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PTSD Compensation and Military Service (2007)

Chapter:2 Background – Disability Compensation

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Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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2
Background—Disability Compensation

Disability-compensation systems vary by myriad factors, reflecting the social, political, and economic conditions of their formative periods. The legislators who create these policies and the executives who carry them out are influenced by key stakeholders and constituents as well as by the state of the relevant science and law at the time of their actions. Thus the major disability-compensation systems that exist in the United States today—veterans’ disability compensation, Social Security disability programs, workers’ compensation, and, to some extent, private disability insurance programs—are multifactorial legacy systems. This committee was charged with addressing veterans’ compensation policy and, specifically, veterans’ compensation for posttraumatic stress disorder (PTSD), but committee members agreed that examining the intent and conduct of other compensation systems would be useful in fulfilling that task.

The first part of this chapter provides a historical background on veterans’ disability compensation, focusing on the period up to and including World War II. A brief review of veterans programs in the United Kingdom and Canada is also included. The chapter’s second part presents an overview of other disability-compensation systems in the United States. Together, these sections serve as a contextual foundation for the material presented in subsequent chapters.

EARLY COMPENSATION FOR MENTAL DISABILITIES

Early American colonial law regarding the care and responsibility for mentally or otherwise disabled persons reflected existing English law to

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

a great extent, with the disposition of a particular case dependent upon such factors as whether a disabled person was considered to be violent or nonviolent, was mentally or intellectually disabled, was able to maintain gainful employment or had access to familial material support, and was accepted as a charge of the local community1 (Braddock and Parish, 2001). From a public welfare perspective, a great deal of overlap exists between the early support systems for the mentally and physically disabled and for the indigent and the criminal. The residents of early asylums, workhouses, almshouses, and houses of correction were a heterogeneous mixture of the criminal, the poor, the orphaned, the elderly, and the sensorily, physically, and mentally impaired (Braddock and Parish, 2001).

The earliest legislation that specifically included a provision for the care and maintenance of persons with mental disabilities was authorized in 1751 in the Pennsylvania colony as part of the law establishing the first general hospital in America (Braddock and Parish, 2001). The petition associated with that legislation cited the growing number of “Lunaticks or Persons distempered in Mind and deprived of their rational Faculties” as justification for the new provision. A 1776 judicial decision in Pennsylvania established what seems to have been the first municipally mandated institutional provision for the mentally ill in the colonies. The Pennsylvania court ordered that “a small Levy be Laid to pay for the buildings of ye house and the maintaining of ye said madman according to the laws of ye government” (Braddock and Parish, 2001).

Throughout the early 1800s counties often dealt with the mentally ill with a practice known as bidding out or auctioning out. When a disabled person was auctioned out, the county paid a stipend to the lowest bidder for the provision of one year of care (Breckenridge, as cited in Braddock and Parish, 2001). Auctioning out would not necessarily have been an improvement over the “beatings of the head [that] were employed to treat people with many mental diseases, including depression, paralysis, and intellectual disability” during the 1700s, as many auctioning-system-related abuses occurred with little or no official monitoring of the care of these wards (Braddock and Parish, 2001). Over time the practice of auctioning out fell out of favor, as local municipalities found its continued implementation to be cost prohibitive.

Fishback, in his essay on public assistance during the American colonial period (Fishback et al., 2006), notes that the Philadelphia Almshouse,

1

Under England’s Poor Law of 1601—also known as the Elizabethan Poor Law—the local community was required to provide certain maintenance through compulsory taxation when a family was unable to provide for a mentally ill member. This provision, and its associated economic burden, often led to a person with mental disability being forcibly driven from local communities (Braddock and Parish, 2001).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

like most almshouses of the period before the Revolutionary War, “was a miscellaneous receptacle for human distress. One almshouse could serve as a hostel, a hospice, and a home for the disabled.” Little research has been conducted on rates of receipt of public assistance during the colonial period, and any such quantitative research on that period that attempted to segregate the physically from mentally disabled—or even the disabled from the poor and criminal—would need to carefully consider the operational definitions for recipient and assistance, as the lines between penal action and welfare administration are barely distinguishable in the few early records that do exist, and “the auctioning system of the 1800s or the whippings of the 1700s … hardly deserve the word ‘assistance’” (Fishback et al., 2006).

While vicissitudinous, the near-400-year history of public assistance for the disabled in the United States evolved with successive policy changes, generally shifting from a collection of disparate systems of localized administration and funding to a series of programs of increasingly uniform standards and more centralized control. An exception to this pattern is the system of public assistance for the veteran, as a centralized policy for the maintenance of disabled soldiers was established very early on, during the Revolutionary War period.

VETERANS’ DISABILITY COMPENSATION

The Pilgrims at Plymouth are credited with passing the first pension law in America (Burke, 1899).2 In 1636 the Pilgrims “enacted in their Court that any man who should be sent forth as a soldier and return maimed should be maintained competently by the colony during his life” (Plymouth Colony Records, as cited in Burke, 1899). This policy was retained when Massachusetts Bay and Plymouth colonies formed a union in 1691 (Burke, 1899). Virginia, Maryland, and New York passed their own colonial statutes providing compensation for disabled military members in 1678 (Burke, 1899). Maryland’s statute went beyond compensation for disabled soldiers and provided pensions for widows and dependent orphans (Rockoff, 2006). While today the compensation of those disabled through service to their country might be seen by many as an obvious social obligation,3 during the

2

In 1624 colonial legislation with provisions for the compensation of disabled soldiers was passed in Virginia. Had it not failed to receive ratification in London, it would have been the earliest compensation legislation in the colonies (Rockoff, 2006). The British had a 200-year history of compensation for disabled military veterans at the time the first pension laws were passed in the Colonies (Bradley Commission, 1956).

3

Veterans in England were maintained through the charitable support of the monastic system until 1592, when legislation providing government compensation to disabled veterans was enacted. A sense of national responsibility for the disabled veteran that was part of their British heritage remained among the early colonists of America (Bradley Commission, 1956).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

Colonial era a major impetus for veterans’ disability compensation was actually the need to build and maintain militia strength during the first Indian Wars, most notably the Pequot War in New England (Rockoff, 2006).

Revolutionary War

The first federal disability-compensation program in the United States was provided to the veterans of the Revolutionary War. From the onset of the war the Continental Congress was inundated with “claims for relief” submitted by disabled servicemen. Officers in the field warned the Congress that if it did “not give better encouragement to the privates than at present is held forth to them, you will have no winter army” (Powell, as cited in Bodenger, 1971). Largely in response to growing pressure from military leaders, plans for the relief of disabled veterans were formulated and ratified, becoming what is known as the Military Pension Law of 1776 (Bradley Commission, 1956). Pursuant to the Pension Laws,4 half-pay was to be given “for life to every officer, soldier, or sailor losing a limb in any engagement or being so disabled in the service of the United States as to render him incapable of earning a livelihood,” and a portion of this was paid to the partially disabled (Bodenger, 1971). The promise of monetary compensation for war-related disability served not only to attract enlistments in the Colonies—where popular support for the war was far from unanimous (Bradley Commission, 1956)—but also to prevent desertions from an Army fighting in conditions that were abjectly cruel:


[T]he emaciated, louse-infested … half-naked exhausted men, broken in spirit and discipline, crowded into the camps and hospitals … [where] sickness, suffering, and death from communicable diseases intensified the devastating effects of the ferociously cold weather upon soldiers who were short of clothes, shoes, blankets, fuel, and food, and existed in dismal, frigid, filthy huts (Bayne-Jones, 1968).


Further incentives were provided for military service when land grants became a standard part of enlistment contracts, and by the War’s end more than 9.5 million acres had been awarded to veterans of the Revolution (Rockoff, 2006).

These compensation policies continued to be modified in the decades following the Revolutionary War. Benefits were made increasingly comprehensive, for instance. Initially limited to members of the Continental Army, benefits were soon provided to “all disabled men who fought in

4

What is known today as disability compensation was formerly known as a pension. It was not until 1919 that all awards related to service-connected disability and death were referred to as compensation (DVA, 2006a).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

the common defense”5 (Bradley Commission, 1956). Throughout the late eighteenth and the early nineteenth centuries, as the federal government attempted to develop acceptable disability policies for veterans, the distinction between recipients of disability compensation and of veterans’ pensions6 became less clear, as some veterans on the compensation rolls discovered they could receive greater monetary benefits by shifting to the pension rolls and many veterans received compensation and pension concurrently. During the early part of this period the locus of benefits administration, with often protracted and circuitous modification, shifted away from state-level jurisdiction to adjudication at various offices at the federal level. While Congress retained final authority over claims, the Secretary of War generally assumed the responsibilities of compensation administration in 1789 (Bradley Commission, 1956).

In 1802, the Secretary of War asked the U.S. Attorney General for an interpretation of the Military Pension Law in order to clarify the issue of service connection for claimed conditions. According to the Attorney General,


the connexion [sic] between the inflicting agent and consequent disability need not always be so direct and instantaneous. It will be enough if it be derivative, and the disability be plainly, though remotely, the incident and the result of the military profession…. Such are the changes and uncertainties of the military life … that the seeds of disease, which finally prostrate the constitution, may have been hidden as they were sown, and thus be in danger of not being recognized as first causes of disability in a meritorious claim [Opinion of Richard Rush (U.S. Attorney General) April 15, 1815] (DVA, 1993).


This finding indicates that by early in the nineteenth century policy makers were already recognizing delayed-onset cases as pensionable.

In 1808 the states’ remaining compensation responsibilities7 were transferred to the federal government. During the period when the state and federal governments had shared responsibility for administration, monetary awards had varied by the individual state’s ability to fulfill the federally mandated program. One of the results of the 1808 transfer of overall compensation administration to the newly established Bureau of Pensions8 was to establish greater consistency in awards payments (DVA, 2006a).

Despite the existence of a dedicated federal bureau to oversee compen-

5

Pensions were provided to local militia, etc.

6

Refers to service pensions and not retirement pensions.

7

Claims had been qualified at the state level and awards were paid by the states and the “sums thus paid [were] … deducted from the requisitions levied on the states for the support of the Confederation government” (Bodenger, 1971).

8

The Bureau operated under the authority of the Department of War.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

sation, a number of major issues remained that both complicated policy development and hampered the administration of veterans’ benefits programs. These included:

  • service records that were of poor quality or nonexistent;

  • pay that was substandard and that was provided in currency that rapidly devaluated during the course of the war;

  • the existence of pension disparities—officers received half-pay for life, while grants for enlisted personnel were far more modest and of limited duration—which in turn led to demands by enlisted personnel for compensation later; and

  • limited-duration enlistments, which further compromised the quality of enlistment records (Bradley Commission, 1956).

