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108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-524

======================================================================



 
      VETERANS' COMPENSATION COST-OF-LIVING ADJUSTMENT ACT OF 2004

                                _______
                                

  June 3, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Smith of New Jersey, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4175]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 4175) to increase, effective as of December 1, 2004, 
the rates of disability compensation for veterans with service-
connected disabilities and the rates of dependency and 
indemnity compensation for survivors of certain service-
connected disabled veterans, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as ``Veterans' Compensation Cost-of-Living 
Adjustment Act of 2004''.

SEC. 2. INCREASE IN RATES OF DISABILITY COMPENSATION AND DEPENDENCY AND 
                    INDEMNITY COMPENSATION.

  (a) Rate Adjustment.--The Secretary of Veterans Affairs shall, 
effective on December 1, 2004, increase the dollar amounts in effect 
for the payment of disability compensation and dependency and indemnity 
compensation by the Secretary, as specified in subsection (b).
  (b) Amounts to Be Increased.--The dollar amounts to be increased 
pursuant to subsection (a) are the following:
          (1) Compensation.--Each of the dollar amounts in effect under 
        section 1114 of title 38, United States Code.
          (2) Additional compensation for dependents.--Each of the 
        dollar amounts in effect under section 1115(1) of such title.
          (3) Clothing allowance.--The dollar amount in effect under 
        section 1162 of such title.
          (4) New dic rates.--The dollar amounts in effect under 
        paragraphs (1) and (2) of section 1311(a) of such title.
          (5) Old dic rates.--Each of the dollar amounts in effect 
        under section 1311(a)(3) of such title.
          (6) Additional dic for surviving spouses with minor 
        children.--The dollar amount in effect under section 1311(b) of 
        such title.
          (7) Additional dic for disability.--The dollar amounts in 
        effect under sections 1311(c) and 1311(d) of such title.
          (8) Dic for dependent children.--The dollar amounts in effect 
        under sections 1313(a) and 1314 of such title.
  (c) Determination of Increase.--(1) The increase under subsection (a) 
shall be made in the dollar amounts specified in subsection (b) as in 
effect on November 30, 2004.
  (2) Except as provided in paragraph (3), each such amount shall be 
increased by the same percentage as the percentage by which benefit 
amounts payable under title II of the Social Security Act (42 U.S.C. 
401 et seq.) are increased effective December 1, 2004, as a result of a 
determination under section 215(i) of such Act (42 U.S.C. 415(i)).
  (3) Each dollar amount increased pursuant to paragraph (2) shall, if 
not a whole dollar amount, be rounded down to the next lower whole 
dollar amount.
  (d) Special Rule.--The Secretary may adjust administratively, 
consistent with the increases made under subsection (a), the rates of 
disability compensation payable to persons within the purview of 
section 10 of Public Law 85-857 (72 Stat. 1263) who are not in receipt 
of compensation payable pursuant to chapter 11 of title 38, United 
States Code.

SEC. 3. PUBLICATION OF ADJUSTED RATES.

  At the same time as the matters specified in section 215(i)(2)(D) of 
the Social Security Act (42 U.S.C. 415(i)(2)(D)) are required to be 
published by reason of a determination made under section 215(i) of 
such Act during fiscal year 2005, the Secretary of Veterans Affairs 
shall publish in the Federal Register the amounts specified in 
subsection (b) of section 2, as increased pursuant to that section.

SEC. 4. IMPROVED BENEFITS FOR FORMER PRISONERS OF WAR.

  Section 1112(b)(3) of title 38, United States Code, is amended by 
adding at the end the following new subparagraph:
          ``(L) Osteoporosis.''.

SEC. 5. CODIFICATION OF COST-OF-LIVING ADJUSTMENT PROVIDED IN PUBLIC 
                    LAW 108-147.

  (a) Veterans' Disability Compensation.--Section 1114 of title 38, 
United States Code, is amended--
          (1) by striking ``$104'' in subsection (a) and inserting 
        ``$106'';
          (2) by striking ``$201'' in subsection (b) and inserting 
        ``$205'';
          (3) by striking ``$310'' in subsection (c) and inserting 
        ``$316'';
          (4) by striking ``$445'' in subsection (d) and inserting 
        ``$454'';
          (5) by striking ``$633'' in subsection (e) and inserting 
        ``$646'';
          (6) by striking ``$801'' in subsection (f) and inserting 
        ``$817'';
          (7) by striking ``$1,008'' in subsection (g) and inserting 
        ``$1,029'';
          (8) by striking ``$1,171'' in subsection (h) and inserting 
        ``$1,195'';
          (9) by striking ``$1,317'' in subsection (i) and inserting 
        ``$1,344'';
          (10) by striking ``$2,193'' in subsection (j) and inserting 
        ``$2,239'';
          (11) in subsection (k)--
                  (A) by striking ``$81'' both places it appears and 
                inserting ``$82''; and
                  (B) by striking ``$2,728'' and ``$3,827'' and 
                inserting ``$2,785'' and ``$3,907'', respectively;
          (12) by striking ``$2,728'' in subsection (l) and inserting 
        ``$2,785'';
          (13) by striking ``$3,010'' in subsection (m) and inserting 
        ``$3,073'';
          (14) by striking ``$3,425'' in subsection (n) and inserting 
        ``$3,496'';
          (15) by striking ``$3,827'' each place it appears in 
        subsections (o) and (p) and inserting ``$3,907'';
          (16) by striking ``$1,643'' and ``$2,446'' in subsection (r) 
        and inserting ``$1,677'' and ``$2,497'', respectively; and
          (17) by striking ``$2,455'' in subsection (s) and inserting 
        ``$2,506''.
  (b) Additional Compensation for Dependents.--Section 1115(1) of such 
title is amended--
          (1) by striking ``$125'' in subparagraph (A) and inserting 
        ``$127'';
          (2) by striking ``$215'' and ``$64'' in subparagraph (B) and 
        inserting ``$219'' and ``$65'', respectively;
          (3) by striking ``$85'' and ``$64'' in subparagraph (C) and 
        inserting ``$86'' and ``$65'', respectively;
          (4) by striking ``$101'' in subparagraph (D) and inserting 
        ``$103'';
          (5) by striking ``$237'' in subparagraph (E) and inserting 
        ``$241''; and
          (6) by striking ``$198'' in subparagraph (F) and inserting 
        ``$202''.
  (c) Clothing Allowance for Certain Disabled Veterans.--Section 1162 
of such title is amended by striking ``$588'' and inserting ``$600''.
  (d) Dependency and Indemnity Compensation for Surviving Spouses.--(1) 
Section 1311(a) of such title is amended--
          (A) by striking ``$948'' in paragraph (1) and inserting 
        ``$967''; and
          (B) by striking ``$204'' in paragraph (2) and inserting 
        ``$208''.
  (2) The table in section 1311(a)(3) of such title is amended to read 
as follows:

      

                                  Monthly                       Monthly
``Pay grade                          rate   Pay grade              rate
    E-1......................        $967       W-4........      $1,157
    E-2......................        $967       O-1........      $1,022
    E-3......................        $967       O-2........      $1,056
    E-4......................        $967       O-3........      $1,130
    E-5......................        $967       O-4........      $1,195
    E-6......................        $967       O-5........      $1,316
    E-7......................      $1,000       O-6........      $1,483
    E-8......................      $1,056       O-7........      $1,602
    E-9......................   $1,102\1\       O-8........      $1,758
    W-1......................      $1,022       O-9........      $1,881
    W-2......................      $1,063       O-10.......   $2,063\2\
    W-3......................      $1,094

``\1\If the veteran served as sergeant major of the Army, senior
  enlisted advisor of the Navy, chief master sergeant of the Air Force,
  sergeant major of the Marine Corps, or master chief petty officer of
  the Coast Guard, at the applicable time designated by section 1302 of
  this title, the surviving spouse's rate shall be $1,189.
``\2\If the veteran served as Chairman or Vice-Chairman of the Joint
  Chiefs of Staff, Chief of Staff of the Army, Chief of Naval
  Operations, Chief of Staff of the Air Force, Commandant of the Marine
  Corps, or Commandant of the Coast Guard, at the applicable time
  designated by section 1302 of this title, the surviving spouse's rate
  shall be $2,213.''.

  (3) Section 1311(b) of such title is amended by striking ``$237'' and 
inserting ``$241''.
  (4) Section 1311(c) of such title is amended by striking ``$237'' and 
inserting ``$241''.
  (5) Section 1311(d) of such title is amended by striking ``$113'' and 
inserting ``$115''.
  (e) Dependency and Indemnity Compensation for Children.--(1) Section 
1313(a) of such title is amended--
          (A) by striking ``$402'' in paragraph (1) and inserting 
        ``$410'';
          (B) by striking ``$578'' in paragraph (2) and inserting 
        ``$590'';
          (C) by striking ``$752'' in paragraph (3) and inserting 
        ``$767''; and
          (D) by striking ``$752'' and ``$145'' in paragraph (4) and 
        inserting ``$767'' and ``$148'', respectively.
  (2) Section 1314 of such title is amended--
          (A) by striking ``$237'' in subsection (a) and inserting 
        ``$241'';
          (B) by striking ``$402'' in subsection (b) and inserting 
        ``$410''; and
          (C) by striking ``$201'' in subsection (c) and inserting 
        ``$205''.

                              Introduction

    On April 20, 2004, the Chairman and Ranking Member of the 
Veterans' Affairs Committee, Honorable Christopher H. Smith and 
Honorable Lane Evans, along with the Chairman and Ranking 
Member of the Subcommittee on Benefits, Honorable Henry E. 
Brown, Jr., and Honorable Michael H. Michaud, introduced H.R. 
4175, which would provide a cost-of-living adjustment (COLA) in 
the rates of service-connected disability compensation and 
dependency and indemnity compensation, effective December 1, 
2004.
    On April 29, 2004, the Subcommittee on Benefits held a 
hearing on ten bills, including H.R. 348, introduced on January 
27, 2003, by Honorable Michael Bilirakis.
    On May 13, 2004, the Subcommittee on Benefits met and 
ordered H.R. 4175 reported favorably, as amended, to the full 
Committee by unanimous voice vote.
    On May 19, 2004, the full Committee met and ordered H.R. 
4175 reported favorably, as amended, to the House by unanimous 
voice vote.

                      Summary of the Reported Bill

    H.R. 4175, as amended, would:

    1. LProvide effective December 1, 2004, a cost-of-living 
adjustment to the rates of disability compensation for veterans 
with service-connected disabilities and to the rates of 
dependency and indemnity compensation for survivors of certain 
service-connected disabled veterans. The percentage amount 
would be equal to the increase for benefits provided under the 
Social Security Act, which is calculated based upon changes in 
the Consumer Price Index.

    2. LAdd osteoporosis to the list of diseases presumed to be 
service connected for former prisoners of war for the purposes 
of veterans' benefits.

    3. LCodify the current dollar amounts of disability 
compensation and dependency and indemnity compensation, as 
provided for in Public Law 108-147.

