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C The Relationship Between Impairments and Earnings Losses in Multicondition Studies
Pages 304-361

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From page 304...
... Reville The purpose of this study is to provide assistance to the Institute of Medicine (IOM) Committee on Medical Evaluation of Veterans for Disability Compensation, and, in particular, to help address portions of the committee's first task: How well do the medical criteria in the VA Rating Schedule and VA rating regulations enable assessment and adjudication of the proper levels of dis ability to compensate both for the impact on quality of life and impairment in earnings capacity?
From page 305...
... The permanent disability period is the crucial period for our study of the veterans disability compensation program because we are examining the benefits provided to veterans with permanent consequences of their injuries or diseases.  This section is based in part on Burton (2005)
From page 306...
... First, Figure C-2 is only concerned with work disability, while the report also considers losses in quality of life, which are defined as "the consequences of an injury or disease other than work disability." Second, Figure C-2 divides both impairment and work disability into subcomponents in order to facilitate the analysis in this study. The concepts in Figure C-2 described below correspond to the operational measures currently used to determine the amount of cash benefits provided by workers' compensation programs and to the outcome measure used in the research on disability programs examined in this study.
From page 307...
... The loss of earning capacity approach is used in a number of workers' compensation programs for certain types of injuries.
From page 308...
... We will describe these methods in connection with the research on the two workers' compensation programs and the veterans disability compensation program examined in this study. The Causes of the Injury or Disease Both workers' compensation programs and the veterans disability compensation program provide benefits only when specified causation requirements are satisfied.
From page 309...
... Studies of the relationship between earnings losses and cash benefits, for example, use the entire amount of cash benefits to evaluate the performance of the system of cash benefits.3 We assume for this study that the sole purpose of cash benefits in workers' compensation is to compensate for work disability and not for the other consequences shown in Figure C-2. Veterans Disability Compensation Program The statement of tasks for the IOM committee asks for an evaluation of VA's Schedule for Rating Disabilities (Rating Schedule)
From page 310...
... There are several possible reasons why disability compensation programs use proxies, such as the extent of the applicant's impairment, to provide benefits for which the purpose is actual loss of earnings. The first reason is administrative convenience: It is easier to conduct a medical examination of an applicant than to monitor the worker's actual labor market experience over an extended period of time.
From page 311...
... The seriousness of the nonscheduled injury -- typically a back condition -- was rated "as the nature of the injury bears to one causing permanent total disability." A 40 percent rating for the back was multiplied by 1,000 weeks to determine the duration of the PPD benefits.  An extended discussion of the various approaches to cash benefits in workers' compensation programs is included in Burton (2005)
From page 312...
... TABLE C-1 Wisconsin Uncontested Permanent Partial Disability Cases for Men with 1968 Injuries 312 Percent Rating Classification Mean of Workers 1–2 3–5 6–10 11–15 16–50 51–100 Ratings Total Panel A Weighted counts of workers and mean disability ratings 1 Workers ages 20–59 941.0 467.0 177.0 52.0 48.0 3.70 1,685.0 2 Workers ages 20–29 294.0 105.5 36.0 15.0 14.0 3.54 464.5 3 Workers ages 30–39 226.0 122.0 39.5 10.0 14.0 3.69 411.5 4 Workers ages 40–49 219.5 140.5 53.5 11.0 13.0 3.68 437.5 5 Workers ages 50–59 201.5 99.0 48.0 16.0 7.0 3.71 371.5 6 Upper extremities 785.0 192.0 82.0 20.0 20.0 2.80 1,099.0 7 Trunk cases 17.0 93.0 42.0 10.0 0.0 5.83 162.0 8 Lower extremities 120.0 150.0 34.0 9.0 4.0 3.76 317.0 9 All other cases 19.0 32.0 19.0 13.0 24.0 9.62 107.0 Panel B Mean potential earnings (1968–1973, in dollars) a 1 Workers ages 20–59 42,567 43,938 43,320 42,472 37,960 42,892 2 Workers ages 20–29 40,144 44,412 38,743 41,693 32,671 40,829 3 Workers ages 30–39 43,641 46,232 47,880 52,464 42,605 44,995 4 Workers ages 40–49 45,298 44,383 48,995 48,364 41,628 45,414 5 Workers ages 50–59 41,925 39,973 36,673 32,905 32,434 40,159 6 Upper extremities 42,740 44,084 41,644 39,699 35,516 42,706 7 Trunk cases 37,364 44,193 45,224 44,276 43,748 8 Lower extremities 42,497 43,123 43,355 37,036 37,720 42,670 9 All other cases 40,529 46,136 46,279 49,113 40,036 44,159
From page 313...