In the uncertainty created by the postwar government fragility, veterans began organizing to push for timely receipt of their promised benefits. The Commutation Act of 1783 had provided government-issued securities—at 6 percent interest—equal in value to five years’ pay for officers who had served during the War of Independence. Securities were not provided to enlisted personnel; they received instead a service pension of one year’s pay (Rockoff, 2006). But the Confederation could not afford to pay the pensions that had been awarded or even to cover the interest on issued bonds (DVA, 2006a). Fears that the country would fail to fulfill its obligations to its veterans led to the formation of the Society of Cincinnati, considered to be the first veterans’ service organization in the United States (Rockoff, 2006). The Society was composed of officers of the Revolutionary War, and its express purpose in the years following the war’s end was to “pressure the government to fulfill the pledges made to the officers” (Rockoff, 2006). The Society’s early activities marked the beginning of a long history in which veterans’ service organizations have been engaged quite influentially in the development of benefits’ policy in the United States.

Early compensation legislation did not specifically refer to mental disabilities, but the language of the following Continental Congress pronouncement would indicate that policy makers intended more than a simple physical-injury-driven pension program for veterans:


[P]ermit not him, who, in the pride and vigor of youth, wasted his health and shed his blood in freedom’s cause, with desponding heart and palsied limbs to totter from door to door, bowing yet his untamed soul, to meet the frozen bosom of reluctant charity (Glasson, 1900, as cited in Braddock and Parish, 2001).


Furthermore, eighteenth-century experts in military medicine had already recognized that the health of the soldier extended beyond infectious disease

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

and injury. Baron van Swieten, in his 1776 volume The Diseases Incident to Armies with the Method of Cure, notes that “the soldier fresh lifted, and torn at once from his family, no sooner loses sight of his village, but he becomes melancholy; and tho, [sic] a robust husbandman, finds himself scarce able to bear the fatigues and inconveniences of a military life” (Bayne-Jones, 1968).

The War of 1812 Through the Civil War Period

Between the Revolutionary War and the Civil War veterans’ disability policy went through a series of changes (Rockoff, 2006). At the beginning of that period, eligibility was strictly contingent upon the existence of a disability, but 1818 saw the introduction of a needs-based service pension for veterans of the Revolutionary War.9 As a result, between 1816 and 1820 the number of veterans receiving a pension increased by 805 percent from 2,200 to 17,730, and the total cost of compensation increased by 1,167 percent from $120,000 to $1,4000,000 (Bradley Commission, 1956). There was no means test associated with the 1818 act, and pensions were considered to be “an expression of gratitude and an act of charity which did not subject indigent veterans to the humiliating necessity of searching for evidence of the precise quantum of their property, or producing surgeons’ certificates of the state of their bodily strength” (DVA, 1993). In 1820, however, budgetary constraints led to the purging of all pension recipients from the rolls, pending proof of poverty. Pensions for the majority of these veterans were restored in 1823 when the economy was more robust.

Veterans of the War of 1812, the Mexican-American War, and the Indian Wars were given monetary pensions similar to those provided to veterans of the Revolutionary War, with eligibility restricted to invalids and the dependents of deceased soldiers (Rockoff, 2006). Veterans of these wars did get warrants for tracts of western land, although that program was thought to have been motivated at least in part by the government’s need to secure hostile regions. By 1860 warrants for more than 73 million acres of land had been issued to veterans (Rockoff, 2006).10 By the time service pensions were established for veterans of these wars, so much time had elapsed—pensions for veterans of the War of 1812 were not established

9

While the first major study of veterans’ earnings was not reported until 1956 (President’s Commission on Veterans’ Pensions), the sharp increase in the number of veterans qualifying for pensions on a means or income basis might imply that veterans were not thriving in post-war occupational settings, assuming that the eligibility cutoff for income was derived from valid economic indices.

10

It has been estimated that roughly 40 percent of the total arable acreage in Iowa was transferred via veterans’ warrants (Rockoff, 2006).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

until 1871, for example (Rockoff, 2006)—that they were the equivalent of old-age pensions for those veterans who had survived to receive them.11

Much as was the case with the Revolutionary War pension laws, Congress’s passage of the Civil War pension system in 1861 has been attributed in large part to the need to raise an army (Blanck, 2001). The pension program was further expanded in 1862 into the so-called General Law System. One of the changes ushered in under the General Law System was a requirement that veterans applying for disability compensation be given a medical evaluation. This evaluation would rate the disabilities found to be attributable to wartime activities according to the veteran’s relative ability to perform “manual labor requiring severe and continuous exertion.” The rating protocol was later amended to include nonmanual labor skills (Blanck, 2001). Under the new system, a veteran12 declared totally disabled was entitled to a monthly annuity of $8. Physicians were responsible for the medical screening and rating of claimed disabilities. Disabilities rated as less than total were awarded in fractions of the maximum $8 grant. Blanck (2001) notes that the “war-related lost finger or small toe was compensated by a prescribed rating of 2/8 totally disabled” or a $2 per month annuity. Amendments to the General Law System in 1862 and 1866 expanded the list of compensable conditions and “increased the rate of compensation for severe disabilities that were neither self-evident nor easily ascertainable by the existing medical practices” (Blanck, 2001). Many of the newly compensable conditions were rated based on their “equivalence” to injury or wound-related disability.

The veterans’ compensation system became more complex as it continued to be amended throughout the 1870s. In 1873 the Consolidation Act was passed by Congress. Under the act, levels of severity were assigned to ratings for war-related disabilities, and compensation was for the first time linked to impairment and not to rank (Blanck, 2001; Bradley Commission, 1956). The act also allowed for the compensation of disabilities shown to have “originating causes” during military service. Thus while a veteran may not have been disabled for years following military service, if a claimed condition was etiologically related to service, then the condition was pensionable (Blanck, 2001).

Due to the crude nature of many of the diagnostic techniques of the day and to changes in the national economy, controversy soon arose regarding the equitable application of medical evaluations and disability rat-

11

Rockoff (2006) also notes that in the 39-year period while Northern veterans of the Civil War were waiting for service pensions, their numbers decreased from 1,830,000 to 821,000.

12

Only Union soldiers were eligible for pensions. Some southern states provided pensions to Confederate soldiers (Rockoff, 2006). It was not until 1958, when the Confederacy was pardoned, that the single living survivor of the Civil War was awarded a pension.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

ings (Blanck, 2001). Not long after the liberalization of eligibility criteria brought about by the General Law System, newspapers were publishing stories of alleged corruption in the veterans’ disability pension system, and the system was portrayed largely as a corrupt process in which biased surgeons were substantiating exaggerated and faked claims of disability (Glasson, 1901, as cited in Blanck, 2001).

While comprehensive statistics were not recorded at the time, an 1888 report made to Congress by the Commission of Pensions indicated that between 1862 and mid-1888 a greater number of awards were granted for delayed-onset diseases than for service-incurred injuries (Blanck, 2001). Among the Commission’s reported statistics were 5,320 pensions for nervous prostration and 1,098 pensions for “disease of the brain, including insanity” (Blanck, 2001). As well, 25,994 cases of “diseases of the heart” were reported.

It was during the Civil War era that military physicians first attempted to isolate the causes of an increasing number of heart disorders of unclear etiology (Meagher, 1919). Jacob Da Costa, an Army surgeon, hypothesized that the syndrome variously referred to as irritable heart, soldier’s heart, effort syndrome, neurocirculatory asthenia, and disordered action of the heart13 was actually an organic response to battle stress (Lasiuk and Hegadoren, 2006; Meagher, 1919). Da Costa’s analysis of 200 cases revealed that 38.5 percent had been exposed to “hard field service and excessive marching,” and 30.5 percent had a history of diarrhea (Meagher, 1919). Being able to attribute soldier’s heart to a physical cause provided an “honorable solution” to all vested parties, as it left the self-respect of the soldier intact and it kept military authorities from having to explain the “psychological breakdowns in previously brave soldiers” or to account for “such troublesome issues as cowardice, low unit morale, poor leadership, or the meaning of the war effort itself” (Van der Kolk et al., as cited in Lasiuk, 2006).

Physicians in Britain were also grappling with “disorders of the heart” among their veteran populations. In 1865, based in large part on the studies conducted during the Crimean War by W.C. MacLean at the Army Medical School at Netley, British physicians attributed the syndrome previously investigated by Da Costa to soldiers’ equipment (Jones, 2006a; Jones and Wessely, 2005). Redesign of the equipment was recommended because government-issued rucksacks and waist-belts were thought to restrict circulation “through the heart, lungs, and great vessels,” and it was observed that in “well-disciplined regiments the practice of falling out at drill or on the line of march is discouraged, and [that] men will bear and suffer much, rather than incur the imputation of being ‘soft’” (Jones and Wessely, 2005).

13

Later, the name Da Costa’s syndrome was added to the list.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

Throughout various British campaigns (Afghanistan, Egypt, and Sudan) between 1882 and 1902, concerns grew in the military medical community as the reengineered field gear failed to reduce incident cases of “irritable heart” (Jones and Wessely, 2005).

By the time World War I approached, at least two patterns in veterans’ disability policy had emerged: benefits were established at the start of wars, despite considerable protest of many legislators and other stakeholders; and, as time passed, the amount of time between death or onset of disability and receipt of compensation awards was gradually reduced (Bradley Commission, 1956). Throughout this period, pension lawyers and veterans service organizations like the Grand Army of the Republic (GAR) became influential lobbyists for the expansion and delivery of benefits (Rockoff, 2006). President Grover Cleveland’s 1888 reelection defeat was said to be due in large part to his unpopularity with the GAR subsequent to his 1887 veto of legislation supported by the GAR that would have provided service-based pensions to “deserving” veterans (Blanck, 2001). In vetoing the bill, Cleveland had expressed concerns over the potential difficulties posed by a situation where the “establishment of facts [resting] largely within the knowledge of the claimant alone … would not only stimulate weakness and pretended incapacity for labor, but put a further premium on dishonesty and mendacity” (Blanck, 2001).

The economic prosperity that the nation enjoyed in the years following the Civil War contributed to the liberalization of veterans’ benefits. Enabled by a federal budget that had for many years been in a surplus state—and following a pattern that was very similar to the evolution of Revolutionary War-era benefits—the Dependent Pension Act of 1890 broadened pension eligibility to include any veteran who was “incapable of manual labor” (Rockoff, 2006; DVA, 2006a). The lifting of the requirement that disabilities be service-connected led to a 203 percent increase in the number of veterans on the pension rolls by 1893 (DVA, 2006a), by which time veteran-related spending represented 43 percent of the total federal budget (Rockoff, 2006).

