washington, D.C., May 27, 1963. DEAR MR. CHAIRMAN: This is in reply to your request for reports on identical bills, H.R. 5250 and H.R. 5488, 88th Congress. The purpose of the bills is to increase the monthly rates of dependency and indemnity compensation payable to widows of veterans dying from serviceconnected causes. Chapter 13 of title 38, United States Code (dependency and indemnity compensation) restates a portion of the Servicemen's and Veterans' Survivor Benefits Act (Public Law 881, 84th Cong., Aug. 1, 1956). This act established a new and modernized benefits program of dependency and indemnity compensation for survivors of veterans dying from service-connected causes on or after January 1, 1957. The rate of dependency and indemnity compensation payable to widows is geared to basic active service pay. The widow is paid at a monthly rate equal to $112 plus 12 percent of the basic pay of her deceased husband. As the service pay is increased, the widows' rates under this program are automatically increased. The basic service pay was last increased June 1, 1958 (Public Law 85-422). H.R. 5250 and H.R. 5488 propose to increase to $120 the $112 which is the constant factor in each widow's dependency and indemnity compensation rate. As you know, H.R. 5555, 88th Congress (the proposed "Uniformed Services Pay Act of 1963"), which would increase basic rates of military pay, passed the House of Representatives and is now pending before the Senate Committee on Armed Services. The increase proposed by H.R. 5250 and H.R. 5488 when added to (a) the increase stemming from the 1958 Service Pay Act and (b) the increase which would automatically result from H.R. 5555 if enacted with the rates prescribed in the bill as passed by the House would total an average increase in widows' rates of approximately 10 percent since the inception of the dependency and indemnity compensation program. This increase is commensurate withthe cost-of-living increase of 10 percent in dependency and indemnity compensation rates for parents and children recently authorized by Public Law 88-21. Favorable consideration of H.R. 5250 or H.R. 5488 is accordingly indicated. It is estimated that either bill would benefit approximately 122,700 widows the first year at a cost of $11,779,000. It is believed that the cost will remain about the same for the next 4 years. The increased rates proposed by either H.R. 5250 or H.R. 5488 would be effective from the first day of the first calendar month which begins after the date of enactment. The increase in military pay proposed by H.R. 5555 would be effective October 1, 1963, or the first day of the first month after enactment, whichever is later. Enactment of H.R. 5555 would require adjustment of widows' dependency and indemnity compensation rates, as would enactment of H.R. 5250 (or H.R. 5488). Thus it would be desirable administratively to have both measures effective from the same date. If this were done, both adjustments in dependency and indemnity compensation rates for widows could be accomplished in one operation and one notice to payees would suffice, thus eliminating duplication of administrative cost and effort which would otherwise result. Accordingly, we urge the effective date of H.R. 5250 (or H.R. 5488) be amended to conform with the effective date of H.R. 5555. This could be accomplished by striking all of section 2 following the word "effect" and inserting in lieu thereof "on the effective date of the Uniformed Services Pay Act of 1963." In line with the foregoing comment, I recommend favorable consideration of either bill with the indicated amendment. The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely, J. S. GLEASON, Jr., Administrator. Mr. GLEASON. Now I want to take up another matter-one wh ch is of particular interest to me. For a number of years this committee has had under serious consideration numerous proposals to reopen the national service life insurance program and you took positive action on the subject in the last Congress. You will recall that prior to such action I advised the committee that as the result of a thorough restudy of the veterans' insurance program, I had concluded that the abrupt withdrawal without notice in 1951 of the privilege theretofore granted to millions of World War II veterans to secure postservice insurance may well have caused hardship in many instances. Many World War II veterans had left the service relatively young, ready to resume their schooling, unmarried, and with their insurace needs as yet undetermined. Under such circumstances many no doubt dropped their NSLI in anticipation that they-like the World War I group to whom USGLI was available for many years after service that is, from 1928 to 1951, or 23 years-would be able to secure Government insurance when their families and careers were established. Further, with respect to veterans who served prior to 1951, I concluded that adequate recognition has not been given to the obligation of the Government toward those veterans whose insurability has been seriously impaired, if not lost, by reason of their service-connected disabilities. I felt, therefore, that a limited extension of the right of veterans to apply for postservice insurance by reason of their service to their country would be most appropriate. I am strongly supporting in this Congress a reopening of the NSLI program for a period of 1 year. During such period, veterans (including veterans with service-connected total disabilities, as well as those less than totally disabled), who served in the Armed Forces of the United States after October 7, 1940, and before January 1, 1957, would be eligible to apply for new insurance under the NSLI program, or increase protection now held up to a maximum of $10,000. Nonservice disabled veterans should be required to show good health. No such insurance should be granted to certain Philippine Army veterans