... 7,766 * 3,889 Panel D Standard deviation of mean earnings losses (1968–1973, in dollars)
From page 314...
... TABLE C-1 Continued 314 Percent Rating Classification Mean of Workers 1–2 3–5 6–10 11–15 16–50 51–100 Ratings Total Panel E Proportional earnings losses 1 Workers ages 20–59 0.036 0.063 0.099 0.176 0.189 0.059 2 Workers ages 20–29 0.043 0.043 0.035 0.159 0.268 0.051 3 Workers ages 30–39 0.069 0.164 0.134 0.248 0.226 0.115 4 Workers ages 40–49 0.062 0.021 0.095 0.085 0.102 0.055 5 Workers ages 50–59 –0.040 0.007 0.119 0.216 0.141 0.003 6 Upper extremities 0.036 0.038 0.070 0.128 0.211 0.043 7 Trunk cases 0.123 0.123 0.075 0.201 0.115 8 Lower extremities 0.043 0.053 0.216 0.317 0.053 0.074 9 All other cases –0.049 0.078 0.069 0.145 0.194 0.088 Panel F Mean benefits of legal fees (1968–1973, in dollars) 1 Workers ages 20–59 696 2,479 4,957 7,807 10,980 2,150 2 Workers ages 20–29 742 2,316 5,078 8,388 12,846 2,047 3 Workers ages 30–39 626 2,509 5,451 7,224 10,286 2,136 4 Workers ages 40–49 706 2,316 4,999 7,360 10,327 2,201 5 Workers ages 50–59 696 2,846 4,412 7,934 9,851 2,234 6 Upper extremities 593 2,057 4,503 6,716 11,641 1,453 7 Trunk cases 1,288 3,141 5,371 8,410 3,850 8 Lower extremities 1,261 2,636 5,803 10,254 13,537 2,809 9 All other cases 842 2,348 4,485 7,326 10,003 4,782
From page 315...
... Panel G Replacement rates: Benefits as proportion of earnings losses 1 Workers ages 20–59 0.45 0.90 1.15 1.04 1.53 0.85 2 Workers ages 20–29 0.43 1.23 3.80 1.27 1.47 0.98 3 Workers ages 30–39 0.21 0.33 0.85 0.55 1.07 0.41 4 Workers ages 40–49 0.25 2.43 1.08 1.78 2.44 0.87 b 5 Workers ages 50–59 9.91 1.01 1.11 2.15 19.11 6 Upper extremities 0.39 1.22 1.55 1.32 1.55 0.79 7 Trunk cases 0.28 0.58 1.58 0.94 0.77 8 Lower extremities 0.70 1.14 0.62 0.87 6.82 0.90 b 9 All other cases 0.66 1.41 1.03 1.29 1.23 * Significant at the .05 level.
From page 316...
... Thus the results in this section probably would not be applicable to workers who receive PPD benefits from the current Wisconsin workers' compensation program. Summary of the Wisconsin Results The male Wisconsin workers who were injured in 1968 and received PPD benefits were separated into two categories.
From page 317...
... The significance at the .05 level is shown by the asterisk by the $2,519 entry in Panel C In contrast, the standard deviation for workers with injuries to the upper extremity rated at 1−2 percent was $875, and so we cannot be 95 percent certain that the mean earnings losses of $1,535 were greater than zero.
From page 318...
... . The equity criteria were used to evaluate a disability benefits program in The Report of the National Commission on State Workmen's Compensation Laws:
From page 319...
... With the exception of the lowest and highest disability category, the percentage earnings losses are close to the midpoint of the corresponding category of disability ratings. For example, workers with disability ratings of 11−15 percent experienced 12.8 percent earnings losses.8 Intra-Injury Horizontal Equity for Ratings Intra-injury horizontal equity for ratings requires that the actual wage losses for workers with the same disability ratings and the same type of injury should be the same or similar.
From page 320...