The World Wars

Micale and Lerner (2001) assert that by 1918 there existed “vigorous public and academic debate in the U.S. over the care and treatment of shell shocked veterans.” Shell shock was an expression used first in 1915 in the Lancet by Charles Samuel Meyers, a military psychiatrist, to describe the escalating number of psychiatric cases of unknown etiology among British soldiers (Meagher, 1919). Meyers hypothesized that the observed syndrome—seen in hospitalized combatants and characterized by anxiety and “distressing dreams of battle, bombing aeroplanes, etc.” (Meagher,

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

1919)—was caused by cerebral concussion and rupture of the vasculature resulting from exposure to exploding shells (Lasiuk and Hegadoren, 2006). Later, Meyers recognized that there existed an analogous condition with the same set of symptoms that appeared in patients that had not been exposed to exploding shells. He then used the expression shell concussion to describe the condition associated with exposure to the physical blast from exploding ordinance and shell shock for psychological morbidity resulting from the stress of war (Lasiuk and Hegadoren, 2006).

An analysis of historic data on British World War I veterans revealed that among the soldiers who were awarded disability compensation there existed a subset to whom awards had been granted for the effects of poison gas exposure who showed no signs of damage to the skin, lungs, or eyes but did demonstrate a constellation of unexplained symptoms (Jones and Wessely, 2005). Jones and Wessely note that attending physicians had recategorized these cases as “disordered action of the heart” in recognition of the emergence of a distinct second class of disability for gas-exposed veterans—psychological cases instead of organic ones. In 1917, 20 percent of the 200,000 veterans on the British pension rolls were being compensated for “war neuroses” (Bailey, 1929). This number more than doubled by 1921 but was still considered a gross underestimate due to the large numbers of veterans who were experiencing combat-related functional impairment but who had been pensioned under other diagnoses. In 1921 the British were paying 35,000 pensions for “effort syndrome” alone (Zarbriski and Brush, 1941).

Among the approximately 4.7 million members of the U.S. military who served during World War I (WWI),14 60 percent entered through the Selective Service System (DVA, 2006a; SSS, 2006). This large influx of citizen soldiers was associated with several developments in veterans’ benefits policy. One of the basic principles of veterans’ compensation in the United States had always been the responsibility of the government to “mend any damage which it has inflicted as a result of calling a citizen from his usual occupation to serve with the colors” (Wolfe, 1918). Wartime service has a variety of costs for members of the armed forces: They lose the opportunity to advance in their peacetime occupations while they are serving, for instance, and they miss out on the potential financial gains afforded to other citizens during wartime economic booms (Siegel and Taylor, 1948). The War Risk Insurance Act of 1914, originally intended to insure the assets of the American shipping industry, was amended in 1917 not only to provide

14

For purposes of veterans’ benefits in the United States, WWI service is defined as service after April 5, 1917, and before November 12, 1918, except for U.S. service members serving in Russia, for whom the WWI service window is November 12, 1918, to July 1, 1920, inclusive (CRS, 2006).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

indemnity against loss of life but also to expand benefits in anticipation of U.S. involvement in WWI—a move suggesting that policy makers recognized that active military service destroyed a man’s “normal insurability” (Wolfe, 1918). The activities of the Bureau of War Risk Insurance after the passage of the Vocational Rehabilitation Law included insurance, health care services, vocational rehabilitation, and compensation for death and disability (Bodenger, 1971).

In 1918 Curtis Lakeman, then Assistant to the Director General of Civilian Relief of the American Red Cross, asked the question, “Will the United States be as successful in making civilians out of its soldiers as it has been in making soldiers of its civilians?” Lakeman (1918) noted that the Vocational Rehabilitation Law of 1918 was modeled to a large degree after the Canadian system, in the sense that readjustment was viewed as national responsibility and that civilians should play a major role in the administration of readjustment programs. Under the Vocational Rehabilitation Law, “the whole range of medical and surgical treatment” was the responsibility of the military but the “vocational and professional training” of the disabled soldier was to be the responsibility of the Federal Board for Vocational Education. The Board was charged with placing the reeducated veteran in an occupation of choice. Vocational rehabilitation was subject to economic compulsion only if a veteran willfully refused to complete training; in this case, all or a portion of his compensation could be withheld by the Bureau of War Risk Insurance (Lakeman, 1918). Even after a veteran was placed in a stable occupational setting, he still received monetary compensation for injuries incurred in the line of duty. This compensation could not be reduced as a result of a veteran “overcoming his handicap.”

Planning for the disbursement of vocational-rehabilitation resources required that the distribution and severity of disabilities be evaluated. The original estimate was that 1 of every 100 men at the frontlines would be disabled and in need of readjustment assistance and that half of these cases would be medical cases (nonsurgical cases), including cases of shell shock (Lakeman, 1918). In 1918, however, it turned out that 24.4 percent of the World War I soldiers and sailors who were returned from the European theater were sent back to the States “on account of nervous or mental disorders” (Lakeman, 1918). During that year the United States cared for approximately 20,000 veterans in nine federally funded homes for disabled soldiers, and an additional 12,000 veterans were cared for in state-run homes.

The War Risk Insurance Law, in addition to furnishing low-cost life and disability insurance to officers and enlisted personnel, provided a pension system with a compensation schedule for partial disability that was fashioned after the workers’ compensation system and based on the “average impairment of earning capacity.” Awards were not reduced if a veteran was

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
×

able to increase his earning capacity by overcoming his disability (Lakeman, 1918). In addition, the United States Public Health Service was charged, in conjunction with the Bureau of War Risk Insurance, with providing no-cost examinations and treatment to entitled soldiers and sailors (Lakeman, 1918).

One issue that had an eventual effect on veterans disability policy for mental disorders was compensation of tuberculosis cases. By mid-1918 tuberculosis had led to the discharge of roughly 10,000 men from the army (Lakeman, 1918). Before the War Risk Insurance Law, these discharges would have been for a condition considered not to have been incurred in the line of duty. The government’s position on these cases had hitherto been that the tuberculosis had existed prior to service but had merely escaped detection, and thus, the care and readjustment of these veterans was not the responsibility of the government. Men discharged with tuberculosis were sent to Army hospitals with tuberculosis wards for the duration of treatment. State public health authorities were provided with lists of those discharged from military service for tuberculosis, and state agencies provided any necessary medical care. The Red Cross provided financial assistance to affected families until “the burden of care and relief [was] transferred to the appropriate civilian community agency” (Lakeman, 1918).

Analogous arrangements were being made to manage the care of the more than 20,000 men discharged in the first year of WWI due to “nervous or mental defect” (Lakeman, 1918). By WWI, experts had estimated that “the insanity rate of men in the Army increases nearly 300 percent in time of war” (Lakeman, 1918), and it was during this time that a center for the specialized treatment of war neuroses was established at the Army hospital in Plattsburg, New York. Service members who were categorized as insane were treated separately at Fort Porter (N.Y.) medical facilities. Soldiers and sailors deemed incurable were discharged from military hospitals when family members or the state hospitals for the home of record took over their care. In cases where neither the family nor the state took charge, service members were moved to St. Elizabeth’s Home in Washington, D.C.15 (Lakeman, 1918).

In cases of neuropsychiatric disorders, as in cases of tuberculosis, the establishment of an in-service onset for purposes of compensation was problematic. The Act of March 3, 1885, had established a presumption of soundness at enlistment (Davenport, 1913). The presumption was retained

15

The facility was established in 1855 as the Government Hospital for the Insane to provide inpatient care of the psychiatric casualties of the Army and Navy and the residents of the District of Columbia. Civil War veterans receiving treatment at the hospital, fearful of being stigmatized, euphemistically referred to the institution as St. Elizabeth’s, and Congress made the name official in 1916 (DMH, 2006; NLM, 2006).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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in the 1917 War Risk Insurance Act, but the act was amended in 1921 to exclude conditions documented prior to or at the time of enlistment (DVA, 1993). In a separate chapter of the 1921 amendment to the act, however, the presumption of service connection was specifically added for active tuberculosis and neuropsychiatric diseases developing within 2 years of discharge from active duty (DVA, 1993). During floor debate on the amendment, its sponsor, Senator David I. Walsh, stated that putting the burden of proof on veterans to establish service connection was a “sharp and an altogether unjustifiable annoyance … [and] that we ought not continue this requirement of endless affidavits, necessarily involving long delay,” adding that “[t]he delays resulting from this affidavit requirement have often resulted in men dying before they ever got their compensation” (DVA, 1993). A compromise version of the amendment eventually passed, shifting the burden of proof from the veteran to the government for cases of tuberculosis and mental disorders (DVA, 1993).

But while policy makers had become more responsive to the needs of disabled veterans, support from the public at large was recognized as being vital to the success of the WWI veterans’ readjustment programs:


An hysterical tendency on the part of the community to pamper the returned soldier with trivial entertainment, or the offer of immediate employment, really resting on a basis of charity or exploitation, may have the most untoward effect in demoralizing the ex-soldier’s will and character. In a few years when the too-ephemeral desire to help the wounded hero has been forgotten, and the man faces the competition of able-bodied workmen in a labor market again over-supplied, he may have good reason to blame the public which gave him the wrong kind of reception (Lakeman, 1918).


Delivering benefits to WWI veterans in need of assistance was a daunting bureaucratic task, but the existence of a standard schedule for rating disabilities eased the process (ESI, 2004). According to this schedule, compensation awards were tied to estimated losses in earning capacity, with the calculated amounts based on the average earnings in all occupations performing manual labor (ESI, 2004). In 1924 the schedule was amended so that a veteran’s pre-service occupational status was considered in estimating the loss of earning capacity (ESI, 2004). However, because of the lack of pre-war occupational history for many veterans of the First World War, the government soon reverted back to the “average impairment” formula (ESI, 2004). The rating schedule was codified in 1939 (Public Law 76-257). Benefit amounts were scaled linearly in increments of 10 percent;16 war

16

Thus, the 10 percent level was a tenth of the amount granted to someone rated at 100 percent; the 50 percent level, half; and so forth.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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veterans were provided higher amounts than those who had served during peacetime (ESI, 2004).17 Congress wrote exceptions into the schedule that granted higher amounts to veterans with certain specific disabilities—loss of an eye, hand, or foot, for example—which was a decision that some have interpreted as compensation for loss of quality of life (ESI, 2004). Another clarification occurred in 1919, when all claims of service-connected death or disability were officially referred to as compensation rather than—and separate from—the traditional term, pension (DVA, 2006a).

