Disability Payments to Veterans More than Doubled Since 2000

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Disability payments to veterans ballooned to $54 billion in 2013 from $20 billion in 2000, according to a report released Thursday by the nonpartisan Congressional Budget Office.

Overall, disability compensation accounted for 70% of the Veterans Benefits Administration's total mandatory spending in 2013.

The report proposed various policy options that could save tens of billions of dollars over the next 10 years for the VBA, a disability payment program under the Department of Veterans Affairs. The options—none of which have been endorsed by Congress or the VA—include taxing benefit payments, prohibiting veterans from receiving both disability and pensions and requiring veterans to file claims within a certain period.

Representatives of the VA and key committees in Congress that deal with veterans issues said they are studying the report. Veterans organizations reached Thursday said they opposed any reduction in benefits.

The report came the same day President Barack Obama signed a bill providing the VA with $16.3 billion to fix problems with long wait times for care in VA hospitals and other issues. Congress passed the bill following months of turmoil at the VA, including the resignation of Secretary Eric Shinseki in late May. Robert McDonald, former CEO of Procter & Gamble Co., was easily confirmed by the Senate last week as VA secretary.

The number of veterans receiving disability payments rose to 3.5 million in 2013 from 2.3 million in 2000, while the total population of living veterans fell from 27 million to 22 million over the same period, the report said. Individual annual payments to disabled veterans on average also increased by nearly 60%, adjusted for inflation.

The report attributed the large increases in part to the recent conflicts in Iraq and Afghanistan, conditions in the labor market and changes in VA policy. The number of Vietnam-era veterans receiving disability benefits increased 60% to 1.2 million since 2000, while the number of Gulf War-era veterans is now five-times as large as it was in 2000.

Among the policy suggestions the report put forth was a time limit for applying for disability benefits. Requiring veterans to apply within five years of leaving the service could save $28 billion, while allowing them to file within 20 years, could save $9 billion, the report said.

The CBO also suggested taxing disability payments, which would save the administration an estimated $64 billion through 2024.

The largest potential windfall—$119 billion—would come about by changing a post-2003 program known as "concurrent receipt" wherein disabled veterans can receive both retirement and disability benefits concurrently. If, instead, that program were continued, extending to veterans who would become eligible between 2015 and 2024, it would cost the VA an estimated $30 billion over the same years, the report estimated.

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