Below is Larry Scott's latest article for Military.com.
September 17, 2006
Buying-Out Disabled VeteransPolitically-stacked Vets’ Commission looks at lump-sum buyouts of veterans’ disability payments by Larry Scott.
Fiscal conservatives called David Stockman “The Budget Wiz” and rallied ‘round his concept of a smaller government which was enshrined in his phrase, “Starving the Beast.” Stockman was the Director of the Office of Management and Budget (OMB) during the Reagan administration and is well-remembered for labeling military retirement pay as “scandalous,” calling it a dangerous drain on the economy.
Stockman then proposed lump-sum buyouts of military retirement pay because he deemed it less expensive to pay once than to pay for life. (He even toyed with the idea of buyouts for Social Security payments.)Stockman’s buyouts never happened but his cost-cutting ideology lives on today in the person of arch-conservative Grover Norquist who urges the current administration to get government “…down to the size where we can drown it in the bathtub.”
President George W. Bush, while spending hundreds of billions on the war in Iraq, is echoing the Stockman/Norquist mantra.President Bush often speaks of controlling spending on entitlement programs and lumps Medicare, Medicaid and veterans’ benefits under the “entitlement umbrella” by consistently using them in the same sentence. This campaign of disinformation is used to sell the concept that all three of these programs are some kind of welfare, are out of control and therefore should fall under a sharp budget knife.
This ignores the reality that Medicare is an insurance program and veterans’ disability compensation is provided to those who have been wounded or injured while serving the country.The Veterans of Foreign Wars (VFW) has labeled White House veterans’ budget proposals “a disgrace and a sham.”
Peter S. Gaytan, director of health care and benefits at the American Legion, testified before Congress that the Bush administration is trying to "balance the…budget on the backs of America's veterans."Now, the Stockman/Norquist philosophy has trickled-down to the Department of Veterans’ Affairs (VA).
The Secretary of Veterans’ Affairs is Jim Nicholson, a multi-millionaire land developer and former Chairman of the Republican National Committee. Nicholson has consistently asked for less funding than the VA needs to treat eligible veterans, even to the point of faking budget numbers (see #1 below).
So, it’s not surprising that one of Stockman’s little-noticed recommendations has caught the eye of Nicholson and other conservative political appointees who run the VA. Stockman proposed the buyout of VA disability compensation.Key to the argument for the buyouts is a report from the VA’s Office of Inspector General (VAOIG) which recommended that the VA “revise [disability] rating criteria to reflect expected lifetime impairment so that VA could offer lump-sum payments to veterans…”The VA is the second-largest government agency with a budget of over $80 billion for fiscal year 2007. The largest portion of the VA budget goes to disability compensation for veterans wounded or injured while on military active-duty.
Lump-sum buyouts of VA disability compensation could save the government billions of dollars every year.Last week, the Veterans’ Disability Benefits Commission (VDBC) met in Washington, D.C. and, once again, took up the issue of lump-sum buyouts (see #2 below). The VDBC was created by the Bush administration in 2003 and tasked with determining “…whether the death or disability of a veteran should be compensated…” and at what level, if any. The 13-member VDBC is a politically stacked-deck with nine members being appointed by Republican politicians.
And, Secretary Nicholson supported the buyout concept in a response to the VAOIG report, saying that the VA will “review prior VA studies concerning lump-sum payments to veterans with disability ratings…and [support] the [VDBC] as it considers this public policy issue.”The VDBC has tasked the Center for Naval Analyses (CNA) with studying the concept of lump-sum buyouts.
In the CNA’s Literature Review they write of “…substantial potential savings associated with a lump-sum disability settlement both in terms of reduced debt cost and administrative burden.”There is a great deal of support on Capitol Hill for the lump-sum buyouts. Leading the charge is Rep. Steve Buyer (R-IN), Chairman of the House Committee on Veterans’ Affairs, who sees the buyouts as a logical cost-cutting move (see #3 below). When it comes to the work of the VDBC and what cost-cutting moves they should study Buyer has stated, “I think everything should be on the table.” But, there is opposition. Not one veterans’ service organization is in favor of the move.