Experience with WWI service members contributed to a growing knowledge base about military psychiatry issues. Swank and Marchand observed that among WWI U.S. infantry soldiers in the northwest European theater with 60 consecutive days of combat, 98 percent were likely to have “become psychiatric casualties of some kind, whether of combat exhaustion, acute anxiety state or depression,” and that among the remaining 2 percent “a predisposition to an ‘aggressive psychopathic personality’” (Swank and Marchand, 1946) was observed (Jones, 2006b). U.S. military physicians were aware of the enormous threat to unit strength posed by combat neuroses. Major Thomas W. Salmon, senior psychiatric advisor for the U.S. forces in France, established a protocol for the treatment of neuroses that was administered as close to the front lines as possible (Scott, 1990). With a period of respite and the “firm expectation that the soldier return to duty” as secondary intervention, Salmon’s plan necessitated the assignment of psychiatrists to each division. Sixty-five percent of soldiers treated under the protocol were returned to the front lines (Scott, 1990). What percentage of these cases of neuroses experienced long-term remission cannot be known in the absence of follow-up data.

While many WWI-era clinicians believed that humiliation and punishment would remedy combat neuroses and viewed breakdown during battle as a manifestation of flawed character (Anonymous, 2005), there were others who offered more enlightened assessments and opted for more humane treatment approaches. Ernest Jones, president of the British Psychoanalytic Association, in his explanation of war neuroses, stated that war amounted to “an official abrogation of civilized standards … [which necessitated] behavior of a kind that is throughout abhorrent to the civilized mind … [and therefore] a soldier who suffered a neurosis had not lost his reason but was labouring under the weight of too much reason” (Bourke, 2002; Meagher, 1919). During WWI a schism formed in the scientific community over the causes of neuroses, with supporters of physical explanations (i.e., injury to the nervous system) and supporters of psychological theories at odds with one another (Bourke, 2002). Thus a variety of therapeutic options were used on the 80,000 cases of shell shock returned to British hospitals. Electric

17

Rates for peacetime veterans were set at 75 percent of their wartime counterparts.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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shock treatment, massage, respite, and special diets were employed by those subscribing to the “organic school,” while talking cures, hypnotherapy, and various other psychological treatments were the preferred therapies of the proponents of psychological trauma (Bourke, 2002). Neither type of therapeutic strategy was efficacious, however, as “four-fifths of shell shock cases were never able to return to military duty” (Bourke, 2002).

At a Veterans’ Bureau clinic in New York, psychiatrist Abraham Kardiner was working with WWI veterans suffering from war neuroses. His experience with these veterans formed the foundation of his book The Traumatic Neuroses of War (1941). In the book Kardiner described the constellation of symptoms surrounding war neuroses, providing an early clinical foundation for what is now known as posttraumatic stress disorder (PTSD) (Anonymous, 2005). His characterization of war neuroses included:

  • exposure to traumatic events;

  • trauma fixation and distorted perception of self, others, events, and environment;

  • nightmares;

  • limited ability to engage in normal activities;

  • chronic irritability; and

  • susceptibility to aggressive outbursts (Anonymous, 2005).

Some of the pre-WWI predictions of likely neuropsychiatric rates among those who served in the war (Lakeman, 1918) were realized, and by February, 1927, “ex-service men with neuropsychiatric disabilities constituted 46.7 percent of all patients receiving hospital treatment as beneficiaries of the U.S. Veterans Bureau” (Bailey, 1929). By the end of the following decade the U.S. government had invested nearly one billion dollars in benefits for veterans with “war neuroses” (Dwyer, 2006).

As had occurred after the Civil War, veterans of WWI organized, seeking to ensure the delivery of promised benefits. In 1919 the American Legion was formed. By 1920 the group, founded by only 20 officers, had attained a membership of over 800,000 (Rockoff, 2006). The American Legion’s position was that “it asks for no bonuses … it merely asks the government to assist the ex-serviceman in overcoming some of the financial disadvantages incidental to his military or naval service” (Siegel and Taylor, 1948). Congress was responsive to the growing veteran constituency and passed the World War Adjustment Compensation Act in 1924. The Act authorized a bonus—on average, $550, payable in 20 years—to WWI veterans based on the length and location of their service, which made it a form of adjusted compensation (Rockoff, 2006; Siegel and Taylor, 1948). With veterans returning to a volatile postwar economy, with inadequate separation pay and no readjustment services, as many as 20 states provided

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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additional benefits to WWI veterans—and not just to disabled veterans (Siegel and Taylor, 1948). The Legion is credited with paying an influential role in the determination of “benefits and treatment for war neurotics” (Bodinger, 1971).

In 1921, the Veterans’ Bureau was established (Public Law 67-47). Under the law establishing it, all functions of the Bureau of War Risk Insurance and the Federal Board of Vocational Rehabilitation as well as all functions of the U.S. Public Health Service related to veterans were transferred to this single entity. The director of the Veterans Bureau had the authority to establish up to 140 regional offices to carry out the functions of “rating and awarding compensation claims, granting medical, surgical, dental, and hospital care, convalescent care, and necessary and reasonable aftercare, making insurance awards, [and] granting vocational training” (Public Law 67-47). Responsibility for delivering services to veterans was still spread among three agencies, though: the Veterans’ Bureau, the Bureau of Pensions of the Interior Department, and the National Homes (DVA, 2006a). A second round of consolidation took place in 1930, combining these entities to create the Veterans Administration (VA).

The hospital-care needs of veterans increased substantially throughout the Depression. During the 1930s the number of VA hospitals increased from 64 to 91, and the number of beds nearly doubled to just under 62,000 (DVA, 2000b). Tuberculosis was initially the most commonly treated condition among WWI veterans at VA hospitals, but by the middle of the 1930s, neuropsychiatric conditions accounted for more than half of the patients. Seventy-two thousand men had been discharged from the Army during and after WWI with neuropsychiatric disorders, and 40,000 had applied for benefits as neuropsychiatric cases (DVA, 2006b).

Concerned by the rates at which men in combat were lost to neuropsychiatric disorders during WWI and by the difficulties involved in treating these cases of combat neurosis, military psychiatric experts during World War II (WWII) focused much effort on screening out at-risk inductees during entrance physical examinations and early in the military training phases. More than 1 million “psychologically unfit” men were screened out by draft boards during WWII (Scott, 1990). During WWII the expressions “shell shock” and “shell concussion” were replaced by combat fatigue and operational fatigue (Hanson, 1943). Army psychiatrist Colonel Frederick Hanson (1943) described the cases of combat neuroses seen in the war:


They walked dispiritedly from the ambulance to the receiving tent, with drooping shoulders and bowed heads. Once in the tent they sat on the benches or the ground silent and almost motionless. Their faces were expressionless, their eyes blank and unseeing, and they tended to go to sleep wherever they were. The sick, injured, lightly wounded, and psychiatric cases were usually indistinguishable on the basis of their appearance.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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Even casual observation made it evident that these men were fatigued to the point of exhaustion. Most important of the factors that produced this marked fatigue was lack of sleep. Under almost all combat conditions the infantryman gets too little sleep. The conditions of his existence—the almost continuous shelling, the strange night noises, flares, sentry and patrol duties, rain, snow, cold, heat, insects, and the ever-present threat of the enemy—conspire to make his sleep at best intermittent and scanty. In spite of this lack of sleep he must undergo long periods of severe exertion, more often than not on a diet that is at best deficient in calories. Often the food is there for him but he either cannot carry enough of it with him, or is too frightened to eat the proper amount. Sometimes the type available has become distasteful through its monotony (Hanson, 1943).


Frontline management of “war neuroses” during WWII was extensively documented. The military medical community did a poorer job of documenting the breakdown of soldiers far from the field of battle, and this reporting bias resulted in a major gap in the scientific literature addressing the long-term outcomes of exposure to battlefield trauma (Dwyer, 2006). As Dwyer notes (2006), the psychiatric histories of troubled soldiers from the early wars are commonly disparate and inaccessible. Military psychiatrists observed that among “noncommissioned officers who were old in combat experience, … well-motivated [and] previously efficient,” prolonged exposure to the horrors of combat created a consistent constellation of symptoms, including anxiety and “concomitant impairment of judgment” (Sobel, 1948). The breakdown of devoted and highly decorated soldiers came to be known in the military psychiatric community as “old sergeant syndrome” (Sobel, 1948). Because of the way psychiatric professionals were put on the front line to interact with affected service members (the Salmon plan), WWII has been credited for facilitating the migration of psychiatrists from the asylum to the community (Dwyer, 2006).

Despite the implementation of induction screening standards, the rate of psychiatric casualties in Europe was 102 per 1,000 troops. The Salmon program was reinstituted with psychiatrists working out of mobile army hospitals close to the front lines (Lasiuk and Hegadoren, 2006), and the loss of troops due to psychiatric breakdown was significantly reduced (Scott, 1990). Grinker and Spiegel observed in 1945 that among WWII soldiers many cases of “gross stress reaction” did not manifest on the field but rather emerged much later, and could persist for several months or even several years (Scott, 1990). Over 500,000 U.S. Army soldiers—a population great enough to outfit 50 combat divisions—were discharged for psychiatric disorders during WWII (Wanke, 1999). An estimated 1.3 million members of the U.S. forces suffered from debilitating neuropsychiatric conditions during the war (Wanke, 1999).

The Serviceman’s Readjustment Act of 1944, which came to be known

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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as the “G.I. Bill of Rights,” was intended to be a less costly solution to readjustment than the bonuses awarded to WWI-era veterans (Siegel and Taylor, 1948). The G.I. Bill included a wide range of benefits: health care, separation pay, home and business loans, reemployment rights and hiring preferences, and education benefits (Rockoff, 2006). While the nation did not want to see its war veterans go from the “battle lines to the bread lines” (Rockoff, 2006), policy makers were also concerned with preventing the national economy from slumping into a postwar recession or even depression (ESI, 2004).

The total number of veterans receiving benefits through VA during the post-WWII era would have included a considerable number of veterans from WWI,18 so it is difficult to get a good estimate of the number of WWII veterans suffering from psychiatric problems, but the number was certainly large. By 1950 there were 136 hospitals in the VA system, of which 34 were neuropsychiatric hospitals, and of the 106,287 hospital beds, 54,084 beds were in neuropsychiatric wards (Magnuson, 1951). In 1943 VA health care was extended to all WWII veterans, even for non-service-connected conditions, but inpatient care was limited to only those veterans with service-connected conditions (CRS, 2005), so the 50,000-plus beds in neuropsychiatric wards would have been dedicated to the service-connected veterans. Still, this statistic represents only those cases severe enough to require hospitalization, and the combat neuroses are counted among other compensable psychiatric conditions. Additionally, VA operated “home-town” programs through which veterans received clinical care in their own communities (Magnuson, 1951). Roughly 75,000 physicians participated in the program.

