STATEMENT OF JOSEPH THOMPSON
UNDER SECRETARY FOR BENEFITS
DEPARTMENT OF VETERANS AFFAIRS
BEFORE THE HOUSE COMMITTEE ON VETERANS' AFFAIRS

July 22, 1998

Mr. Chairman, and Members of the Committee, I am pleased to be here this morning to provide information regarding benefits the Department of Veterans Affairs (VA) provides to Filipino veterans. We are aware of the Committee’s interest in the level of benefits that VA currently provides to Filipino veterans and the history of the provision of benefits by the United States to Filipino veterans since World War II.

I would note that information regarding benefits provided to Filipino veterans, including certain statistical data and a detailed history of the laws under which VA has furnished health care to Filipino veterans, was transmitted to the Chairman by a letter dated June 24, 1998. A copy of this submission is attached to this hearing statement (Appendix).

I would like to provide a brief overview of the benefits VA provides to Filipino veterans under current law, along with a discussion of the limitations imposed on VA under the law.

For purposes of VA benefits and services, the service of members of the Philippine armed forces can be categorized as service in one of four groups, the Old Philippine Scouts, the New Philippine Scouts, the Philippine Commonwealth Army, and the recognized guerilla forces. Service in the "Old Philippine Scouts" is considered to have been active service in the United States Armed Forces. Accordingly, those who served in the Old Philippine Scouts qualify for the full range of VA benefits and services at full benefit rates on the same basis as United States veterans. The New Philippine Scouts was formed pursuant to Public Law No. 79-190, which specifically authorized the enlistment and reenlistment of Philippine citizens, with the consent of the Philippine President , into the Armed forces of the United States during the period from October 6, 1945, until June 30, 1947. The Commonwealth Army was organized by the government of the Philippines after enactment of the Tydings-McDuffy Act, Public Law No. 73-127, which subjected that Army to the call of the President of the United States under specified conditions. The Commonwealth Army was "called" to service by President Roosevelt by military order dated July 26, 1941, and served with United States Armed Forces in the Far East during World War II (ending July 1, 1946). Guerilla units were formed by United States and Philippine Army members (and some civilians) after the May 7, 1942 surrender of the Philippine Islands to the Japanese. Following the liberation of the Philippine Islands, the then War Department (now the Department of Defense) undertook a process whereby guerilla units or individuals were given the status of membership in the Commonwealth Army or in the service of the Armed Forces of the United States.

History shows that the limitations on eligibility for U.S. benefits based on service in these Philippine forces were based on a carefully considered determination of the two governments’ responsibilities toward them. The Philippines became a sovereign nation on July 4, 1946, and the current limitations on VA benefits for veterans of its forces resulted from the First Supplemental Appropriations Act of 1946. That law specifically limited the range of benefits available to those who served in the organized military forces of the government of the Commonwealth of the Philippines (the Philippine Commonwealth Army) while those forces were in the service of the United States pursuant to the military order of the President of the United States. It also provided $200 million to the Philippine Army to help pay benefits to its soldiers, as part of a comprehensive economic and political plan for allocating financial assistance to the Philippines. The Second Supplemental Surplus Rescission Act of 1946 placed similar limits on benefits available to the New Philippine Scouts. Other acts passed by Congress in 1947 and 1948 provided additional monetary assistance. As a result of these enactments, those who served in the New Philippine Scouts, the Commonwealth Army, and recognized guerrilla forces, and their survivors, are entitled to gratuitous monetary benefits from the United States Government only under chapter 11 (disability compensation), chapter 13 (except for section 1312(a)) (dependency and indemnity compensation (DIC)), and, in the case of Commonwealth Army and guerilla force veterans, chapter 23 (certain burial benefits) ) of title 38, United States Code.

Within months of gaining its independence, the Republic of the Philippines enacted a G.I. Bill of rights that provided a broad range of benefits to its veterans, including compensation for service-connected death and disability, educational benefits, reemployment rights, preference in public employment, home loans, hospitalization, tax exemptions and more.

With further regard to the payment of monetary benefits, section 107(a) and (b) of title 38, United States Code, provides that benefit payments based on service in the Philippine Commonwealth Army, including recognized guerrilla units, and the New Philippine Scouts shall be made at a rate of $0.50 for each dollar authorized and that, where annual income is a factor in entitlement to benefits, the dollar limitations in the law specifying such annual income shall apply at a rate of $0.50 for each dollar.

Until the enactment in 1994 of section 507 of Public Law No. 103-446, the payment limitations in section 107 also included a requirement that the payment of benefits be made at a rate in pesos as is equivalent to $0.50 for each dollar. Reference to the peso in regard to the payment of certain benefits to Philippine veterans and their dependents and survivors originated in the First Supplemental Surplus Appropriation Rescission Act of 1946. That Act limited the payment of compensation for service-connected disability or death for veterans of the Philippine Commonwealth Army to the rate of one Philippine peso for each dollar authorized to be paid. The Second Supplemental Surplus Appropriation Rescission Act of 1946 contained a similar provision authorizing payment of certain VA benefits at the rate of one Philippine peso per dollar to the New Philippine Scouts. At that time, the exchange rate was two Philippine pesos for one United States dollar, i.e., the value of the peso was approximately 50 cents. The legislative history of the Second Supplemental Surplus Appropriation Rescission Act of 1946 indicates that Congress intended to compensate Commonwealth Army veterans and New Philippine Scouts on this basis because of differences between the United States economy and the Philippine economy and the different standards of living in the two countries.