... 320 EVALUATING VETERANS FOR DISABILITY BENEFITS 25 21.1 20 Percent Earnings Losses 15 12.8 10 7.0 3.8 5 3.6 0 1–2 3–5 6–10 11–15 16–50 Percent Rating FIGURE C-4 Percentage earnings losses for Wisconsin workers with upper extremity injuries. C-4 14,000 12,159 12,000 10,606 10,000 8,000 7,503 6,365 5,592 Dollars 6,000 5,098 4,000 3,285 2,913 2,847 1,688 1,535 2,000 0 -215 -410 -539 -2,000 -2,216 -4,000 1–2 3–5 6–10 11–15 16–50 Range is mean plus or minus two standard deviations Mean plus two standard deviations Mean minus two standard deviations FIGURE C-5 Earnings losses for Wisconsin workers with upper extremity injuries: means and ranges of losses.
From page 321...
... One "lesson" of Figure C-5 in conjunction with Panels C and D of Table C-1 is that the Wisconsin workers' compensation program did a reasonably good job on vertical equity for upper extremity cases when the emphasis is placed on mean values of losses, but that the program did not do as well on intra-injury horizontal equity, as shown by the considerable variability in lost wages for workers with similar disability ratings. The relationships between disability ratings and earnings losses for four types of injuries are shown in Figure C-6.
From page 322...
... ? As shown in Figure C-7, for all Wisconsin workers, there is a very close relationship between rating categories and percentage earnings losses.
From page 323...
... . This replacement rate, which is shown by the horizontal line 66.67 percent in Figures C-8 to C-10, can be used to assess the adequacy of benefits provided by the Wisconsin workers' compensation program for workers receiving permanent partial disability benefits.
From page 324...
... Those who subscribe to the alternative view can take some comfort from Figure C-10, which indicates the Wisconsin 180 155 160 155 140 Percent Replacement Rates 132 120 122 100 80 60 39 40 20 0 1–2 3–5 6–10 11–15 16–50 Percent Rating FIGURE C-8 Replacement rates (benefits as a percentage of earnings losses) for Wisconsin workers with upper extremity injuries.
From page 325...
... for Wisconsin workers with four types of injuries. C-9 180 160 153 140 Percent Earnings Losses 115 120 90 104 100 80 60 45 40 20 0 1–2 3–5 6–10 11–15 16–50 Percent Rating FIGURE C-10 Replacement rates (benefits as a percentage of earnings losses)
From page 326...
... and percent rating, there are large variations in earnings losses among different workers.
From page 327...
... We produced new empirical results for this study involving workers who were injured between January 1, 1991, and December 31, 1993, and who received permanent partial disability benefits in California.11 The California workers' compensation benefit system applicable to the workers in this study had some similarities to the Wisconsin workers compensation program described in the previous section. California used different benefit formulae during the temporary disability period and the permanent disability period (Figure C-1)
From page 328...
... Work-capacity Guidelines were developed to rate spines and then were extended to other medical conditions. The guidelines in part correspond to II in Figure C-2 ("contemplates the individual has lost approximately half of his pre-injury capacity for performing such activities as bending, stooping, lifting")
From page 329...
... There are no California data on the standard deviation of mean earnings losses corresponding to Panel D in the Wisconsin data in Table C-1. In addition, the only benefits data readily available for California are confined to PPD benefits and do not include temporary disability benefits, as in Wisconsin, and so there are no Panels F and G in Table C-2.
From page 330...
... TABLE C-2 California Permanent Partial Disability Cases 330 Percent Rating Classification Mean of Workers Ratings 1–5 6–10 11–15 16–20 21–25 26–50 51–100 Total Panel A Counts of workers 1 General lower 299 134 152 136 117 147 65 18.7 1,050 extremity impairment 2 Hip impairment 65 44 44 17 26 42 25 20.6 263 3 Knee impairment 2,549 1,500 1,313 843 690 825 206 14.6 7,926 4 Ankle impairment 988 473 335 253 134 218 100 13.7 2,501 5 Impaired function 196 35 23 23 11 13 10 9.4 311 in toe(s) 6 Vision impairment 93 22 12 8 28 7 1 10.2 171 7 Hearing impairment 732 255 227 103 74 62 79 11.0 1,532 8 Hand/fingers 2,322 615 507 233 102 273 17 8.7 4,069 9 Loss of grasping 1,721 2,421 1,167 771 234 511 85 11.3 6,910 power 10 Chronic lung 19 68 9 13 4 15 16 20.4 144 impairment 11 Heart disease 6 34 26 43 10 64 47 32.0 230 12 General impairment 895 886 1,187 621 272 1,003 75 17.9 4,939 to shoulder or arm 13 Impaired function in 1,808 1,023 930 410 109 106 14 9.8 4,400 shoulder 14 Impaired function in 760 388 292 107 43 59 1 9.3 1,650 elbow 15 Impaired function 1,244 711 716 334 115 437 18 13.0 3,575 in wrist
From page 331...