whose insurance rights are now restricted by 38 U.S.C. 107, or to persons in the active military service. Further, to avoid the pyramiding of survivors' benefits for deaths in active service, such insurance should be terminated upon recall to active duty or active duty for training for 31 days or more, and not be payable for deaths which occur on short tours of such duty if dependency and indemnity compensation is payable in such cases. Any reopening of the insurance program should be self-supporting, with the limited exception of the service-disabled veteran group. For the nonservice disabled veterans, the premiums charged should be sufficient to cover both the benefit claims cost and the cost of administration, with authority to adjust them according to experience. In reporting on such proposals in the past it has been the general practice in estimating costs for the Veterans' Administration to assume an arbitrary unit number of applications would be received and an arbitrary number of policies would be issued if legislation to reopen the NSLI program were enacted. Recently, the Census Bureau, at the request of the Veterans' Administration, has been conducting a nationwide survey of veterans by means of an extensive questionnaire. The Census Bureau determined that a scientific sampling of 13,000 veterans would be sufficient to support valid conclusions. As final results would not be available until later in the year, a tally of the insurance questions was made based on answers to nearly half of the questionnaires sent out. To date, of answers received from World War II and Korean conflict veterans, we find that 75 percent do not have NSLI. Further, about half of this group state that they would take out such Veterans' Administration insurance if it were legally possible. In addition, over 50 percent of the veterans who now have less than $10,000 of Veterans' Administration insurance would take out more if Congress authorized it. On the basis of the returns to date from this survey it appears that if the NSLI program is reopened as many as 7 to 8 million veterans will be interested in such insurance. With the exception of H.R. 210, and an identical bill, H.R. 2397, all of the bills on this subject pending before the committee would authorize the issue of insurance to persons in good health as well as to those who have service-connected disabilities. H.R. 210 would reopen the national service life insurance program only to persons who were eligible to apply for national service life. insurance between October 7, 1940, and January 1, 1957, and who are in good health except for a service-connected disability which renders them uninsurable. It would apply to the totally disabled as well as those with service-connected disability less than total in degree. However, premium waiver would not be authorized for a total disability which was in effect at the time the veteran applied for issuance of insurance under the bill. The premiums to be charged the service-disabled veterans group to cover the benefits claims cost of their insurance under H.R. 210 will be based on the old American Experience Table of Mortality and interest at the rate of 3 percent per annum. The Veterans' Administration has no actual experience on the particular group of service-connected disabled veterans (including the totally disabled) covered by these proposals. Our closest experience is with nonparticipating insurance (with the same premium rate basis) issued to persons with service-incurred disabilities less than total in degree under section 602(c)(2) of the National Service Life Insurance Act. If that experience is comparable, it is believed that the life insurance issued under H.R. 210 to the service-connected disabled group, insofar as the benefits claims cost is concerned, would be self-supporting, or nearly so, and would require little or no Government subsidy from a claims cost standpoint. It is noted, however, that under H.R. 210 the service-disabled group would not be charged for the cost of administration of their insurance. Based upon our best estimates, and considering the preliminary returns from the mentioned survey, as many as 600,000 veterans might qualify as uninsurable under the terms of the bill, and of this group around 300,000 policies might be issued. Mr. Chairman, I would like to thank you and the members of the committee for this privilege of sharing with you in these hearings our views on these very important legislative proposals. (Letters from J. S. Gleason, Jr., Administrator, to Hon. Olin E. Teague follow :) VETERANS' ADMINISTRATION, Hon. OLIN E. TEAGUE, Chairman, Committee on Veterans' Affairs, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: This is in response to your request for a report on H.R. 210, 88th Congress. It will also serve as a report on an identical bill, H.R. 2397. The purpose of the bill is to add a new section 725 to title 38, United States Code, to authorize, for 1 year, the issue of national service life insurance (NSLI) to persons heretofore eligible to apply for such insurance after October 7, 1940, and before January 1, 1957, who are in good health except for a service-connected disability (regardless of degree) which renders them uninsurable according to standards of good health established by the Administrator. The life insurance authorized by the bill could only be issued on a permanent plan basis and it would be nonparticipating. All premiums would be paid into and all liabilities would be paid from the NSLI appropriation. The Government would bear the administrative cost. The premium rates and guaranteed values would be based on the American Experience Table of Mortality, and interest at 3 percent per annum. All settlements on policies involving annuities would be calculated on the basis of the Annuity Table for 1949, and interest at 3 percent per annum. Certain Philippine veterans whose