Veteran Affairs disability compensation: Likely the U.S.’s largest disability program, but what do we know about its impacts on service-disabled veterans?

Abstract

The last few decades have seen rapid growth in the size of the Veterans Affairs Disability Compensation (VADC) program, which provides tax-free cash benefits to veterans with disabilities connected to military service. Given this recent growth, VADC is on pace to eclipse Social Security Disability Insurance (SSDI) to become the largest U.S. disability program by expenditures. Although there are decades of causal research on the design and impacts of SSDI, there is no comparable body of evidence for VADC. In this Policy Insight, we discuss how causal evidence was produced for Social Security-administered disability programs and why there is a lack of this evidence for VADC. Chief among the explanations is a lack of VADC data access available to the broader researcher community, access that Social Security facilitates for the programs it administers. However, even with this access, the proliferation of benefits and services targeted to service-disabled veterans implies that existing earnings loss studies and causal estimates of the impact of VADC benefit receipt on any given outcome of interest likely are mismeasurements of true effects. We conclude with recommendations for restructuring approaches to research design to accurately estimate impacts of VADC benefits as well as the wide array of other programs supporting service-disabled veterans.