The current language of section 107(a) and (b) derived from a 1966 enactment, Public Law No. 89-641. Congress had been informed that the exchange rate had at that time increased to almost four pesos per dollar. By changing the rate of compensation payable to affected Filipino beneficiaries to $0.50 for each dollar authorized, Congress restored these individuals to the position they had held in 1946 following passage of the Rescission Acts, when the exchange rate was two pesos per dollar. In this way, Congress sought to adhere to the principle that Filipino beneficiaries would receive a monetary payment equivalent to half the payment made to similarly entitled United States veterans.

Mr. Chairman, we estimate the present population of Filipino veterans and survivors receiving compensation or DIC from VA to be 6,250 veterans and 7,000 survivors. Approximately 1,250 Filipino veterans with service-connected disabilities reside in the United States. Using the 1998 estimated average annual obligation for World War II veterans ($5,490) and survivors ($10,806), per the 1999 Congressional Budget, and the rate of $.50 for each dollar authorized per 38 U.S.C. § 107, we estimate that compensation benefits to be paid to all Filipino veterans and their survivors in FY 1998 will total $17.2 million and $37.8 million, respectively. The average annual benefit paid to individual service-connected Filipino veterans is $2,745. We are unable to estimate the amount of burial benefits to be paid for service-connected Filipino veterans for FY 1998. We have also been unable to determine the total amount of benefits that have been paid to Filipino veterans and their survivors since World War II.

With regard to medical care for Filipino veterans, since World War II, the United States has provided assistance to the Philippines in a number of different ways in order to facilitate the provision of medical care to eligible veterans. This has been accomplished through the direct conveyance of facilities (the Veterans’ Memorial Medical Center) and equipment, as well as a series of grants and contracts to support care for Filipino veterans. As noted earlier, a complete discussion of the laws under which Congress has authorized, provided grant support for, or otherwise made provision for furnishing medical care to Filipino veterans and U.S. veterans in the Philippines is contained in VA’s June 24, 1998, letter to the Chairman (Appendix).

VA provides care in the Philippines to United States veterans only, for their service-connected conditions. The Manila VA Outpatient Clinic, in conjunction with the Regional Office, does provide compensation and pension examinations for certain categories of Filipino veterans. Section 1734 of title 38, United States Code, provides that VA may, within the limits of VA facilities, provide hospital and nursing home care and medical services to Commonwealth Army veterans and New Philippine Scouts only for treatment of service-connected disabilities. It is estimated that there are approximately 1,250 Philippine veterans (other than "Old Scouts") with service-connected disabilities residing in the United States. VA databases do not track the treatment of these veterans separately, so the only information we have is anecdotal. Contacts with VA staff at a few West Coast facilities indicate that VA does generally provide treatment for the service-connected conditions of these Philippine veterans, as allowed under section 1734. However, provision of such treatment remains a local medical center decision under the discretionary authority of section 1734. The Manila Outpatient Clinic saw 3,012 veterans during FY 1997. Of those, only about 1,200 were United States veterans eligible for treatment. The remaining veterans were primarily Filipino veterans receiving compensation and pension examinations.

The total expenditures for the Veterans Health Administration in the Philippines in FY 1997 were approximately $3.2 million. Of this total, it is estimated that the direct costs associated with the outpatient treatment of United States veterans was $1,031,946. The total cost of the inpatient workload for these veterans was $437,845. In the Philippines, there is not an equivalent to United States nursing home care, so there is no data for that type of care.

VA Legislative Proposal

Mr. Chairman, on June 17, 1998, VA submitted to the Speaker of the House a legislative proposal which included a provision to amend section 107 of title 38, United States Code, to provide for payment of, or calculation of entitlement to, certain benefits without regard to current $0.50-on-the-dollar limitations in the case of certain Filipinos who reside in the United States. As noted earlier, section 107(a) and (b) of title 38, United States Code, currently provides that benefit payments based on service of veterans of the Philippine Commonwealth Army, including members of recognized guerrilla units, and the so-called New Philippine Scouts shall be made at a rate of $0.50 for each dollar authorized and that, where annual income is a factor in entitlement to benefits, the dollar limitations in the law specifying such annual income shall apply at a rate of $0.50 for each dollar.

The limitations on benefit payments to certain Filipino beneficiaries were intended to reflect the differing economic conditions in the Philippines and the United States. These limitations were not made contingent, in any respect, on the place of residence of the beneficiary, although, at the time the limitations were established, the great majority of affected individuals resided in the Philippines. Through the years, numerous Filipino veterans and their dependents and survivors have immigrated to this country, and many have become permanent residents or citizens. The policy considerations underlying the current restrictions on payments of compensation and DIC to the affected individuals are no longer relevant in the case of those who reside in the United States. Filipino beneficiaries residing in the United States face living expenses comparable to United States veterans and imposition of limitations on the payment of these subsistence benefits to these individuals based on policy considerations applicable to Philippine residents is not only inequitable, but may result in undue hardships to this group of beneficiaries. Therefore, we believe a change in law is warranted in the case of compensation and DIC benefits payable to United States residents based on service in the Philippine Commonwealth Army, including recognized guerilla units, or the New Philippine Scouts. Thus, we propose that the $.50-on-the-dollar limitation in section 107 be eliminated in the case of affected Filipino compensation and DIC beneficiaries who reside in the United States.

Mr. Chairman, this concludes my statement.