In 1945 the rating schedule was updated to what is, in essence, the foundation for the rating schedule that exists today: the VA Schedule for Rating Disability (VASRD).19 Included in the 1945 schedule was a detailed index of diagnostic codes as well as protocols for compensation, examination, and reporting (ESI, 2004). Compensation has been adjusted according to cost-of-living indices. The linear compensation scheme was abandoned in the 1950s when veterans with higher ratings began receiving awards greater than would have been predicted by a linear trend (ESI, 2004). This change has been attributed, in part, to the earnings-related findings of the President’s Commission on Veterans’ Benefits (Bradley Commission, 1956).

18

As of 1951 nearly 50 percent of veterans of WWI with psychoses had been hospitalized in the VA system for more than 10 years (Magnuson, 1951).

19

A more detailed discussion of issues regarding the administration of the VA is contained in the IOM report A 21st Century System for Evaluating Veterans for Disability Benefits (2007).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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Korean and Vietnam Wars

Early in the Korean War psychiatric casualty rates were 50 per 1,000 (Scott, 1990). After the reimplementation of the Salmon plan, the rate was reduced by 40 percent (Scott, 1990). It was during the Korean War that the original Diagnostic and Statistical Manual of Mental Disorders (DSM-I) was published by the American Psychiatric Association (APA). DSM-I included the combat-related disorder gross stress reaction, the definition of which was developed in part from work conducted by military psychiatric personnel like Abram Kardiner (Scott, 1990). The VA subsequently amended the VASRD to reflect the DSM nomenclature. The introduction to the Mental Disorders section of the VASRD instructed rating personnel to “familiarize themselves thoroughly” with the DSM and stated explicitly that “[f]ormal psychometric tests are essential in the diagnosis of mental deficiency” (VA, 1957). The inability to adapt socially was cited as “one of the best evidences” of the state of a subject’s mental health. Social functioning was to be considered, for rating purposes, only in the context of industrial adaptability with the understanding that “a person who has regained competency may still be unemployable” (VA, 1957). The rating schedule for mental disorders in 1957 was so strongly linked with the DSM that specific page numbers were cited in the primary text as supplemental guidelines for adjudicators. However, rating boards were instructed not to apply the APA’s classification scheme for degrees of impairment. The VASRD was modified in 1996 so that levels of disability for all mental disorders were arranged under common categories of impairment.

The psychiatric breakdown rate for U.S. troops in Vietnam between 1965 and 1967 was one-tenth of what it had been early in the Korean Conflict, a success that was attributed to the implementation of an updated version of the Salmon plan at the onset of the war (Scott, 1990). When the second edition of the DSM was published in 1968 during the height of the Vietnam War, gross stress reaction was one of the diagnoses omitted from the index (Scott, 1990). Speculation surrounded the reasons for the omission, and Scott (1990) stated that psychiatrist Chaim Shatan had told him in a personal interview that he “suspected that gross stress reaction was omitted to reduce the financial liability of the VA following the Vietnam War.” Scott, in the absence of corroborating evidence, offered an alternate explanation: none of the members of the APA committee that authored the update were experts in military psychiatry.

Based on a careful review of the extensive descriptions of stress reactions in combat and noncombat settings (for example, natural disasters and death camps), the DSM-III committee concluded that it was appropriate to reintroduce the concept of gross stress reaction from DSM-II, to rename it as “post-traumatic stress disorder,” and to base the diagnostic criteria on

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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those symptoms most frequently described in the research literature on both combat and noncombat stress reactions.

Summary Observations

The veterans’ compensation and pension system that exists today is a legacy system with a nearly 400-year history (summarized in Table 2-1). It has been subject to the influences and agendas of many stakeholders—politicians, military leaders, and veterans—and to its share of accusations of bureaucratic mismanagement. Changes in compensation policy over the years have been driven by several diverse factors. They are sometimes attempts to correct for past shortcomings in the system or adapt to changes in the social, political, or economic climate. On other occasions, they appear to be efforts to recognize in a tangible way the horrific conditions under which wars are fought and the life opportunities missed or compromised by those who participated in them. The state of the relevant science has also played a role in determining how health problems are perceived and what people think about whether those problems are compensable. While in the strictly technical sense PTSD has existed for less than three decades,20 when all of its earlier incarnations are considered—irritable heart, soldier’s heart, neurasthenia, shell shock, combat fatigue, operational fatigue, combat stress reaction, post-traumatic neurosis, and so on—the syndrome has a history as long as veterans’ compensation itself.

Veterans’ Disability Compensation in Other Countries

Some foreign governments have veterans’ compensation policies for PTSD. The committee briefly reviewed the systems in the United Kingdom and Canada. While these systems share some common attributes with the VA benefits system, it is difficult to perform direct comparisons between the systems in those two countries and in the United States because of the existence of universal health care and other social support mechanisms in the United Kingdom and Canada.

Veterans Affairs Canada takes a broad view of the intent of its disability benefits system:


To put on the uniform of one’s country—and this is as true today as it was in 1914—is to make an extraordinary commitment: to put oneself at risk, as required, in the interests of the nation. It is this commitment that explains and justifies veterans’ benefits…. Canada has a comprehensive program of these benefits because of its long and distinguished military

20

The disorder called PTSD was first defined in the third edition of the Diagnostic and Statistical Manual, which was published in 1980.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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TABLE 2-1 Disability and Veterans’ Compensation Policy Time Line

1636

To encourage service in the Pequot War, the Plymouth colony provides for the maintenance of disabled soldiers; the first veterans’ benefits in an English-speaking colony

1776

The Continental Congress promises pensions to officers and soldiers disabled in the course of service; land grants ranging from 100 to 1,100 acres based on rank were considered part of the contract of enlistment

1778

The Continental Congress promises half-pay for seven years for officers who serve until the end of the war

1780

The Continental Congress promises half-pay for life to officers and for seven years to the widows and orphans of officers who die in service; this is the first national provision for widows and orphans

1783

Washington addresses his officers at Newburgh, New York, counseling patience in pursuing demands for past pay and pensions; the Commutation Act is passed; the Society of Cincinnati, the nation’s first veterans’ organization is founded

1808

Control of military pensions transferred from the states to the federal government

1818

Service Pension Law passed; means-based; disability not a requirement

1828

Full pay for life is granted to surviving officers, noncommissioned officers, and soldiers who had served until the end of the war

1862

General Law Pension System implemented; Arrears Act passed

1865

National Home for Disabled Volunteer Soldiers established (not just a single facility—various branches were constructed nationwide); veterans’ preference for civil service legally established

1866

The Grand Army of the Republic formed

1879

The Arrears of Pension Act passed

1885

Act of March 3, presumption of soundness at time of enlistment for all pension applicants, although soundness could be rebutted

1890

Dependent Pension Act is passed

1913

The Veterans of Foreign Wars is formed from the merger of smaller organizations of veterans of the Spanish–American War and the Philippine Insurrection

1917

War Risk Insurance Act authorizes the issuance of life-insurance policies to members of the armed services; a standard schedule for rating service-connected disabilities is created based on average impairment

1918

A vocational rehabilitation program is established for veterans

1919

American Legion founded in Paris by American Expeditionary Force members

1920

Disabled American Veterans formed

1921

The Veterans Bureau is established to consolidate veterans’ services into one agency

1924

Pre-service occupation is considered in the determination of disability rating

1930

Creation of the Veterans Administration

1933

Repeal of the pre-service consideration in rating determination; valuation of ratings correlated with the consumer price index

1936

Congress passes legislation (over President Roosevelt’s veto) providing for immediate payment of the World War I bonus

1937

The category “totally disabled” is established for veterans with certain disabilities

1938

Service members injured in the line of duty are guaranteed disability benefits in light of a potential draft

1939

Rating schedule is revised

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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1944

President Roosevelt signs the “Servicemen’s Readjustment Act of 1944,” commonly known as the G.I. Bill of Rights (Public Law 346); it provides home loans, education assistance, and other readjustment services to veterans

1952

American Psychiatric Association publishes the first edition of the Diagnostic and Statistical Manual for Mental Disorders (DSM-I); the volume includes an entry for the combat-related disorder “gross stress reaction”

1956

Report of the President’s Commission on Veterans’ Benefits released

1956

Social Security Disability Insurance is established to cover disability-related “involuntary retirement”

1957

Veterans Benefits Act of 1957

1958

All laws concerning veterans’ benefits updated

1965

Service members’ Group Life Insurance—subsidized term life insurance purchased from private insurers—is made available

1962

Second edition of the Diagnostic and Statistical Manual for Mental Disorders (DSM-II) published, gross stress reaction dropped from the index, “adjustment disorder to adult life” is added instead

1973

The United States institutes an all-volunteer armed forces; veteran’s benefits become an important incentive for recruitment

1980

Posttraumatic stress disorder appears in the third edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM-III)

1987

A revision to the third edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM-III-R) is published (PTSD is retained as a diagnosis)

1989

The cabinet-level Department of Veterans Affairs (VA) is established

1994

The fourth edition of the Diagnostic and Statistical Manual for Mental Disorders (DSM-IV) published

2000

A revision to the fourth edition of the Diagnostic and Statistical Manual for Mental Disorders (DSM-IV-TR) is published

SOURCES: Adapted from Rockoff, 2006; Fishback et al., 2006; ESI, 2004; Scott, 1990; Buddin and Kapur, 2005; Bradley Commission, 1956; Davenport, 1913.

history. By the same token, a well-thought-out and up-to-date scheme of veterans’ benefits—one that links recruitment, retention, and recognition—is essential to the well-being and operational effectiveness of today’s Canadian Forces…. Between those in uniform and the country they serve there is an implicit social covenant that must be honoured. All this was well understood by previous generations of Canadians, as evidenced by the fact that veterans’ benefits as such have never been an issue in party politics (VAC, 2004).