rights to insurance were restricted by the Rescission Acts of 1946 (now 38 U.S.C. 107) and any person while on active duty under a call or order to active duty for a period of 31 days or more would not be eligible for insurance under the bill. The bill would be effective the first day of the seventh calendar month following the date of enactment. The insurance issued under the bill to service-disabled persons (those totally disabled as well as those whose disabilities are less than total in degree) would be granted under the same terms and conditions as are contained in standard policies of NSLI, with certain specified exceptions. Since good health is a condition precedent to the issue of a total disability income provision under 38 U.S.C. 715, persons issued life insurance under the bill could not qualify for the disability income provision unless they subsequently recovered their health. Also, premium waiver under 38 U.S.C. 712 would not be authorized for any total disability which was in effect at the time the veteran applied for life insurance under the bill. As indicated above, the premiums to be charged the service-disabled veteran group to cover the benefits claims cost of their insurance under H.R. 210, will be based on the old American Experience Table of Mortality, and interest at the rate of 3 percent per annum. The Veterans' Administration has no actual experience on the particular group of service-connected disabled veterans (including the totally disabled) covered by the proposal. Our closest experience is with nonparticipating insurance (with same premium rate basis) issued to persons with service-incurred disabilities less than total in degree under section 602(c) (2) of the NSLI Act. If that experience is comparable, it is believed that the life insurance issued under H.R. 210 to the service-connected disabled veterans insofar as the benefits claims cost is concerned, would be self-supporting, or nearly so, and would require little Government subsidy from a claims cost standpoint. Based upon our best estimates, and considering the preliminary returns from a nationwide survey of veterans being conducted by the Census Bureau, as many as 600,000 veterans might qualify as uninsurable under the terms of the bill, and about 300,000 policies might be issued to this group. In that event, the administrative cost of the bill to the Veterans' Administration for the first 5 years following the effective date will be as follows: 1st year. 2d year. 3d year- 5th year.. $4,500, 966 1, 485, 395 860, 495 846, 095 820, 295 The above estimate does not include the cost of physical examinations in connection with maintenance of policies such as those required in reinstatement and waiver of premium cases. I advised the Congress last year that as the result of a thorough restudy of the veterans' insurance program, I had concluded that the abrupt withdrawal without notice in 1951 of the privilege theretofore granted to millions of World War II veterans to secure postservice insurance may well have caused hardship in many instances. Many World War II veterans had left the service relatively young, ready to resume their schooling, unmarried, and with their insurance needs as yet undetermined. Under such circumstances many no doubt dropped their NSLI in anticipation that they-like the World War I group to whom USGLI was available for many years after service would be able to secure NSLI when their families and careers were established. Further, with respect to veterans who served prior to 1951, I concluded that adequate recognition has not been given to the obligation of the Government toward those veterans whose insurability has been seriously impaired, if not lost, by reason of their service-connected disabilities. I felt, therefore, that a limited extension of the right of such veterans to apply for postservice Insurance by reason of their service to their country would be most appropriate. As I have advised your committee in my report on H.R. 196, and similar bills, I strongly suuport legislation in this Congress to reopen generally the NSLÍ program for a period of 1 year. In that report I expressed the belief that all World War II and Korean confict veterans should have another opportunity, for a limited period, to secure a policy of NSLI and recommended certain conditions under which such insurance should be granted. H.R. 210 has a most worthy objective and would adequately meet the obligation of the Government to furnish postservice life insurance to the service disabled. However, as indicated, I feel that a bill having the broader coverage is fully justified and, accordingly, recommend favorable consideration of such a proposal in lieu of H.R. 210. Advice has been received from the Bureau of the Budget that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely, J. S. GLEASON, Jr., VETERANS' ADMINISTRATION, Hon. OLIN E. TEAGUE, Chairman, Committee on Veterans' Affairs, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: In response to your request for a report on H.R. 196, 88th Congress, I am pleased to advise your committee that I strongly support the enactment of legislation to authorize, for a limited period, the granting of national service life insurance to veterans heretofore eligible for such insurance. There are a number of bills which are pending before your committee, any one of which, if enacted, would reopen the national service life insurance program for a limited period to certain veterans who were previously eligible for such insurance by reason of active service during various periods since October 8, 1940. Therefore, this report on H.R. 196 will also serve as a report on H.R. 793, H.R. 2124, H.R. 2136, H.R. 2150, H.R. 2355, H.R. 3503, H.Ŕ. 4381, H.R. 4441, H.R. 4526, H.R. 4815, H.R. 5438, H.R. 5850, and H.R. 5908. Ámong these bills, H.R. 196 and an identical bill, H.R. 4441, are generally self-supporting |