                       Background and Discussion

    Increase in rates of disability compensation and dependency 
and indemnity compensation.--Section 2 of the bill would 
increase, effective December 1, 2004, the rates of compensation 
for service-connected disabilities and the rates of dependency 
and indemnity compensation (DIC) for surviving spouses and 
children of veterans who die of service-connected causes, as 
well as the additional amounts for dependents and survivors, 
and clothing allowances for certain veterans. With H.R. 4175, 
the Committee is following its longstanding practice of setting 
the cost-of-living adjustment (COLA) by reference to the yet-
to-be-determined Social Security increase. At the time of the 
filing of this report, the increase is expected to be 1.7 
percent, but it may be higher or lower depending on changes in 
the Consumer Price Index; the exact percentage is calculated as 
of September 30, 2004. Last year's increase was 2.1 percent.
    More than 2.5 million veterans were receiving service-
connected disability compensation as of April 2004. The basic 
purpose of the disability compensation program is to provide a 
measure of relief from the impaired earning capacity of 
veterans disabled as the result of their military service. The 
amount of compensation payable varies according to the degree 
of disability. This amount in turn is required by law to 
represent, to the extent practicable, the average impairment in 
earning capacity in civilian occupations resulting from such 
disability or combination of disabilities.
    To be eligible to receive disability compensation, a 
veteran must have a disability incurred or aggravated during 
military service, which is not the result of willful 
misconduct, and have been discharged under other than 
dishonorable conditions. The responsibility for determining a 
veteran's entitlement to service-connection for a disability 
rests solely with the Department of Veterans Affairs (VA).
    As of April 2004, there were 301,328 surviving spouses and 
29,938 children receiving dependency and indemnity compensation 
(DIC). Surviving spouses and dependent children of veterans who 
died of disabilities determined by VA to be service-connected 
(including veterans who died while on active duty) or who had a 
service-connected disability rated at 100 percent for certain 
periods of time prior to death are entitled to receive monthly 
DIC benefits.
    The purpose of DIC benefits authorized under chapter 13 of 
title 38, United States Code, is to provide partial 
compensation to the appropriate survivors for the loss in 
financial support due to the service-connected death. Income 
and need are not factors in determining a surviving spouse's or 
child's entitlement because the Nation in part assumes the 
legal and moral obligation of the veteran to support the spouse 
and children.
    The Committee annually reviews the service-connected 
disability compensation and DIC programs to ensure such 
benefits provide reasonable and adequate compensation for 
disabled veterans and their families. Based on this review, 
Congress acts annually to provide a COLA in compensation and 
DIC benefits. Congress has provided annual increases in these 
rates for every fiscal year since 1976.

    Improved veterans' benefits for former prisoners of war.--
Section 4 of the bill would add osteoporosis to the list of 
diseases presumed to be the result of prisoner of war (POW) 
status. Section 1112(b) of title 38, United States Code, 
specifies 16 disabilities that VA presumes are related to the 
POW experience for the purposes of veterans' and survivors' 
benefits.
    The Committee notes that in September 2003, the Secretary 
of Veterans Affairs formed a Workgroup on Presumptive Medical 
Conditions in Former Prisoners of War. Its mission is to 
develop a methodology for a fair and balanced assessment of 
medical conditions identified as associated with POW detention, 
and recommend to the Secretary any conditions it believes 
warrant either presumptive status or further study. Among other 
responsibilities and functions, the workgroup will consider 
diseases brought to their attention by the Secretary's Advisory 
Committee on Former Prisoners of War, veterans service 
organizations, and other interested parties. The workgroup is 
comprised of representatives from the Veterans Health 
Administration, Veterans Benefits Administration, and the 
Office of General Counsel.

    Codification of cost-of-living adjustment provided in 
Public Law 108-147.--Section 5 of the bill would codify as 
dollar amounts the current rates of compensation for service-
connected disabilities and the rates of dependency and 
indemnity compensation for surviving spouses and children of 
veterans who die of service-connected causes, as well as the 
additional amounts for dependents and survivors, and clothing 
allowances for certain veterans. These rates went into effect 
on December 1, 2003, pursuant to Public Law 108-147, which was 
signed by President Bush on December 3, 2003.

                      Section-By-Section Analysis

    Section 1 would provide that this Act may be cited as the 
``Veterans' Compensation Cost-of-Living Adjustment Act of 
2004''.

    Section 2(a) would authorize the Secretary of Veterans 
Affairs to increase, effective December 1, 2004, the dollar 
amounts in effect for the payment of disability compensation 
and dependency and indemnity compensation.

    Section 2(b) would specify the programs to receive 
increased dollar amounts: compensation, additional compensation 
for dependents, clothing allowance, rates under the ``new'' DIC 
program, rates under the ``old'' DIC program, additional DIC 
for surviving spouses with minor children, additional DIC for 
disability, and DIC for dependent children.

    Section 2(c)(1) would increase the dollar amounts for those 
programs specified in subsection (b) based on the amount in 
effect on November 30, 2004.

    Section 2(c)(2) would specify that each amount shall be 
increased by the same percentage by which benefits are 
increased under title II of the Social Security Act (42 U.S.C. 
401 et seq.).

    Section 2(c)(3) would round down to the next lower dollar 
amount all compensation and DIC benefits, when the amount is 
not a whole dollar amount.

    Section 2(d) would provide a special rule authorizing the 
Secretary of Veterans Affairs to adjust administratively, 
consistent with the increases made under subsection (a), the 
rates of disability compensation payable to persons within the 
purview of section 10 of Public Law 85-857 (72 Stat. 1263), who 
are not in receipt of compensation payable pursuant to chapter 
11 of title 38, United States Code.