Both the United Kingdom and Canada pay monthly annuities to compensate for a disability’s effect on earning potential and lump sum payments to compensate for the effect of a disability on quality of life. The programs are young in both countries, having been in place less than 5 years in each (VDBC, 2006). In Canada, veterans’ compensation is based in large part on the policies of the U.S. Department of Veterans Affairs, with compensation

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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for controversial conditions such as Agent Orange and PTSD being based explicitly on the research and policy decisions in the United States (VAC, 2005). Functional impairments that lead to a loss of income are compensated through a system of annuity payments, with amounts calculated using a standard schedule (Table 2-2) analogous to the VASRD (MOD, 2005). Loss of quality of life is compensated separately and is paid as a lump sum based on standard formulae. In the United Kingdom monetary benefits are issued in both lump sum payments (for loss of quality of life) and guaranteed income payments (for earnings impairment) (MOD, 2005).

The committee did not locate any studies specifically addressing the effect of the availability of universal health care on compensation-seeking patterns in these countries. It is likely that some proportion of disabled veterans may have their therapeutic needs met though available health care systems and consequently forgo the disability application process, especially for conditions, such as PTSD, to which a stigma is attached. These countries do not have what is sometimes referred to as a 24-hours-7-days-per-week

TABLE 2-2 UK Rating Table for Mental Disorders

Level

Injury

8

Permanent mental disorder, causing severe functional limitation and restriction

10

Permanent mental disorder, causing moderate functional limitation and restriction

11

Mental disorder, which is functionally limiting and restricting, and has continued, or is expected to continue, for 5 years

12

Mental disorder, which has caused or is expected to cause functional limitation and restriction at 2 years, from which the claimant has made or is expected to make substantial recovery within 5 years

13

Mental disorder, which has caused, or is expected to cause, functional limitation and restriction, at 26 weeks, from which the claimant has made, or is expected to make, a substantial recovery within 2 years

14

Mental disorder, which has caused, or is expected to cause, functional limitation and restriction at 6 weeks, from which the claimant has made, or is expected to make, a substantial recovery within 26 weeks

NOTES:

1. In assessing functional limitation and restriction for mental disorders, account shall be taken of psychological, social, and occupational function.

2. Functional limitation and restriction is likely to be severe where symptoms of behaviours include mania, delusions, hallucinations, severe depression with suicidal preoccupations, or abnormal rituals.

3. Mental disorders must be diagnosed by a relevant accredited medical specialist.

4. Any reference to duration of effects in column B are from the date of injury or onset of illness.

SOURCE: Ministry of Defence, UK, 2005. Crown Copyright/MOD.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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policy, which provides for compensation in the case of injuries and diseases incurred in off-duty hours during active service.

OTHER MENTAL DISABILITY COMPENSATION PROGRAMS

A number of other disability-compensation programs provide financial and other types of support to persons diagnosed with mental disorders in general and with PTSD in particular. As part of its work, the committee examined the literature describing these other programs. Below the information collected about compensation programs for mental disorders and PTSD provided by the U.S. federal government, state and local governments, the private sector (via workers’ compensation schemes), and selected foreign military services is summarized.

Philosophy of U.S. Disability Systems

Compensation for disability is in large part based on principles of social justice. Generally speaking, social justice refers to the principle that a society should provide fair treatment and a just share of the benefits (wealth and resources) to individuals and groups. The term is used in numerous ways and represents many ideas, problem definitions, and ways of finding solutions to problems. It is used in this report because ideas of social justice are often used as a rationale for disability compensation.

A society’s social-justice system reflects the social, economic, and political views that its members hold concerning what a society should be. In most societies, individuals are thought to have a responsibility to work and support themselves. Societies do generally accept, however, that some people will not be able to work (or work at full capacity) and therefore may be granted an exemption from work and be granted funds in lieu of wages. There are various categories of reasons that excuse a person from the obligation to work, and a society’s particular sense of social justice can be seen in the way that that society identifies and defines these categories: “Each category must be based on a culturally legitimate rationale for nonparticipation in the labor system…. The definitions are also tied to underlying cultural notions about work” (Stone, 1986).

Disability is a commonly accepted category for exemption from work and receipt of compensation. As already noted, its use can be traced back to the so-called Poor Laws first instituted in England in the mid- to late 1500s. Additionally, disability is sometimes used to qualify persons for medical care at reduced or no cost. In the United States, the Social Security Disability Insurance/Supplemental Security Income (SSDI/SSI) programs and the benefits programs administered by VA are often cited as representing the prevailing American social-justice views for persons with disability.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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The ongoing public policy debate about these programs often implicitly contains disputes about social justice.

For compensation purposes, disability is a socially created administrative category. Each disability-compensation system has a rule base as well as an assessment process. Most systems require medical documentation of a physical or mental medical condition and also an administrative rating of the severity of that condition in terms of impairment of function in relationship to work. Compensation is most often proportional to loss of potential earnings and dependant on the level of funding set aside for the specific program.

When some people are legitimately exempted from work, others in the society may have to help fund their “substitute wages.” Funding sources for disability compensation include the individuals themselves (social and private insurance programs and individual savings, for example), public taxation, employers, or charity. Again, ideas of social justice will underlie the decisions about what proportion of contribution should be expected from each of these various sources.

VA disability benefits, including compensation, reflect a somewhat different set of principles of social justice. Persons who serve in the military and who have a disability related to military service21 are eligible for benefits. One of the reasons that societies form is to provide safety and security for their members, so when individuals put themselves at risk to preserve a society’s security, social justice implies that they should be compensated for losses resulting from taking that risk. VA benefits are not contingent on work status (except for the individual unemployability benefit and 100 percent mental disorders disability status), but the VA disability rating is based on average earnings loss attributable to the disability. Rehabilitation, both medical and vocational, is part of the VA benefit system. Disability ratings also play an important role in determining access to ongoing medical care.

Western societies overwhelmingly view disability compensation as a type of income-redistribution policy. Just as strongly and widely held is the view that persons with disabilities should be encouraged to work and should not be discriminated against in the workplace. On the other hand, there have also been universal concerns about the potential overuse or misuse of the disability exemption to work. Some commentators argue that disability is more complex than just establishing and rating the severity of a medical condition and that placing someone in a disability category requires con-

21

Note that the VA standard is that disabilities are compensable if they occur or originate during service, a more broad conception than “as a result of service.” Other nations, including Australia, Canada, and the United Kingdom, use “as a result of,” but they also have national health programs that see to the needs of their veterans.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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sidering personal, social, and environmental factors as well (IOM, 1991). Economists worry that persons with disabilities who can satisfy their needs through disability compensation may not be motivated to enter the labor market, especially in view of other environmental and employment barriers (Berkowitz and Hill, 1986; Weaver, 1991). Fears of deception, abuse, symptom exaggeration, or malingering have generated vigorous programmatic abuse-monitoring tactics and a concomitant demand for objective evidence of impairment and degree of functional loss. Time-limited benefits with frequent reevaluation are used for selected conditions.

Civilian disability-compensation systems in the United States include services to assist persons in gaining or remaining in employment. People who qualify for compensation may be required to follow prescribed medical treatment and to participate in rehabilitation in order to continue receiving payment. If a person does work, benefits may be gradually reduced, depending on the amount of earnings. In some systems people who receive work income still remain eligible for health care, with their health care expenditures related to their income. Increasingly, compensation is discussed as only one part of a social-justice system for supporting persons with disabilities. The performance of accepted social roles, including work, is cited as the most desirable outcome (IOM, 1997).

In discussing pro-work support policies, Burkhauser and Stapleton maintain that:


[h]istorically, the federal government’s approach to providing economic security for people with disabilities has been dominated by a caretaker approach, reflect[ing] the outdated view that disability is solely a medical issue. A main premise of this model is that people with severe medical conditions are unable to work (Burkhauser and Stapleton, 2003).


These authors go on to mention such social policy instruments as the Americans with Disabilities Act, the 1998 Individuals with Disabilities Education Act, the 1999 Ticket to Work and Work Incentives Improvement Act, and administration initiatives such as the Clinton administration’s Presidential Task Force on the Employment of Adults with Disabilities and the Bush administration’s New Freedom Initiative. Burkhauser and Stapleton also maintain that pro-work social-justice policy requires “investment in ‘the human capital’ of people with disabilities.” They cite evidence from a survey of private and government employers that indicates that lack of training and lack of related experience are the main barriers to employment and advancement of people with disabilities (Bruyère, 2000).

Thus the dominant social-justice rationale for disability compensation is grounded in the view that people have the right and the responsibility to support themselves and to share equally in the goods, services, and benefits of the society, commensurate with their own effort and abilities. Persons

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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with disabilities may or may not have the ability to work. Nonetheless, contemporary society recognizes when these people have the ability to work; allowing—and expecting—them to work serves the interest of both individuals and the group. In the United States, social-justice beliefs include the idea that people who cannot work should be taken care of by the greater society and also the idea that people should be encouraged to work whenever possible. Social justice also requires that people who take risks supporting the common good be entitled to compensation and services if they become disabled in that pursuit, and it is this that would appear to be the primary rationale for the VA disability program.

U.S. Government Programs

Social Security Administration

Two programs administered by the Social Security Administration (SSA) are the federal government’s primary means of assisting disabled individuals who are unable to work. SSI is a means-tested income-assistance program for aged, blind, or disabled individuals who have little or no income and are unable to engage in substantial gainful activity because of a physical or mental impairment that is expected to last for at least 12 months or result in death (SSA, 2006a). SSDI is a social-insurance program providing monthly benefits to disabled individuals who qualify for cash payments based on their prior contribution to the system through a compulsory tax on earnings. These individuals must be unable to work because of a medical condition that is expected to last at least one year or result in death (SSA, 2006a). Those individuals who participate in both programs—that is, they receive SSDI cash benefits on the basis of their tax contributions and have monthly income low enough to also qualify them for SSI cash benefits under the means test—are known as “dual beneficiaries” (SSA, 2006a).

People who are disabled because of psychiatric conditions are overrepresented on both the SSI and SSDI rolls, making up the largest working-age disability group receiving public income support (Cook, 2006). Furthermore, for more than a decade the number of SSI beneficiaries with psychiatric disabilities has been increasing faster than the total program (Mashaw and Reno, 1996a). From 1988 to 2001 the number of SSI recipients with psychiatric disabilities more than tripled, from 411,800 to 1.5 million; during the same period, the total number of SSI recipients rose by a factor of something over two and one-half (Jans et al., 2004). The percentage of SSDI recipients with disabling mental disorders has also increased over time, but not as rapidly. Few SSDI recipients join the workforce—less than 0.5 percent of beneficiaries leave the rolls because they have found suitable employment (Berkowitz, 2003; Newcomb et al., 2003)—and people with

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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disabling mental illness are no exception. Indeed, SSI beneficiaries with psychiatric disabilities are significantly less likely to work than those with other disabilities (Muller et al., 1996), and SSDI beneficiaries with disabling mental disorders remain on the rolls significantly longer than those with other diagnoses (Hennessey and Dykacz, 1989). Although SSDI was originally designed for male workers in their 50s and 60s with common work-related disabilities such as back pain, policy analysts have noted that the program has evolved to meet a growing number of social welfare needs and new congressional mandates; at the same time, SSI has become a large cash-benefit program for a population that is younger and less attached to the labor force than it was originally intended to support (Mashaw and Reno, 1996a).

