Four million disabled veterans or their survivors could lose $464 million in compensation and pension payments in fiscal 1987 as a result of provisions in a Senate-passed deficit-reduction bill, according to a letter from Veterans Affairs Administrator Harry N. Walters to the House Veterans' Affairs Committee.
The bill, known as Gramm-Rudman-Hollings, would eliminate cost-of-living adjustments to help get the U.S. deficit down if Congress did not make enough cuts to progress toward a balanced budget.
Walters also drafted another letter, dealing with average losses per veteran from the cuts and outlining probable reductions in veterans' medical services and GI Bill educational benefits if the bill became law. But it never was sent to Capitol Hill. Sources said the administration told the VA not to send it.
Both letters were drafted by the VA chief in response to a request from the House veterans committee chairman, Rep. G.V. (Sonny) Montgomery (D-Miss.)
The VA makes two kinds of basic support payments to veterans: compensation, for injuries and disabilities suffered while in service; and pensions, for elderly veterans who served in wartime and are now poor and who suffer from disabling conditions not related to their service period. In fiscal 1986, compensation payments will be about $10.5 billion for 2.6 million recipients, including survivors. Pension benefits for 1.4 million people will run about $4 billion.
According to the letters, copies of which were obtained by The Washington Post, suspension of cost-of-living adjustments in 1987 for the disabled veterans or their survivors would save $355 million. Another $109 million would be saved by suspending cost-of-living payments to the 1.4 million pensioners, for a total of $464 million.
The average veteran's payment is about $3,700 a year; by forgoing a cost-of-living increase of 3 percent to 4 percent, the veteran would lose about $100 to $150.
The average benefit for the survivor of a service-disabled veteran is about $6,000 a year, so a cost-of-living suspension would mean a loss of $180 to $240.
The letters estimated that a 4 percent cut in medical appropriations in 1987 under Gramm-Rudman-Hollings could leave the VA with $812 million less than it needs to provide care for veterans. Such a loss could force it to reduce the number of patients receiving hospital treatment by 170,210 and outpatient visits by 765,944.
Capitol Hill sources said GI Bill education payments, which vary widely and do not include automatic cost-of-living hikes, could be cut from $20 to about $150 monthly.