... 6 Vision impairment 179,462 163,693 182,941 152,001 214,175 173,203 907,883 186,080 7 Hearing impairment 327,325 298,036 286,521 300,473 322,791 263,565 342,879 312,602 8 Hand/fingers 209,404 212,214 192,877 201,203 181,845 188,842 173,162 205,078 9 Loss of grasping 202,594 197,372 184,260 182,303 171,652 187,648 206,208 193,295 power 10 Chronic lung 209,446 187,187 172,809 236,983 161,239 199,785 216,351 197,553 impairment 331 continued
From page 332...
... TABLE C-2 Continued 332 Percent Rating Classification Mean of Workers Ratings 1–5 6–10 11–15 16–20 21–25 26–50 51–100 Total 11 Heart disease 230,212 321,699 386,182 296,066 441,916 320,496 271,779 316,501 12 General impairment 221,518 212,543 192,945 186,673 179,654 186,235 160,057 198,256 to shoulder or arm 13 Impaired function in 229,916 218,578 224,585 191,834 177,413 201,546 181,857 220,468 shoulder 14 Impaired function in 244,375 236,635 217,595 217,276 211,776 187,296 25,710 233,035 elbow 15 Impaired function 196,603 204,600 191,931 187,747 173,689 195,437 205,847 195,597 in wrist 16 Impaired function 211,659 201,228 198,319 193,793 186,691 181,240 185,695 194,965 of neck, spine, or pelvis 17 General impairment 298,018 283,966 202,290 252,706 351,237 173,110 219,259 258,382 to abdomen 18 Psychiatric 252,582 203,768 209,605 199,731 233,809 215,352 231,894 217,825 impairment 19 Posttraumatic head 109,461 133,884 254,696 199,530 199,818 132,797 215,269 167,631 syndrome 20 Headaches 171,730 216,163 215,627 66,244 70,903 136,991 221,950 178,310 21 Other 222,476 172,208 268,260 352,335 194,575 211,438 218,442 220,426 22 Multiple 232,058 205,536 191,462 193,938 188,114 184,851 190,298 192,060 impairments 23 Total 224,315 209,364 202,352 197,457 192,891 187,224 193,817 204,505
From page 333...
... 6 Vision impairment 1,518 27,353 24,981 –31,339 50,294 81,007 769,050 20,680 7 Hearing impairment 97,275 105,490 106,834 134,188 147,299 112,385 126,603 107,081 8 Hand/fingers 30,674 40,465 47,015 53,352 62,070 76,110 117,422 39,687 9 Loss of grasping 29,904 35,871 46,702 48,068 49,262 72,625 83,994 41,338 power 10 Chronic lung 53,569 62,087 14,616 49,687 -41,265 51,094 151,581 62,804 impairment 11 Heart disease 54,910 80,954 62,862 135,073 222,307 131,962 191,720 131,322 12 General impairment 41,267 47,078 51,570 60,893 58,731 74,778 89,442 55,752 to shoulder or arm 13 Impaired function in 41,217 56,103 74,430 65,240 64,813 94,681 94,728 55,980 shoulder 14 Impaired function in 43,771 48,292 59,764 49,634 72,154 54,021 9,145 49,130 elbow 15 Impaired function 30,876 48,626 44,769 51,796 46,014 69,838 107,651 44,779 in wrist 16 Impaired function 34,857 37,488 46,577 50,187 58,597 67,237 103,985 50,822 of neck, spine, or pelvis 17 General impairment 106,332 96,965 45,454 121,247 165,557 53,324 120,402 94,057 to abdomen 333 continued
From page 334...