SSDI disability eligibility is based on the following criteria: First, an individual must not be working or, if working, must have monthly earnings below a certain threshold. Second, the person’s medical condition must significantly limit his or her ability to perform basic work activities, such as walking, sitting, or remembering, for a period of at least one year. Third, the medical condition must be on a list of impairments considered “severe” by SSA or be determined to be as severe as that of a listed impairment, or else the medical condition must prevent the individual from being able to do the same work that had been performed before the onset of the medical condition. Fourth, the individual must not be able to perform some other work that would be appropriate to his or her medical condition, age, education, past work experience, and work skills. To receive SSDI, individuals do not need to be poor or to have few economic assets or resources, but they may not have earnings above the monthly threshold.

SSI eligibility is based on a somewhat different set of criteria. The individual must be elderly, blind, or disabled, must not be working or else must not be earning more than a mandated monthly threshold, must have very low income, and must have few economic assets or other resources, such as real estate, stocks, or bonds. Disability is determined in the same manner as for SSDI, as described above.

In summary, the rationales for eligibility of these two programs are similar yet subtly different. SSI is a means-tested income-assistance program, while SSDI is a social-insurance program. This is reflected in the fact that the average monthly benefits are higher for SSDI ($943.40 per month in June 2006) than for SSI ($470.30 per month in June 2006), although many states supplement SSI cash payments to varying degrees (SSA, 2006b).

Both programs assume that any beneficiaries who need it should also receive access to health care via two federal systems. Individuals on SSI qualify for the federal Medicaid program, while those on SSDI qualify for Medicare after a mandatory waiting period of up to two years (Stapleton et al., 2006).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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SSI and SSDI beneficiaries are assumed to be totally and permanently disabled. Because of this, federal regulations mandate an administrative review of the individual’s disability status, called the continuing disability review, upon the individual’s return to work (Newcomb et al., 2003). If the individual is deemed “recovered,” then cash payments and associated benefits cease. This has the effect of discouraging many individuals who are capable of working from returning to work (Burkhauser and Wittenberg, 1996).

Both programs also assume that individuals who earn above a certain monthly threshold for a specified period of time should have their cash benefits reduced. In the case of SSI, the reduction in benefits varies according to the amount earned above the threshold, while in the SSDI program the reduction is absolute. SSDI beneficiaries can earn up to SSA’s substantial gainful activity level each month ($830 in 2006) with no loss of benefits, but once earnings exceed that amount for nine nonconsecutive months plus a three-month grace period, all SSDI cash benefits cease. This is referred to as the “earnings cliff” (Stapleton et al., 2006). By contrast, once an SSI beneficiary’s earnings reach $65 per month, his or her cash payment is reduced by one dollar for every two dollars of additional earnings. Some have noted that this marginal tax rate of 50 percent far exceeds that paid by the wealthiest individuals (Stapleton et al., 2006).

Additional work disincentives in the SSA system include an “implicit tax” on disabled workers whose labor force participation causes them to lose additional benefits, such as health insurance, housing subsidies, utility supplements, transportation stipends, and food stamps (Polak and Warner, 1996). And, finally, SSDI beneficiaries who return to work in the first 24 months of eligibility become ineligible for health coverage under Medicare, regardless of whether their jobs provide medical benefits (White et al., 2005). Research has indicated that people with psychiatric disabilities are aware of these disincentives and report that they plan their labor force participation accordingly (MacDonald-Wilson, 2003; Polak and Warner, 1996).

Both SSI and SSDI are systems for people with long-term, total disability, unlike other programs that provide money to individuals with partial disability or short-term disability. While the assumption is that beneficiaries are totally disabled, the system also includes an assumption that productive employment, when practical, is preferable to a reliance on cash benefits for the individuals with disabilities, their families, and society as a whole. Even when individuals with disabilities cannot be fully economically self-sufficient, the program assumes that allowing for some paid work by the beneficiaries will lead to important gains in the economic welfare of the family as well as contributing to the society’s aggregate productivity (Mashaw and Reno, 1996b). Beginning in the 1990s, the SSA instituted a

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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number of programs that offered free special services to blind or disabled SSI or SSDI beneficiaries with the goal of helping them work. The services included counseling, job training, and help in finding a job (Cook et al., 2006). These work-incentive programs also allowed individuals to retain their eligibility for health insurance even after they were no longer eligible for cash benefits under SSI or SSDI.

Those receiving SSI or SSDI have “presumptive eligibility” for state-federal vocational rehabilitation services, unless they are deemed too significantly impaired to benefit (U.S. Department of Education, 2006). By federal legislative mandate, the Rehabilitation Services Administration, an agency of the U.S. Department of Education, uses federal and state dollars to fund vocational-rehabilitation programs in each state which provide job placement and training services to people with disabilities (Kaye, 1998). Eligibility does not guarantee receipt of services, however, and state programs are required to serve those individuals with the most severe disabilities when there are not enough resources to serve everyone who is eligible (Andrews et al., 1992). Furthermore, there are no formal referral pathways between the SSI/SSDI and the state-federal vocational-rehabilitation systems, so SSA beneficiaries with disabilities typically do not receive vocational-rehabilitation services.

Federal Employees’ Compensation Act

Federal civilian and private-sector workers may also receive compensation for PTSD under the Federal Employees’ Compensation Act (FECA) (5 U.S.C. §§ 8101-8193). FECA, which has its origins in the Compensation Act of 1916 (39 Stat. 743), provides for compensation “for the disability or death of an employee resulting from personal injury sustained while in the performance of his duty” [§ 8102(a)].22 This includes on-the-job mental or emotional injuries. In order to substantiate a claim, the applicant must


… submit factual evidence of employment factors or incidents alleged to have caused or aggravated the psychiatric condition, medical evidence establishing the existence of a mental disorder or emotional condition, and “rationalized medical opinion evidence establishing that his emotional condition is causally related to the identified compensable employment factors” (Turner, 2004).


The circumstances under which compensation is granted for PTSD are a regular subject of litigation and cannot be easily summarized. Compensation disbursement is managed by the Department of Labor’s Office

22

The Longshoremen and Harbor Workers Compensation Act provides similar benefits coverage for so-called nonappropriated fund employees.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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of Workers’ Compensation Programs. FECA also includes a rehabilitation component. Periodic Roll Management units monitor cases to assess claimants’ ability to return to work after awards are granted.

State and Local Government and Private Sector (Workers’ Compensation)

Workers’ Compensation

In the United States, workers’ compensation provides compensation for injuries and illnesses sustained while on the job. Workers’ compensation in the United States originated in a theoretical “bargain” between labor and employers in the early twentieth century (Clayton, 2003/2004). Workers traded the ability to sue employers for damages in civil court in exchange for a no-fault system based only on economic losses. In 1911, Wisconsin, California, Illinois, Kansas, Massachusetts, New Hampshire, New Jersey, Ohio, and Washington adopted workers’ compensation statutes, and programs spread to most other states within a decade, although Mississippi did not establish a program until 1948 (Fishback et al., 2006). Today every state except Texas requires employers to provide insurance to employees against the health and economic impacts of occupational injuries and illnesses. With a few exceptions—some employees in Texas, agricultural employees in some states, and workers at firms with fewer than five employees—workers’ compensation covers all occupational injuries and illnesses in the country.

This no-fault bargain has implications for the amount of compensation that is paid for occupational injuries and illnesses. Compensation in civil court may include an amount for noneconomic damages, such as pain and suffering, that is often some multiple of the size of the award for economic damages. The no-fault bargain has been interpreted as meaning that, in exchange for being assured of receiving a certain payment without the need for proving fault, the employee will give up the right to receive compensation for noneconomic losses.

Sixty different programs, each with its own definition of disability, constitute the workers’ compensation system in the United States (Barron, 2001). In every jurisdiction, the benefits paid under workers’ compensation include all medical care for the specific injury or illness, temporary disability benefits for days out of work as a result of the injury, death benefits, and permanent disability benefits for residual disability (or impairment) after the worker has recovered from the injury or illness as much as will be possible (Clayton, 2003/2004). The point at which the worker becomes eligible for permanent disability benefits is variously referred to as “maximum medical improvement” or “permanent and stationary” status, depending upon the state. There are two general approaches to paying out workers’

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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compensation benefits: New York, Pennsylvania, and certain other states use a “wage loss” approach, paying injured workers over time, given evidence that they are unable to work; a second group of states pays according to “loss of wage-earning capacity” or “impairment” (Barth, 2003/2004), basing payments upon a disability schedule (Berkowitz and Burton, 1987; Reville et al., 2005). The permanent disability benefits provided in workers’ compensation and, in particular, the approach of paying according to the loss of wage-earning capacity is most similar to the VA approach.

As a basis for disability compensation, though, the VASRD is unique to the VA. In determining workers’ compensation, most states—42 of them— use the American Medical Association (AMA) impairment-rating guides in various editions, depending upon the state (Barth, 2003/2004). The AMA system is based on “whole body impairment” and not upon occupational disability or loss of earnings capacity.

The AMA impairment-rating guides do not rate psychiatric conditions. The latest edition of these guides (AMA, 2001) does include a chapter on psychiatric conditions, but the information is not converted into a whole-body impairment rating.

Many states have policies that address the treatment of psychiatric injuries and illnesses in workers’ compensation, but there is no centralized data source that summarizes this information. In general, a distinction is made in workers’ compensation between psychiatric conditions that are adjunct to physical injuries (so-called physical-mental) and stand-alone psychiatric conditions (so-called mental-mental). PTSD is an example of a mental-mental claim. While it is difficult to determine exactly how the different states treat physical-mental claims, there are no states that seem to exclude them explicitly. However, many states do have explicit policies regarding “mental-mental” claims. According to Neuhauser, at least 13 states explicitly exclude all “mental-mental” claims (Connecticut, Florida, North and South Dakota, Georgia, South Carolina, Kentucky, Minnesota, Montana, New Hampshire, Washington, Wyoming, and West Virginia) and thus would not allow compensation for PTSD without attendant physical injury (Neuhauser, 2007). Conversely, a number of states (Alaska, Arizona, Colorado, Idaho, Louisiana, Massachusetts, Missouri, Nevada, New Mexico, Oregon, Rhode Island, and Utah) explicitly allow compensation for “traumatic stress claims” when they arise out of “extraordinary or unusual” events, such as robberies and other violent acts, or else meet some similar standard.