The American Legion, arguably the most conservative veterans’ organization, has reminded its members that “…Chairman Buyer and other government officials have publicly expressed their desire to use the VDBC as a vehicle to institute radical changes in the VA disability system that would negatively impact and restrict entitlement to benefits for a large number of veterans.” This statement from the American Legion can only be labeled “prophetic” as the VDBC ponders lump-sum buyouts of VA disability payments.How would the lump-sum buyouts work?
Initially the VDBC will look at lump-sum payments to veterans who receive 10 per cent or 20 per cent disability payments, those veterans currently receiving $112 or $218 a month. The buyouts would be based on life expectancy with only a percentage of the total value offered. Most commonly mentioned is a 50 per cent buyout, but some have mentioned 30 per cent as a more prudent offer.
(Example: If a veteran gets $218 a month from the VA and has a life expectancy of 20 years, his total compensation would be $52,320. The proposed buyouts would offer a cash settlement of somewhere between $15.696 and $26,160.)One of the main arguments for lump-sum payments (besides saving the government money) is that the veteran can then invest his buyout and do much better financially in the long run.
However, the CNA says the literature doesn’t support that theory and told the VDBC “…younger, less educated, and lower ranking personnel would be more inclined to accept a VA lump-sum offer,” and, “…funds received in lump-sum payments are often spent on consumer goods rather than spent on long-term investments,” and, “…the decision to take a lump-sum payment may often not be an informed one.”There are more questions than answers. Here are just a few of the potential problem areas – •
If the veteran's service-connected condition worsened, would he be able to file a claim or would the condition now not be compensable? Many veterans will initially receive a 10 per cent or 20 per cent disability rating and then see it jump to as high as 100 per cent as they age and their particular condition worsens.•
Would the VA continue to treat the veteran for the condition even though he wasn't getting compensation? Or, would the condition now be considered not to exist? The cost-savings to the government would be great and the cost to the veteran could be catastrophic.•
What about another condition that occurs that is secondary to the original service-connected condition? How would that fit in? An example would be a veteran who receives disability for a bad knee. As that knee gets worse with age, back problems can arise and that could constitute a secondary disability that could be compensated.• Would the VA stop at the 10 per cent and 20 per cent disability ratings?
Many feel that this would be just the beginning and that once the door is open, all disability ratings could be up for a lump-sum buyout.• Would the buyouts be retroactive? Or, would only “new” veterans fall under the plan? The largest savings for the government would be gained by including veterans currently receiving disability.• And, would the buyouts be mandatory or optional?
The savings for the government would be greatest with a mandatory buyout plan. Could this be imposed on veterans?The biggest question of all is: How can you buy-out a disability? Veterans receive disability compensation because their ability to perform everyday tasks has been diminished by wounds or injuries sustained while on active-duty. The compensation paid by the VA is meant to make up for income lost due to the disabilities.
A lump-sum payment is antithetical to the concept of on-going compensation for an on-going disability.Veterans and their families cannot underestimate the power being wielded by the VDBC. They truly are an instrument for “radical changes in the VA disability system.” Their recommendations could forever alter the system of veterans’ benefits in this country, leaving our veterans, their widows and children with fewer benefits and less compensation.
Is this what our veterans deserve? Veterans’ benefits are not a gift. They are not a welfare program. They are earned through service to country. They must not be diminished in any way.Washington watchers feel the VDBC will approve the concept of lump-sum buyouts. We know the White House will approve. But, will Congress fall into line? Just another thing to think about when we go to the polls in November.The VDBC’s report to the President and Congress is due in late 2007.#1 More on Jim Nicholson -- http://www.vawatchdog.org/milcom/cookingthevasbooks.htm #2 More on the VDBC -- http://www.vawatchdog.org/milcom/vdbcstackeddeck.htm #3 More on Rep. Steve Buyer – http://www.vawatchdog.org/milcom/areyoureallyaveteran.htm © 2006 Larry Scott / VA Watchdog dot Org