VA Disability Compensation:

Disability Ratings May Not Reflect Veterans' Economic Losses

HEHS-97-9: Published: Jan 7, 1997. Publicly Released: Jan 7, 1997.

Additional Materials:


Cynthia A. Bascetta
(202) 512-7207


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO provided information that would enable the subcommittee to assess the need for a comprehensive study of the economic validity of the Department of Veterans Affairs' (VA) disability rating schedule, focusing on: (1) the basis for the disability ratings assigned to conditions in the current schedule; (2) socioeconomic changes that have occurred since the original version of the schedule was developed that may have influenced the earning capacity of disabled veterans; (3) the results of a previous study that examined the validity of ratings in the schedule; (4) VA's efforts to help ensure that the ratings do reflect disabled veterans' average impairment in earning capacity; and (5) the advantage of basing ratings in the schedule on actual loss in earnings, and approaches that could be used to estimate this loss.

GAO found that: (1) the disability ratings in VA's current schedule are still primarily based on physicians' and lawyers' judgments made in 1945 about the effect service-connected conditions had on the average individual's ability to perform jobs requiring manual or physical labor; (2) although the ratings in the schedule have not changed substantially since 1945, dramatic changes have occurred in the labor market and in society since then; (3) the results of an economic validation of the schedule conducted in the late 1960s indicated that ratings for many conditions did not reflect the actual average loss in earnings associated with them; (4) it is likely that some of the ratings in the schedule do not reflect the economic loss experienced by veterans today; (5) the schedule may not equitably distribute compensation funds among disabled veterans; (6) VA has done little since 1945 to help ensure that disability ratings correspond to disabled veterans' average loss in earning capacity; (7) despite the results of the economic validation study, VA's efforts to maintain the schedule have concentrated on improving the appropriateness, clarity, and accuracy of the descriptions of the conditions in the schedule rather than on attempting to ensure that the schedule's assessments of the economic loss associated with these conditions are accurate; (8) basing disability ratings at least in part on actual earnings loss rather than solely on judgments of loss in functional capacity would help to ensure that veterans are compensated to an extent commensurate with their economic losses and that compensation funds are distributed equitably; (9) GAO's work demonstrates that there are generally accepted and widely used approaches to statistically estimate the effect of specific service-connected conditions on veterans' average earnings; (10) these estimates could be used to set disability ratings in the schedule that are appropriate in today's socioeconomic environment; and (11) it could cost between $5 million and $10 million to collect the data that produce these estimates, a small fraction of the over $11 billion VA paid in disability compensation to veterans in fiscal year 1995.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress has not proposed any legislation regarding the rating schedule and has not yet directed the Department of Veterans Affairs to conduct an evaluation of its disability-rating schedule.

    Matter: Congress may wish to consider directing VA to determine whether the ratings for conditions in the schedule correspond to veterans' average loss in earnings due to these conditions and adjust disability ratings accordingly.


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