    Section 3 would require the Secretary of Veterans Affairs 
to publish in the Federal Register the amounts specified in 
subsection (b), as increased pursuant to that section.

    Section 4 would amend section 1112(b)(3) by adding 
osteoporosis to the list of diseases presumed to be the result 
of prisoner of war status.

    Section 5 would codify the cost-of-living adjustments 
provided in Public Law 108-147.

                    Performance Goals and Objectives

    The reported bill would authorize veterans benefits 
enhancements under laws administered by the Secretary of 
Veterans Affairs. The Department of Veterans Affairs' 
performance goals and objectives are established in annual 
performance plans and are subject to the Committee's regular 
oversight and evaluation by the U.S. General Accounting Office. 
VA also publishes a performance and accountability report for 
each fiscal year.

             Statements of the Views of the Administration

    The Administration's fiscal year 2005 budget request, 
submitted in February 2004, recommended a cost-of-living 
adjustment based on the change in the Consumer Price Index 
(CPI) be given to all compensation beneficiaries, including DIC 
recipients, effective December 1, 2004. The estimated increase 
in the CPI at that time was 1.3 percent.

  STATEMENT OF ROBERT J. EPLEY, ASSOCIATE DEPUTY UNDER SECRETARY FOR 
   POLICY AND PROGRAM MANAGEMENT, VETERANS BENEFITS ADMINISTRATION, 
                     DEPARTMENT OF VETERANS AFFAIRS

                             APRIL 29, 2004

          * * * * * * *

                                H.R. 348

    You also requested our views, Mr. Chairman, on H.R. 348, the 
``Prisoner of War Benefits Act of 2003.''
    Section 2(a) and (b) of H.R. 348 would eliminate the requirement 
that a former prisoner of war (POW) be detained or interned for at 
least thirty days in order to be eligible for a presumption of service 
connection for certain diseases and at least ninety days in order to be 
eligible to receive VA care and treatment for a dental condition or 
disability. Congress dealt with the issues covered by subsections 2(a) 
and (b) during the First Session of the 108th Congress. Section 201 of 
the Veterans Benefits Act of 2003, Public Law 108-183, eliminated the 
thirty-day detention requirement in order for a former POW to be 
eligible for a presumption of service connection for psychosis, any of 
the anxiety states, dysthymic disorder (or depressive neurosis), 
organic residuals of frostbite, and post-traumatic osteoarthritis. 
Section 101 of the Veterans Health Care, Capital Asset, and Business 
Improvement Act of 2003, Public Law 108-170, eliminated the ninety-day 
detention requirement in order for a former POW to be eligible for VA 
care and treatment for a dental condition or disability.
    Section 2(c) of H.R. 348 would add heart disease, stroke, liver 
disease, type 2 diabetes, and osteoporosis to the list of diseases for 
which a presumption of service connection is available pursuant to 38 
U.S.C. ' 1112(b). Section 2(c) would also authorize the Secretary to 
promulgate regulations creating a presumption of service connection for 
any other disease which the Secretary determines has a ``positive 
association with the experience of being a [POW].'' A ``positive 
association'' would exist ``if the credible evidence for the 
association is equal to or outweighs the credible evidence against the 
association.'' In deciding whether to promulgate such a regulation, the 
Secretary would be required to consider the recommendations of the 
Advisory Committee on Former POWs and any other available sound medical 
and scientific information and analyses. VA would have sixty days from 
receipt of an Advisory Committee recommendation to make a determination 
as to whether a presumption of service connection is warranted, and 
then another sixty days to publish in the Federal Register either 
proposed regulations, if VA determines that a presumption is warranted, 
or a notice explaining the scientific basis for a determination that a 
presumption is not warranted.
    VA strongly supports enactment of section 2(c) of H.R. 348, 
provided that the Congress can find offsetting savings. No one can 
reasonably doubt that the stresses and privations endured by prisoners 
of war take heavy tolls on their health in ways that may never be fully 
understood. The majority of former POWs are aging veterans of World War 
II who are unable to wait for science to provide definitive answers. 
Moreover, former POWs as a group do not benefit from relatively relaxed 
statutory standards--such as the positive-association standard applied 
in the case of all Vietnam veterans because of their potential for 
exposure to defoliants used there--for weighing the scientific evidence 
regarding associations between their service experience and later 
occurring diseases. There is some scientific evidence suggesting an 
association between the POW experience and each of the illnesses 
covered by the bill, and because these veterans are particularly 
deserving of special consideration they too should be accorded the 
benefit of the doubt.
    VA is also working administratively to address the needs of former 
POWs for full and fair compensation. In December 2003 the Secretary 
tasked a work group of Veterans Health Administration, Veterans 
Benefits Administration and Office of General Counsel officials to 1) 
develop a methodology for the fair and balanced assessment of medical 
conditions associated with detention as a POW, and 2) recommend to him 
any conditions that, when this methodology is applied, warrant 
designation as presumptively service connected.
    The work group has met several times and will shortly be 
recommending to the Secretary a proposed methodology for consideration 
of additional diseases. In developing its recommendations, the group 
has been mindful of the standards Congress has adopted for application 
in other contexts; i.e., for herbicide-exposed Vietnam veterans and 
veterans of the Gulf War. We pledge to work through these difficult 
issues as quickly as possible and to keep this Committee informed of 
our progress.
    We estimate that enactment of section 2(a) and (c) of H.R. 348 
would have mandatory costs of $33.8 million in fiscal year 2005 and a 
10-year cost of $588.8 million.
          * * * * * * *

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 25, 2004
Hon. Christopher H. Smith
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4175, the 
Veterans' Compensation Cost-of-Living Adjustment Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright, who can be reached at 226-2840.

