VA Benefits
Fundamental Changes to VA's Disability Criteria Need Careful Consideration Gao ID: GAO-03-1172T September 23, 2003This testimony discusses our past reviews of the Department of Veterans Affairs (VA) disability programs as Congress considers the fundamental issue of eligibility for benefits and the related issue of concurrent receipt of VA disability compensation and Department of Defense (DOD) retirement pay. Our work has addressed these issues in addition to identifying significant program design and management challenges hindering VA's ability to provide meaningful and timely support to disabled veterans and their families. It is especially fitting, with the continuing deployment of our military forces to armed conflict, that we reaffirm our commitment to those who serve our nation in its times of need. Therefore, effective and efficient management of VA's disability programs is of paramount importance. In January 2003, we designated VA's disability compensation programs, as well as other federal disability programs including Social Security Disability Insurance and Supplemental Security Income, as high-risk areas. We did this to draw attention to the need for broad-based transformation of these programs, which is critical to improving the government's performance and ensuring accountability within expected resource limits. In March 2003, we cautioned that the proposed modification of concurrent receipt provisions in the military retirement system would not only have significant implications for DOD's retirement costs but could also increase the demands placed on the VA claims processing system. This would come at a time when the system is still struggling to correct problems with quality assurance and timeliness. Moreover, we testified that it would be appropriate to consider the pursuit of more fundamental reform of the disability programs as the Congress and other policy makers consider concurrent receipt.
VA needs to modernize its disability programs. In particular, VA relies on outmoded medical and economic disability criteria in adjudicating claims for disability compensation. In addition, VA has long-standing problems providing veterans with accurate, consistent, and timely benefit decisions, although recent efforts have made important improvements in timeliness. However, complex program design features, including eligibility, have developed over many years, and solutions to the current problems will require thoughtful analysis to ensure that efficient, effective, and equitable solutions are crafted. Moreover, these solutions might need to take into account a broader perspective from other disability programs to ensure sound federal disability policies across government programs and to reduce the risks associated with the current programs.
GAO-03-1172T, VA Benefits: Fundamental Changes to VA's Disability Criteria Need Careful Consideration
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Testimony:
Before the Committee on Veterans' Affairs, U.S. Senate:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 2:30 p.m. EDT:
Tuesday, September 23, 2003:
VA Benefits:
Fundamental Changes to VA's Disability Criteria Need Careful
Consideration:
Statement of Cynthia A. Bascetta, Director, Education, Workforce, and
Income Security Issues:
GAO-03-1172T:
Mr. Chairman and Members of the Committee:
I am pleased to be here to discuss our past reviews of the Department
of Veterans Affairs (VA) disability programs as you consider the
fundamental issue of eligibility for benefits and the related issue of
concurrent receipt of VA disability compensation and Department of
Defense (DOD) retirement pay. Our work has addressed these issues in
addition to identifying significant program design and management
challenges hindering VA's ability to provide meaningful and timely
support to disabled veterans and their families. It is especially
fitting, with the continuing deployment of our military forces to armed
conflict, that we reaffirm our commitment to those who serve our nation
in its times of need. Therefore, effective and efficient management of
VA's disability programs is of paramount importance.
As you know, in January 2003, we designated VA's disability
compensation programs, as well as other federal disability programs
including Social Security Disability Insurance and Supplemental
Security Income, as high-risk areas.[Footnote 1] We did this to draw
attention to the need for broad-based transformation of these programs,
which is critical to improving the government's performance and
ensuring accountability within expected resource limits. In March 2003,
we cautioned that the proposed modification of concurrent receipt
provisions in the military retirement system would not only have
significant implications for DOD's retirement costs but could also
increase the demands placed on the VA claims processing system. This
would come at a time when the system is still struggling to correct
problems with quality assurance and timeliness. Moreover, we testified
that it would be appropriate to consider the pursuit of more
fundamental reform of the disability programs as the Congress and other
policy makers consider concurrent receipt.
