NCPA - National Center for Policy Analysis


June 9, 2009

The veterans disability compensation (VDC) program, which provides a monthly stipend to disabled veterans, is the third largest American disability insurance program.  Since the late 1990s, VDC growth has been driven primarily by an increase in claims from Vietnam veterans.  Researchers at the National Bureau of Economic Research (NBER) attempt to solve the problem of selection bias that's inherent in comparisons of outcomes between veterans and non-veterans by using the draft lottery and 2000 U.S. Decennial Census data.

According to the researchers:

  • Vietnam veterans who receive VDC or Social Security Disability Insurance (SSDI) -- especially those who are classified as "individually unemployable (IU)" -- are probably more likely to define themselves as disabled and less likely to work.  
  • This seems to be a special concern for Vietnam-era Post-Traumatic Stress Disorder claims -- data from 2005 show that roughly one-third of PTSD claimants are designated IU.

These results have important implications for veterans' compensation policy and raises questions about widely publicized projections of the disability costs likely to come out of current conflicts, say the researchers:

  • A large number of VDC claims in this most recent cohort are for PTSD.
  • But the costliness of PTSD claims comes in large part from the link with IU and the consequent increase in VDC benefits.
  • Case reviews show that mental health visits declined by 82 percent after an IU rating decision, and that many granted an IU determination stop seeking treatment for mental health entirely.

Likewise, the researchers' results indicate that the employment consequences of PTSD may have as much to do with incentives as with a medical inability to work.  The complicated links between military service and variables related to health show that the disability-related costs of conflict are driven by policy and regulatory choices, as well as the battlefield consequences of war.

Source: Joshua Angrist, Stacey Chen and Brigham Frandsen, "Did Vietnam Veterans Get Sicker in the 1990s?" National Bureau of Economic Research, Working Paper, No. 14781, March 2009.

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