            Sincerely,
                                       Douglas Holtz-Eakin,
                                                           Director
    Enclosure.

           *       *       *       *       *       *       *


               Congressional Budget Office Cost Estimate

                May 25, 2004

H.R. 4175, Veterans' Compensation Cost-of-Living Adjustment Act of 2004

As ordered reported by the House Committee on Veterans' Affairs on May 
                                19, 2004

    H.R. 4175 would increase the amounts paid to veterans for 
disability compensation and to their survivors for dependency 
and indemnity compensation by the same cost-of-living 
adjustment (COLA) payable to Social Security recipients. The 
increase would take effect on December 1, 2004, and the results 
of the adjustment would be rounded to the next lower dollar. In 
addition, the bill would add osteoporosis to the list of 
diseases that are presumed service-connected for former 
prisoners-of-war (POWs), and codify the cost-of-living 
adjustments (COLAs) provided by the Veterans' Compensation 
Cost-of-Living Adjustment Act of 2003 (Public Law 108-147).
    The COLA that would be authorized by this bill is assumed 
in CBO's baseline, pursuant to section 257 of the Balanced 
Budget and Emergency Deficit Control Act, and savings from 
rounding it down were achieved by the Balanced Budget Act of 
1997 (Public Law 105-33) and extended to 2013 by the Veterans 
Benefits Act of 2003 (Public Law 108-183).
    Because the COLA is assumed in the baseline, the COLA 
provision would have no budgetary effect relative to the 
baseline. Relative to current law, CBO estimates that enacting 
this provision would increase spending for these programs by 
about $466 million in 2005. (The annualized cost would be about 
$620 million in subsequent years.) This estimate assumes that 
the COLA effective on December 1, 2004, would be 1.5 percent.
    Section 4 of the bill would add osteoporosis to the list of 
disabilities that the Department of Veterans Affairs (VA) 
assumes are service-connected for former POWs. Thus, under the 
bill, former POWs with osteoporosis would be eligible for 
disability compensation and, if a former POW dies as a result 
of this condition certain, survivors would be eligible for 
dependency and indemnity compensation (DIC).
    Based on information provided by VA, CBO estimates that 
there are currently 37,000 living former POWs. Applying 
prevalence rates for osteoporosis obtained from the National 
Center for Health Statistics and other sources, CBO estimates 
that in 2005, about 440 former POWs would become newly eligible 
for disability compensation for osteoporosis under section 4.
    CBO assumes that about 50 percent of former POWs who are 
not already receiving disability compensation and 60 percent of 
former POWs who are currently receiving disability compensation 
would apply for the new benefit. CBO assumes that new 
compensation cases would phase in over three years so that by 
2007 about 120 new compensation cases would begin receiving 
disability compensation for osteoporosis. This figure excludes 
veterans who already have a disability rating of 100 percent 
for other service-connected disabilities and who would 
therefore not be eligible for an increase in their disability 
compensation rating.
    CBO derived the weighted average of payments made to 
veterans currently receiving disability compensation for 
osteoporosis to determine the increase in disability 
compensation payments under section 4. Based on information 
provided by VA, veterans receiving payments for osteoporosis 
were paid on average about $1,300 in 2003 in disability 
compensation payments. These payments are adjusted annually for 
increases in COLA. Former POWs not receiving disability 
compensation payments for other disabilities would receive this 
amount, while former POWs currently receiving disability 
compensation would receive an increase above their current 
level of disability compensation, unless they are already rated 
at 100 percent disabled.
    Under current law, certain survivors of former POWs can 
qualify for DIC if one of the following two criteria:

     The former POW died of a service-connected 
disability; or
     The former POW was continuously rated 100 percent 
for a service-connected disability for one year prior to death.

          Survivors of veterans who meet one of these criteria 
        would already be eligible for DIC under current law. 
        Because osteoporosis would be considered a service-
        connected disability under section 4, certain survivors 
        of veterans who die as a result of one of the diseases 
        would become newly eligible for DIC under the bill.
          CBO was unable to obtain mortality rates for 
        osteoporosis; however, because the disease has a low 
        prevalence rate in men and does not generally lead 
        directly to death, we estimate that the potential 
        increase in spending for DIC payments under section 4 
        from former POWs dying as a result of osteoporosis 
        would be insignificant.
          Taken together, CBO estimates that enacting section 4 
        would increase payments for disability compensation and 
        DIC by less than $500,000 in 2005, about $1 million 
        over the 2005-2009 period, and $2 million over the 
        2005-2014 period.

    H.R. 4175 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    On January 29, 2004, CBO transmitted a cost estimate for 
H.R. 348, as introduced on January 27, 2003. H.R. 348 included 
five additional diseases as presumed service-connected diseases 
for former POWs--heart disease, stroke, diabetes mellitus, 
liver disease, and osteoporosis.
    CBO's estimate of the cost of adding osteoporosis to the 
list of presumed service-connected diseases contained in H.R. 
348 is identical to the cost estimated for Section 4 of H.R. 
4175.
    The CBO staff contact for federal costs is Dwayne M. 
Wright, who can be reached at 226-2840. This estimate was 
approved by Peter H. Fontaine, Deputy Assistant Director for 
Budget Analysis.

                     Statement of Federal Mandates

    The preceding Congressional Budget Office cost estimate 
states that the bill contains no intergovernmental or private 
sector mandates as defined in the Unfunded Mandates Reform Act.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE



           *       *       *       *       *       *       *
PART II--GENERAL BENEFITS

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CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

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SUBCHAPTER II--WARTIME DISABILITY COMPENSATION

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Sec. 1112. Presumptions relating to certain diseases and disabilities

  (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (3) The diseases specified in this paragraph are the 
following:
          (A) * * *

           *       *       *       *       *       *       *

          (L) Osteoporosis.

