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

43 Pages Posted: 27 Oct 2006 Last revised: 11 Nov 2013

See all articles by Mark Duggan

Mark Duggan

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Robert Rosenheck

Yale Medical School

Perry Singleton

Syracuse University - Department of Economics

Date Written: June 2006

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.

Suggested Citation

Duggan, Mark G. and Rosenheck, Robert and Singleton, Perry D., Federal Policy and the Rise in Disability Enrollment: Evidence for the Va's Disability Compensation Program (June 2006). NBER Working Paper No. w12323. Available at SSRN: https://ssrn.com/abstract=912433

Mark G. Duggan (Contact Author)

University of Maryland - Department of Economics ( email )

3115C Tydings Hall
College Park, MD 20742
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Robert Rosenheck

Yale Medical School ( email )

333 Cedar Street
New Haven, CT 06520-8034
United States

Perry D. Singleton

Syracuse University - Department of Economics ( email )

New York
United States

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