Today, as you requested, I would like to highlight the findings of our
related past work on VA's disability programs, including our 1989
report on veterans receiving compensation for disabilities unrelated to
military service. My comments are based on numerous reports and
testimonies prepared over the last 15 years as well as our broader work
on other federal disability programs. (See Related GAO Products.):
In summary, VA needs to modernize its disability programs. In
particular, VA relies on outmoded medical and economic disability
criteria in adjudicating claims for disability compensation. In
addition, VA has long-standing problems providing veterans with
accurate, consistent, and timely benefit decisions, although recent
efforts have made important improvements in timeliness. However,
complex program design features, including eligibility, have developed
over many years, and solutions to the current problems will require
thoughtful analysis to ensure that efficient, effective, and equitable
solutions are crafted. Moreover, these solutions might need to take
into account a broader perspective from other disability programs to
ensure sound federal disability policies across government programs and
to reduce the risks associated with the current programs.
Background:
VA provides disability compensation to veterans with service-connected
conditions, and also provides compensation to survivors of service
members who died while on active duty. Disabled veterans are entitled
to cash benefits whether or not employed and regardless of the amount
of income earned. The cash benefit level is based on the percentage
evaluation, commonly called the "disability rating," that represents
the average loss in earning capacity associated with the severity of
physical and mental conditions. VA uses its Schedule for Rating
Disabilities to determine, based on an evaluation of medical and other
evidence, which disability rating to assign to a veteran's particular
condition. VA's ratings are in 10 percent increments, from 0 to 100
percent.
Although VA generally does not pay disability compensation for
disabilities rated at 0 percent, such a rating would make veterans
eligible for other benefits, including health care. About 65 percent of
veterans receiving disability compensation have disabilities rated at
30 percent or lower, and about 8 percent are 100 percent disabled.
Basic monthly payments range from $104 for a 10 percent disability to
$2,193 for a 100 percent disability.
VA's Disability Criteria Are Outmoded:
In assessing veterans' disabilities, VA remains mired in concepts from
the past. VA's disability programs base eligibility assessments on the
presence of medically determinable physical and mental impairments.
However, these assessments do not always reflect recent medical and
technological advances, and their impact on medical conditions that
affect potential earnings. VA's disability programs remain grounded in
an approach that equates certain medical impairments with the
incapacity to work.
Moreover, advances in medicine and technology have reduced the severity
of some medical conditions and allowed individuals to live with greater
independence and function more effectively in work settings. Also, VA's
rating schedule updates have not incorporated advances in assistive
technologies--such as advanced wheelchair design, a new generation of
prosthetic devices, and voice recognition systems--that afford some
disabled veterans greater capabilities to work.
In addition, VA's disability criteria have not kept pace with changes
in the labor market. The nature of work has changed in recent decades
as the national economy has moved away from manufacturing-based jobs to
service-and knowledge-based employment. These changes have affected the
skills needed to perform work and the settings in which work occurs.
For example, advancements in computers and automated equipment have
reduced the need for physical labor. However, the percentage ratings
used in VA's Schedule for Rating Disabilities are primarily based on
physicians' and lawyers' estimates made in 1945 about the effects that
service-connected impairments have on the average individual's ability
to perform jobs requiring manual or physical labor. VA's use of a
disability schedule that has not been modernized to account for labor
market changes raises questions about the equity of VA's benefit
entitlement decisions; VA could be overcompensating some veterans,
while undercompensating or denying compensation entirely to others.
In January 1997, we suggested that the Congress consider directing VA
to determine whether the ratings for conditions in the schedule
correspond to veterans' average loss in earnings due to these
conditions and adjust disability ratings accordingly. Our work
demonstrated that there were generally accepted and widely used
approaches to statistically estimate the effect of specific service-
connected conditions on potential earnings. These estimates could be
used to set disability ratings in the schedule that are appropriate in
today's socioeconomic environment.[Footnote 2]
In August 2002, we recommended that VA use its annual performance plan
to delineate strategies for and progress in periodically updating labor
market data used in its disability determination process.[Footnote 3]
We also recommended that VA study and report to the Congress on the
effects that a comprehensive consideration of medical treatment and
assistive technologies would have on its disability programs'
eligibility criteria and benefit package. This study would include
estimates of the effects on the size, cost, and management of VA's
disability programs and other relevant VA programs and would identify
any legislative actions needed to initiate and fund such changes.