           *       *       *       *       *       *       *


Sec. 1114. Rates of wartime disability compensation

  For the purposes of section 1110 of this title--
          (a) if and while the disability is rated 10 percent 
        the monthly compensation shall be [$104] $106;
          (b) if and while the disability is rated 20 percent 
        the monthly compensation shall be [$201] $205;
          (c) if and while the disability is rated 30 percent 
        the monthly compensation shall be [$310] $316;
          (d) if and while the disability is rated 40 percent 
        the monthly compensation shall be [$445] $454;
          (e) if and while the disability is rated 50 percent 
        the monthly compensation shall be [$633] $646;
          (f) if and while the disability is rated 60 percent 
        the monthly compensation shall be [$801] $817;
          (g) if and while the disability is rated 70 percent 
        the monthly compensation shall be [$1,008] $1,029
          (h) if and while the disability is rated 80 percent 
        the monthly compensation shall be [$1,171] $1,195;
          (i) if and while the disability is rated 90 percent 
        the monthly compensation shall be [$1,317] $1,344;
          (j) if and while the disability is rated as total the 
        monthly compensation shall be [$2,193] $2,239;
          (k) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of one or more creative organs, or one 
        foot, or one hand, or both buttocks, or blindness of 
        one eye, having only light perception, has suffered 
        complete organic aphonia with constant inability to 
        communicate by speech, or deafness of both ears, having 
        absence of air and bone conduction, or, in the case of 
        a woman veteran, has suffered the anatomical loss of 25 
        percent or more of tissue from a single breast or both 
        breasts in combination (including loss by mastectomy or 
        partial mastectomy) or has received radiation treatment 
        of breast tissue, the rate of compensation therefor 
        shall be [$81] $82 per month for each such loss or loss 
        of use independent of any other compensation provided 
        in subsections (a) through (j) or subsection (s) of 
        this section but in no event to exceed [$2,728] $2,785 
        per month; and in the event the veteran has suffered 
        one or more of the disabilities heretofore specified in 
        this subsection, in addition to the requirement for any 
        of the rates specified in subsections (l) through (n) 
        of this section, the rate of compensation shall be 
        increased by [$81] $82 per month for each such loss or 
        loss of use, but in no event to exceed [$3,827] $3,907 
        per month;
          (l) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of both feet, or of one hand and one 
        foot, or is blind in both eyes, with 5/200 visual 
        acuity or less, or is permanently bedridden or so 
        helpless as to be in need of regular aid and 
        attendance, the monthly compensation shall be [$2,728] 
        $2,785;
          (m) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of both hands, or of both legs at a 
        level, or with complications, preventing natural knee 
        action with prostheses in place, or of one arm and one 
        leg at levels, or with complications, preventing 
        natural elbow and knee action with prostheses in place, 
        or has suffered blindness in both eyes having only 
        light perception, or has suffered blindness in both 
        eyes, rendering such veteran so helpless as to be in 
        need of regular aid and attendance, the monthly 
        compensation shall be [$3,010] $3,073;
          (n) if the veteran, as the result of service-
        connected disability, has suffered the anatomical loss 
        or loss of use of both arms at levels, or with 
        complications, preventing natural elbow action with 
        prostheses in place, has suffered the anatomical loss 
        of both legs so near the hip as to prevent the use of 
        prosthetic appliances, or has suffered the anatomical 
        loss of one arm and one leg so near the shoulder and 
        hip as to prevent the use of prosthetic appliances, or 
        has suffered the anatomical loss of both eyes, or has 
        suffered blindness without light perception in both 
        eyes, the monthly compensation shall be [$3,425] 
        $3,496;
          (o) if the veteran, as the result of service-
        connected disability, has suffered disability under 
        conditions which would entitle such veteran to two or 
        more of the rates provided in one or more subsections 
        (l) through (n) of this section, no condition being 
        considered twice in the determination, or if the 
        veteran has suffered bilateral deafness (and the 
        hearing impairment in either one or both ears is 
        service connected) rated at 60 percent or more 
        disabling and the veteran has also suffered service-
        connected total blindness with 5/200 visual acuity or 
        less, or if the veteran has suffered service-connected 
        total deafness in one ear or bilateral deafness (and 
        the hearing impairment in either one or both ears is 
        service connected) rated at 40 percent or more 
        disabling and the veteran has also suffered service-
        connected blindness having only light perception or 
        less, or if the veteran has suffered the anatomical 
        loss of both arms so near the shoulder as to prevent 
        the use of prosthetic appliances, the monthly 
        compensation shall be [$3,827] $3,907;
          (p) in the event the veteran's service-connected 
        disabilities exceed the requirements for any of the 
        rates prescribed in this section, the Secretary may 
        allow the next higher rate or an intermediate rate, but 
        in no event in excess of [$3,827] $3,907. In the event 
        the veteran has suffered service-connected blindness 
        with 5/200 visual acuity or less and (1) has also 
        suffered bilateral deafness (and the hearing impairment 
        in either one or both ears is service connected) rated 
        at no less than 30 percent disabling, the Secretary 
        shall allow the next higher rate, or (2) has also 
        suffered service-connected total deafness in one ear or 
        service-connected anatomical loss or loss of use of one 
        hand or one foot, the Secretary shall allow the next 
        intermediate rate, but in no event in excess of 
        [$3,827] $3,907. In the event the veteran has suffered 
        service-connected blindness, having only light 
        perception or less, and has also suffered bilateral 
        deafness (and the hearing impairment in either one or 
        both ears is service connected) rated at 10 or 20 
        percent disabling, the Secretary shall allow the next 
        intermediate rate, but in no event in excess of 
        [$3,827] $3,907. In the event the veteran has suffered 
        the anatomical loss or loss of use, or a combination of 
        anatomical loss and loss of use, of three extremities, 
        the Secretary shall allow the next higher rate or 
        intermediate rate, but in no event in excess of 
        [$3,827] $3,907. Any intermediate rate under this 
        subsection shall be established at the arithmetic mean, 
        rounded down to the nearest dollar, between the two 
        rates concerned;
          (r) Subject to section 5503(c) of this title, if any 
        veteran, otherwise entitled to compensation authorized 
        under subsection (o) of this section, at the maximum 
        rate authorized under subsection (p) of this section, 
        or at the intermediate rate authorized between the 
        rates authorized under subsections (n) and (o) of this 
        section and at the rate authorized under subsection (k) 
        of this section, is in need of regular aid and 
        attendance, then, in addition to such compensation--
                  (1) the veteran shall be paid a monthly aid 
                and attendance allowance at the rate of 
                [$1,643] $1,677; or
                  (2) if the veteran, in addition to such need 
                for regular aid and attendance, is in need of a 
                higher level of care, such veteran shall be 
                paid a monthly aid and attendance allowance at 
                the rate of [$2,446] $2,497, in lieu of the 
                allowance authorized in clause (1) of this 
                subsection, if the Secretary finds that the 
                veteran, in the absence of the provision of 
                such care, would require hospitalization, 
                nursing home care, or other residential 
                institutional care.

