Federal Policy and the Rise in Disability Enrollment: Evidence for the VA's Disability Compensation Program

Abstract

The U.S. Department of Veterans' Affairs (VA) currently provides disability benefits to 2.72 million veterans of U.S. military service through the Disability Compensation (DC) program. Until recently, the medical eligibility criteria for this program were the same across service eras, with the key condition being that the disability was caused or aggravated by military service. But in July of 2001, the VA relaxed the eligibility criteria for Vietnam veterans by including diabetes in the list of conditions covered by DC. This change was motivated by an Institute of Medicine report, which linked exposure to Agent Orange and other herbicides used by the U.S. military in Vietnam, to the onset of diabetes. In this paper, we investigate the impact of this policy change on DC enrollment, expenditures, and the sensitivity of the program to economic conditions. Our findings demonstrate that the Agent Orange decision increased DC enrollment by 7.6 percentage points among Vietnam veterans and that an additional 3.3 percent enjoyed an increase in their DC benefits. Our estimates further suggest that the policy change increased program expenditures by $2.69 billion during the 2006 fiscal year and by $45 billion in present value terms. After the policy took effect, we find that the sensitivity of the program to local economic conditions increased substantially. Taken together, our results suggest that even relatively narrow changes in the medical eligibility criteria for federal disability programs can have a powerful effect on program enrollment and expenditures.

Un-Fortunate Sons: Effects of the Vietnam Draft Lottery on the Next Generation's Labor Market

“…Other work in economics investigating the health and disability of servicemen from this period more generally (Duggan, Rosenheck, and Singleton, 2010;Autor, Duggan, and Lyle, 2011;Johnston, Shields, and Siminski, 2015) has reached similar conclusions.…”

“…Johnson et al (2016) examine military service transmission within the Minnesota Twin study and find directionally similar effects (albeit an order of magnitude larger). 14 See, for example, Angrist (1990); Dobkin and Shabani (2009);Angrist, Chen, and Frandsen (2010) ;Duggan, Rosenheck, and Singleton (2010); Angrist and Chen (2011);Angrist, Chen, and Song, (2011);Autor, Duggan, and Lyle (2011);Lindo and Stoecker (2014); Coile, Duggan, and Guo (2015); and Autor, Duggan, Greenberg, and Lyle (2015).…”

Recent Trends In VA Treatment Of Post-Traumatic Stress Disorder And Other Mental Disorders

“…As a result, there has been an eightfold increase in the number of Vietnam-era veterans receiving compensation for this illness-from only 18,000 in 2001 to more than 160,000 in 2004. 6 Additional analyses of the data presented in this study show that the number of Vietnamera veterans receiving specialty mental health treatment with a comorbid diagnosis of diabetes (ICD-9 code 250.xx) increased by 72,000 from 1999 to 2005 (Exhibit 5). Although substantial, this increase in diabetes comorbidity could explain only half of the 140,000-veteran increase in specialty mental health service use among Vietnam-era veterans.…”

The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program

“…5 This research has focused almost exclusively on the Social Security Disability Insurance (SSDI) program, with early studies considering the effects on labor force participation (Parsons, 1980;Bound, 1989;Bound and Waidmann, 1992) and subsequent studies exploring the sensitivity of the program to economic conditions (Black et al, 2002) and the labor market effects of changes in the program's medical eligibility criteria and in effective replacement rates (Autor and Duggan, 2003). 6 One challenge for this research is that, because SSDI is a federal program, there is 4 See Duggan, Rosenheck, and Singleton (2010) for a comparison to veterans from earlier service eras.…”

“…8 Duggan et al (2010) use five years of data (odd-numbered years between 1997 and 2005) from the Veterans' Supplement to the CPS to compare changes in labor force participation among Vietnam veterans who served in theatre and other Vietnam era veterans. Given the small sample size, their estimates are very imprecise, as their confidence interval includes the full range of possible effect sizes (zero effect or a one-for-one reduction in labor force participation).…”