An important distinction between the compensation paid to workers of private employers and the benefits paid by the VA is that veterans acquire their disabilities while taking risks on behalf of the public. In this sense, veterans have more in common with police officers, firefighters, and other public-safety employees of states, counties, and municipalities around the

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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country than they do with employees of private companies. As noted by Seabury (2002), public-safety workers’ compensation benefits are often set by statute at higher levels than the benefits required to be paid by private employers or even than the benefits paid by public employers to their employees that are not involved in public safety. In addition, many states, counties, and municipalities provide lower eligibility thresholds and higher benefits for disability retirement to public safety employees.

Short- and Long-Term Disability

Protection against income loss because of disability is often available to employees through their workplace. The annual U.S. Department of Labor survey that tracks employee benefits found in 2006 that 39 percent of all employees in the private sector had access to short-term disability (STD) benefits and 30 percent had access to long-term disability (LTD) benefits. By comparison, 71 percent of private-sector employees had access to health insurance through their employers (BLS, 2006).

STD programs cover absences from illness and accidents that are not sustained in the course of employment and most often specifically exclude work-related accidents or injuries. Employees must typically be out of work five days before they get benefits, and this waiting period will usually be covered by a paid-absence plan. The usual disability definition is “unable to perform the required tasks of the usual and customary occupation by reason of a medically established mental or physical condition” (IOM, 1999). Wage-replacement ratios range from 50 to 70 percent of pre-disability earnings, with 50 percent replacement being the norm. STD compensation is paid for up to 26 weeks.

Most plans apply specific guidelines for how long a particular impairment should prevent a person from working, given his or her age and the demands of the particular job. Return-to-work dates may be established as part of the initial award of benefits. For persons whose impairments indicate that they will be unable to work over the long term, case-management techniques such as assuring proper medical treatment, vocational rehabilitation, and job accommodation or modification may begin during the STD payment period.

LTD programs cover work absences caused by illnesses and accidents that are not sustained in the course of employment. For employees in higher income brackets, LTD may supplement workers’ compensation and SSDI benefits. Before persons are eligible for LTD payments, they are required to be unable to work for 30-120 days as a result of their disability.

When an employer offers both STD and LTD, the eligibility periods are coordinated. For the first 6-12 months of disability, the eligibility requirement is that a person be “unable to perform the required tasks of the usual

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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and customary occupation” by reason of a medically established mental or physical impairment. After one year, a stricter definition, inability to do “any occupation,” applies. The benefit period may be for a specific length of time or else until retirement age. Wage-replacement rates vary from 50 to 70 percent of pre-disability earnings, with 60 percent being the most common. Most LTD plans require that a person be receiving appropriate medical treatment for the disabling condition. These plans require systematic follow-up with both the person and their physician to assess ongoing disability status. LTD programs include appropriate return-to-work services.

Mandatory Temporary Disability Benefits

Five states—California, Hawaii, New Jersey, New York, and Rhode Island—plus the Commonwealth of Puerto Rico have mandated temporary disability compensation. Employees contribute to these plans in all five states. Employers contribute in Hawaii, New Jersey, and New York. Wage replacement is usually 50 percent of prior pay with certain dollar maximums and minimums. Most states require that a person be out of work for seven days before payment. In 2006 the maximum duration of benefits was 26 weeks in Hawaii, New York, and New Jersey, and 52 weeks in California.

Rationale for Private-Sector Work Disability Programs

The underlying principle for private-sector work disability programs can be traced to the ideas of social justice discussed above. In the United States, people have the responsibility to support themselves through work. There is general public acceptance that the risk of being unable to work because of a disability is legitimate. Definitions of work disability are more or less objectively defined and managed. There is an underlying presumption that persons would rather work than be unable to work because of disability.

Insurance Principles

Social insurance—SSDI being the prime example—spreads the risk of being unable to work because of a disability across the working population. Payroll taxes from all covered workers and their employers are pooled to create a fund for making payments to those found disabled under the established definition. Everyone pays according to a wage-related formula applicable to the entire population. A younger person with less risk of becoming disabled pays the same rate as an older person with greater risk as long as they earn the same amount.

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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A central principle of private-sector disability-compensation programs is that the risk of an insurable event can be determined by actuarial predictions. The predictability of risk makes it possible to place a price tag on risk protection that is based on projected disability incidence and duration for individuals and groups in similar risk categories. Risk categories for work disability are sorted out by individual characteristics such as age, work skills, and health as well as by the type of work performed (classified by industries and occupations). The insurance industry’s rationale is that assumption of a risk can be done profitably through proper risk assessment, risk management, and pricing.

Both insurance approaches—the social and the private—assume that what economists and insurers call “moral hazard” can be managed. The term moral hazard is used to describe the effect that insurance can have on the behavior of the person being insured. Malcolm Gladwell, a noted social commentator, highlighted the relevance of moral hazard in a 2005 New Yorker public-policy article: “Insurance can have the paradoxical effect of producing risky and wasteful behavior.” Gladwell indicated that economists spend a great deal of time thinking about such moral hazards, and for good reason:


Insurance is an attempt to make human life safer and more secure. But, if those efforts can backfire and produce riskier behavior, providing insurance becomes a much more complicated and problematic endeavor (Gladwell, 2005).

The Perception of the Risk

The risk of being unable to work for a considerable period of time because of disability is high. An often-cited figure, attributed to the 1987 Group Long-Term Disability Valuation Tables published by the Society of Actuaries, is that at some point between the ages of 35 and 65, three out of ten people are unable to work for a period of 90 days or longer because of disability (Society of Actuaries, 1987). Employees and self-employed workers are often made aware of this risk and the need for income protection by insurance companies, labor, and professional organizations.

Payment Sources

Part or all of the cost of disability protection may be paid by employers. Employers can pay insurance companies to cover the risk and pay benefits. Large employers may self-insure, which means that they pay the benefit costs and costs of administration themselves instead of passing them off to an insurance company. Disability protection may be offered in a benefit

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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plan that gives an employee a certain amount of money to spend on various benefit options. Insurance companies offer group coverage to employees in selected industries, and employees pay the entire cost. Professional and other associations may offer their members group coverage through insurance companies.

Workers and self-employed persons may qualify to buy individual protection against the risk of earnings loss because of disability. In these cases, the risks of disability are assessed and priced based on individual characteristics such as age, occupation, and health.

Program Goals

Disability protection can be part of a larger menu of employment-based benefits constituting a total compensation package. Historically, such benefits have been made available in lieu of wage increases, and collective-bargaining has played a large role in making these benefits available. Employers recognize that protection from the risk of work-related disability can be an important part of an overall employee-compensation package and can help attract and retain employees.

Employers often use these benefits as part of a larger absence-management program. Managed-disability programs can save costs by reducing absence and increasing productivity by returning employees to work in transitional or modified work roles. Some research suggests that managed-disability programs reduce medical costs (Chelius et al., 1992).

Assessment of Work Disability

Private-sector programs require the presence of a medically established condition. The inability to work is judged according to how that condition impairs work-related functions for a particular person. Functional assessments determine what a person can and cannot do because of the medical condition. Depending on the definition of work disability being used, the person’s functional assessment is then compared to the functions required for either a particular occupation or for any occupation in the economy. This means that both medical and vocational evaluations form a part of the overall disability evaluation.

Disability Management

Employees, employers, and insurers all bear part of the costs of private-sector disability compensation. Managing costs and assuring adequate protection are goals of a workplace disability-compensation system. Disability management is a concept that took hold in private-sector disability-

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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compensation systems in the 1990s. Disability-management programs are designed to prevent or minimize the costs of disability to both employers and employees. The goals of a disability-management program include (1) disability prevention through health promotion and health care, (2) encouraging employees to remain at work or return to work whenever possible, (3) early intervention, (4) medical and vocation rehabilitation, and (5) case management. The most successful of these programs involve employees in their design and assure a proper mix of work incentives and appropriate benefit payments (Akabas et al., 1992; Shrey, 1998).

BOX 2-1

Characteristics of Best-Practice Programs

On the basis of a review of the relevant literature and the expertise of its own members, the committee responsible for the report Integrating Employee Health: A Model Program for NASA derived the following characteristics that may be considered as “best practice”:

  • Program plans are linked to organizational business objectives.

  • Top management supports the program.

  • Effective communication programs are implemented.

  • Effective incentive programs are used.

  • Evaluation is an integral part of the program and is

    • systematic;

    • shared with top management;

    • shared with employees; and

    • valued by top management.

  • The creation of a supportive environment is strongly pursued.

  • The program is appropriately resourced with a sufficient budget.

  • The program design is based on best practice management and behavioral theory (APQC, 1999; also addressed in Chapter 5 of IOM, 2005), including:

    • goal setting;

    • stages of readiness to change, the central construct of the Transtheoretical Model of Behavior Change;

    • define theories (Prochaska et al., 1997)

    • self-efficacy as a recognized predictor for successful behavior change among employees;

    • incentives to optimize program participation;

    • social norms and social support features;

    • programs tailored to the needs of individuals; and

    • multi-level program design that addresses awareness, behavior change, and supportive environments.

SOURCE: Adapted from Box 4-1 (IOM, 2005).

Suggested Citation:"2 Background – Disability Compensation." Institute of Medicine and National Research Council. 2007. PTSD Compensation and Military Service. Washington, DC: The National Academies Press. doi: 10.17226/11870.
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Integration of disability compensation with health care and health-promotion programs is an important and evolving practice. Such integration assures that all workplace health-promotion and disability programs work together under like principles to encourage a healthy workforce and reduce disability. A previous Institute of Medicine committee produced a report that addresses the characteristics of a best-practice program for an integrated health system (IOM, 2005), and a summary of their findings is reproduced here as Box 2-1.

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The scars of war take many forms: the limb lost, the illness brought on by a battlefield exposure, and, for some, the psychological toll of encountering an extremely traumatic event. PTSD Compensation and Military Service presents a thorough assessment of how the U.S. Department of Veterans Affairs evaluates veterans with possible posttraumatic stress disorder and determines the level of disability support to which they are entitled. The book presents a history of mental health disability compensation of military personnel and reviews the current compensation and pension examination procedure and disability determination methodology. It offers a number of recommendations for changes that would improve the fairness, consistency, and scientific foundation of this vital program. This book will be of interest and importance to policy makers, veterans affairs groups, the armed forces, health care organizations, and veterans themselves.

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