           *       *       *       *       *       *       *

          (s) If the veteran has a service-connected disability 
        rated as total, and (1) has additional service-
        connected disability or disabilities independently 
        ratable at 60 percent or more, or, (2) by reason of 
        such veteran's service-connected disability or 
        disabilities, is permanently housebound, then the 
        monthly compensation shall be [$2,455] $2,506. For the 
        purposes of this subsection, the requirement of 
        ``permanently housebound'' will be considered to have 
        been met when the veteran is substantially confined to 
        such veteran's house (ward or clinical areas, if 
        institutionalized) or immediate premises due to a 
        service-connected disability or disabilities which it 
        is reasonably certain will remain throughout such 
        veteran's lifetime.

Sec. 1115. Additional compensation for dependents

  Any veteran entitled to compensation at the rates provided in 
section 1114 of this title, and whose disability is rated not 
less than 30 percent, shall be entitled to additional 
compensation for dependents in the following monthly amounts:
          (1) If and while rated totally disabled and--
                  (A) has a spouse but no child, [$125] $127;
                  (B) has a spouse and one or more children, 
                [$215] $219 plus [$64] $65 for each child in 
                excess of one;
                  (C) has no spouse but one or more children, 
                [$85] $86 plus [$64] $65 for each child in 
                excess of one;
                  (D) has a parent dependent upon such veteran 
                for support, then, in addition to the above 
                amounts, [$101] $103 for each parent so 
                dependent;
                  (E) notwithstanding the other provisions of 
                this paragraph, the monthly payable amount on 
                account of a spouse who is (i) a patient in a 
                nursing home or (ii) helpless or blind, or so 
                nearly helpless or blind as to need or require 
                the regular aid and attendance of another 
                person, shall be [$237] $241 for a totally 
                disabled veteran and proportionate amounts for 
                partially disabled veterans in accordance with 
                paragraph (2) of this section; and
                  (F) notwithstanding the other provisions of 
                this paragraph, the monthly amount payable on 
                account of each child who has attained the age 
                of eighteen years and who is pursuing a course 
                of instruction at an approved educational 
                institution shall be [$198] $202 for a totally 
                disabled veteran and proportionate amounts for 
                partially disabled veterans in accordance with 
                paragraph (2) of this section.

           *       *       *       *       *       *       *


SUBCHAPTER VI--GENERAL COMPENSATION PROVISIONS

           *       *       *       *       *       *       *


Sec. 1162. Clothing allowance

  The Secretary under regulations which the Secretary shall 
prescribe, shall pay a clothing allowance of [$588] $600 per 
year to each veteran who--
          (1) * * *

           *       *       *       *       *       *       *


CHAPTER 13--DEPENDENCY AND INDEMNITY COMPENSATION FOR SERVICE-CONNECTED 
DEATHS

           *       *       *       *       *       *       *


SUBCHAPTER II--DEPENDENCY AND INDEMNITY COMPENSATION

           *       *       *       *       *       *       *


Sec. 1311. Dependency and indemnity compensation to a surviving spouse

  (a)(1) Dependency and indemnity compensation shall be paid to 
a surviving spouse at the monthly rate of [$948] $967.
  (2) The rate under paragraph (1) shall be increased by [$204] 
$208 in the case of the death of a veteran who at the time of 
death was in receipt of or was entitled to receive (or but for 
the receipt of retired pay or retirement pay was entitled to 
receive) compensation for a service-connected disability that 
was rated totally disabling for a continuous period of at least 
eight years immediately preceding death. In determining the 
period of a veteran's disability for purposes of the preceding 
sentence, only periods in which the veteran was married to the 
surviving spouse shall be considered.
  (3) In the case of dependency and indemnity compensation paid 
to a surviving spouse that is predicated on the death of a 
veteran before January 1, 1993, the monthly rate of such 
compensation shall be the amount based on the pay grade of such 
veteran, as set forth in the following table, if the amount is 
greater than the total amount determined with respect to that 
veteran under paragraphs (1) and (2):
      