Some Veterans Are Compensated For Disabilities Not Related To Military
Service:
A disease or injury resulting in disability is considered
serviceconnected if it was incurred or aggravated during military
service. No causal connection between the disability and actual
military service is required. In 1989, we reported on the U.S. practice
of compensating veterans for conditions that were probably neither
caused nor aggravated by military service.[Footnote 4] These conditions
included diabetes unrelated to exposure to Agent Orange[Footnote 5],
chronic obstructive pulmonary disease, arteriosclerotic heart disease,
and multiple sclerosis. A review of case files for veterans receiving
compensation found that 51 percent of compensation beneficiaries had
disabilities due to injury; of these, 36 percent were injured in
combat, or otherwise performing a military task. The remaining 49
percent were disabled due to disease; of these, 17 percent had
disabilities probably caused or aggravated by military service; 19
percent probably did not have disabilities related to service; and for
13 percent, the link between disease and military service was
uncertain. We suggested that the Congress might wish to reconsider
whether diseases neither caused nor aggravated by military service
should be compensated as service-connected disabilities.
In March 2003, the Congressional Budget Office (CBO) reported that,
according to VA data, about 290,000 veterans received about $970
million in disability compensation payments in fiscal year 2002 for
diseases identified by GAO as neither caused nor aggravated by military
service. CBO estimated that VA could save $449 million in fiscal years
2004 through 2008, if disability compensation payments to veterans with
several nonservice-connected, disease-related disabilities were
eliminated in future cases. In August 2003, we also identified this as
an opportunity for budgetary savings if the Congress wished to
reconsider program eligibility.[Footnote 6]
Because of the complexities involved in a potential change in
eligibility, the details of how such a change would be implemented and
its ramifications are important to the Congress, VA, veterans, and
other stakeholders. For example, serviceconnection is linked with
eligibility for other VA benefits, such as health care and vocational
rehabilitation. Moreover, efforts to change VA disability programs,
including eligibility reform, would benefit from consideration in the
broader context of fundamental reform of all federal disability
programs.
Mr. Chairman, this concludes my prepared remarks. I would be happy to
answer any questions that you or Members of the Committee might have.
Contact and Acknowledgments:
For further information, please contact me at (202) 512-7101 or Irene
Chu at (202) 512-7102. Greg Whitney also contributed to this statement.
[End of section]
Related GAO Products:
Opportunities for Oversight and Improved Use of Taxpayer Funds:
Examples from Selected GAO Work. GAO-03-1006. Washington, D.C.: August
1, 2003.
Department of Veterans Affairs: Key Management Challenges in Health and
Disability Programs. GAO-03-756T. Washington, D.C.: May 8, 2003.
High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January 1,
2003.
Major Management Challenges and Program Risks: Department of Veterans
Affairs. GAO-03-110. Washington, D.C.: January 1, 2003.
Veterans' Benefits: Quality Assurance for Disability Claims and Appeals
Processing Can Be Further Improved. GAO-02-806. Washington, D.C.:
August 16, 2002.
SSA and VA Disability Programs: Re-Examination of Disability Criteria
Needed to Help Ensure Program Integrity. GAO-02-597. Washington, D.C.:
August 9, 2002.
Veterans' Benefits Claims: Further Improvements Needed in Claims-
Processing Accuracy. GAO/HEHS-99-35. Washington, D.C.: March 1, 1999.
VA Disability Compensation: Disability Ratings May Not Reflect
Veterans' Economic Losses. GAO/HEHS-97-9. Washington, D.C.: January 7,
1997.
VA Benefits: Law Allows Compensation for Disabilities Unrelated to
Military Service. GAO/HRD-89-60. Washington, D.C.: July 31, 1989.
FOOTNOTES
[1] U.S. General Accounting Office, High-Risk Series: An Update,
GAO-03-119 (Washington, D.C.: Jan. 1, 2003).
[2] U.S. General Accounting Office, VA Disability Compensation:
Disability Ratings May Not Reflect Veterans' Economic Losses, GAO/
HEHS-97-9 (Washington, D.C.: Jan. 7, 1997).
[3] U.S. General Accounting Office, SSA and VA Disability Programs: Re-
Examination of Disability Criteria Needed to Help Ensure Program
Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002).
[4] U.S. General Accounting Office, VA Benefits: Law Allows
Compensation for Disabilities Unrelated to Military Service, GAO/
HRD-89-60 (Washington, D.C.: July 31, 1989).
[5] In May 2001, VA issued a regulation identifying Type 2 diabetes as
a service-connected disability for veterans who served in Vietnam,
based on presumed exposure to Agent Orange.
[6] U.S. General Accounting Office, Opportunities for Oversight and
Improved Use of Taxpayer Funds: Examples from Selected GAO Work,
GAO-03-1006 (Washington, D.C.: Aug. 1, 2003).