                                  Monthly                       Monthly
[Pay grade                           rate   Pay grade              rate
    E-1......................        $948       W-4........      $1,134
    E-2......................         948       O-1........       1,001
    E-3......................         948       O-2........       1,035
    E-4......................         948       O-3........       1,107
    E-5......................         948       O-4........       1,171
    E-6......................         948       O-5........       1,289
    E-7......................         980       O-6........       1,453
    E-8......................       1,035       O-7........       1,570
    E-9......................    \1\1,080       O-8........       1,722
    W-1......................       1,001       O-9........       1,843
    W-2......................       1,042       O-10.......   \2\ 2,021
    W-3......................       1,072

\1\[If the veteran served as sergeant major of the Army, senior enlisted
  advisor of the Navy, chief master sergeant of the Air Force, sergeant
  major of the Marine Corps, or master chief petty officer of the Coast
  Guard, at the applicable time designated by section 1302 of this
  title, the surviving spouse's rate shall be $1,165.
\2\[If the veteran served as Chairman or Vice-Chairman of the Joint
  Chiefs of Staff, Chief of Staff of the Army, Chief of Naval
  Operations, Chief of Staff of the Air Force, Commandant of the Marine
  Corps, or Commandant of the Coast Guard, at the applicable time
  designated by section 1302 of this title, the surviving spouse's rate
  shall be $2,168.]


      

                                  Monthly                       Monthly
Pay grade                            rate   Pay grade              rate
    E-1......................        $967       W-4........      $1,157
    E-2......................        $967       O-1........      $1,022
    E-3......................        $967       O-2........      $1,056
    E-4......................        $967       O-3........      $1,130
    E-5......................        $967       O-4........      $1,195
    E-6......................        $967       O-5........      $1,316
    E-7......................      $1,000       O-6........      $1,483
    E-8......................      $1,056       O-7........      $1,602
    E-9......................   $1,102\1\       O-8........      $1,758
    W-1......................      $1,022       O-9........      $1,881
    W-2......................      $1,063       O-10.......   $2,063\2\
    W-3......................      $1,094

\1\If the veteran served as sergeant major of the Army, senior enlisted
  advisor of the Navy, chief master sergeant of the Air Force, sergeant
  major of the Marine Corps, or master chief petty officer of the Coast
  Guard, at the applicable time designated by section 1302 of this
  title, the surviving spouse's rate shall be $1,189.
\2\If the veteran served as Chairman or Vice-Chairman of the Joint
  Chiefs of Staff, Chief of Staff of the Army, Chief of Naval
  Operations, Chief of Staff of the Air Force, Commandant of the Marine
  Corps, or Commandant of the Coast Guard, at the applicable time
  designated by section 1302 of this title, the surviving spouse's rate
  shall be $2,213.

  (b) If there is a surviving spouse with one or more children 
below the age of eighteen of a deceased veteran, the dependency 
and indemnity compensation paid monthly to the surviving spouse 
shall be increased by [$237] $241 for each such child.
  (c) The monthly rate of dependency and indemnity compensation 
payable to a surviving spouse shall be increased by [$237] $241 
if the spouse is (1) a patient in a nursing home or (2) 
helpless or blind, or so nearly helpless or blind as to need or 
require the regular aid and attendance of another person.
  (d) The monthly rate of dependency and indemnity compensation 
payable to a surviving spouse shall be increased by [$113] $115 
if the surviving spouse is, by reason of disability, 
permanently housebound but does not qualify for the aid and 
attendance allowance under subsection (c) of this section. For 
the purposes of this subsection, the requirement of 
``permanently housebound'' will be considered to have been met 
when the surviving spouse is substantially confined to such 
surviving spouse's home (ward or clinical areas, if 
institutionalized) or immediate premises by reason of a 
disability or disabilities which it is reasonably certain will 
remain throughout such surviving spouse's lifetime.

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Sec. 1313. Dependency and indemnity compensation to children

  (a) Whenever there is no surviving spouse of a deceased 
veteran entitled to dependency and indemnity compensation, 
dependency and indemnity compensation shall be paid in equal 
shares to the children of the deceased veteran at the following 
monthly rates:
          (1) one child, [$402] $410;
          (2) two children, [$578] $590;
          (3) three children, [$752] $767; and
          (4) more than three children, [$752] $767, plus 
        [$145] $148 for each child in excess of three.

           *       *       *       *       *       *       *


Sec. 1314. Supplemental dependency and indemnity compensation to 
                    children

  (a) In the case of a child entitled to dependency and 
indemnity compensation who has attained the age of eighteen and 
who, while under such age, became permanently incapable of 
self-support, the dependency and indemnity compensation paid 
monthly to such child shall be increased by [$237] $241.
  (b) If dependency and indemnity compensation is payable 
monthly to a person as a surviving spouse and there is a child 
(of such person's deceased spouse) who has attained the age of 
eighteen and who, while under such age, became permanently 
incapable of self-support, dependency and indemnity 
compensation shall be paid monthly to each such child, 
concurrently with the payment of dependency and indemnity 
compensation to the surviving spouse, in the amount of [$402] 
$410.
  (c) If dependency and indemnity compensation is payable 
monthly to a person as a surviving spouse and there is a child 
(of such person's deceased spouse), who has attained the age of 
eighteen and who, while under the age of twenty-three, is 
pursuing a course of instruction at an educational institution 
approved under section 104 of this title, dependency and 
indemnity compensation shall be paid monthly to each such 
child, concurrently with the payment of dependency and 
indemnity compensation to the surviving spouse, in the amount 
of [$201] $205.

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