... TABLE C-2 Continued 334 Percent Rating Classification Mean of Workers Ratings 1–5 6–10 11–15 16–20 21–25 26–50 51–100 Total 18 Psychiatric 114,519 107,346 105,382 103,634 136,278 146,619 189,275 123,867 impairment 19 Posttraumatic head 60,075 17,161 86,519 53,981 –75,641 85,629 200,984 63,190 syndrome 20 Headaches 39,739 66,326 98,959 –32,016 50,423 20,066 –12,946 46,647 21 Other 41,070 13,888 38,994 170,609 61,545 114,093 152,655 50,093 22 Multiple 54,613 41,508 39,885 57,043 57,888 74,409 104,045 64,671 impairments 23 Total 38,687 42,198 49,856 55,293 62,038 73,530 106,482 53,623 Panel E Proportional earnings losses 1 General lower 0.15 0.17 0.19 0.27 0.33 0.44 0.48 0.25 extremity impairment 2 Hip impairment 0.18 0.25 0.20 0.45 0.38 0.19 0.50 0.26 3 Knee impairment 0.15 0.15 0.20 0.24 0.34 0.39 0.57 0.22 4 Ankle impairment 0.13 0.14 0.24 0.19 0.32 0.35 0.45 0.19 5 Impaired function 0.14 0.16 0.29 –0.05 0.19 0.48 0.58 0.18 in toe(s) 6 Vision impairment 0.01 0.17 0.14 –0.21 0.23 0.47 0.85 0.11 7 Hearing impairment 0.30 0.35 0.37 0.45 0.46 0.43 0.37 0.34 8 Hand/fingers 0.15 0.19 0.24 0.27 0.34 0.40 0.68 0.19 9 Loss of grasping 0.15 0.18 0.25 0.26 0.29 0.39 0.41 0.21 power 10 Chronic lung 0.26 0.33 0.08 0.21 –0.26 0.26 0.70 0.32 impairment
From page 335...
... 11 Heart disease 0.24 0.25 0.16 0.46 0.50 0.41 0.71 0.41 12 General impairment 0.19 0.22 0.27 0.33 0.33 0.40 0.56 0.28 to shoulder or arm 13 Impaired function in 0.18 0.26 0.33 0.34 0.37 0.47 0.52 0.25 shoulder 14 Impaired function in 0.18 0.20 0.27 0.23 0.34 0.29 0.36 0.21 elbow 15 Impaired function 0.16 0.24 0.23 0.28 0.26 0.36 0.52 0.23 in wrist 16 Impaired function 0.16 0.19 0.23 0.26 0.31 0.37 0.56 0.26 of neck, spine, or pelvis 17 General impairment 0.36 0.34 0.22 0.48 0.47 0.31 0.55 0.36 to abdomen 18 Psychiatric 0.45 0.53 0.50 0.52 0.58 0.68 0.82 0.57 impairment 19 Posttraumatic head 0.55 0.13 0.34 0.27 -0.38 0.64 0.93 0.38 syndrome 20 Headaches 0.23 0.31 0.46 –0.48 0.71 0.15 –0.06 0.26 21 Other 0.18 0.08 0.15 0.48 0.32 0.54 0.70 0.23 22 Multiple 0.24 0.20 0.21 0.29 0.31 0.40 0.55 0.34 impairments 23 Total 0.17 0.20 0.25 0.28 0.32 0.39 0.55 0.26 335
From page 336...
... The proportional earnings losses are shown in Panel E These figures represent the mean earnings losses in Panel C divided by the mean potential earnings in Panel B
From page 337...
... 337 APPENDIX C 100 80 Percent Earnings Losses 60 40 20 0 1–5 6–10 11–15 16–20 21–25 26–50 50+ –20 –40 Percent Rating General Lower Extremity Impairment Knee Impairment Vision Impairment Hearing Impairment FIGURE C-11 Percentage earnings losses for California workers with four types of injuries. Figure C-11 100 80 60 Percent Earnings Losses 40 20 0 1–5 6–10 11–15 16–20 21–25 26–50 50+ –20 –40 Percent Rating Chronic Lung Impairment General Impairment to Shoulders or Arms Impaired Function of Neck, Spine, or Pelvis Psychiatric Impairment FIGURE C-12 Percentage earnings losses for California workers with four types of injuries.
From page 338...
... At this level of aggrega 60 55 50 Percent Earnings Losses 40 39 32 30 28 25 20 20 17 10 0 1–5 6–10 11–15 16–20 21–25 26–50 50+ Percent Rating FIGURE C-13 Percentage earnings losses for all California workers. Figure C-13
From page 339...
... 2. We have data on disabled workers with 22 medical conditions, which constitute a significant portion, but not the universe, of California workers who received permanent partial disability benefits during the years covered by our study.
From page 340...
... THE 1971 REPORT ON THE ECONOMIC VALIDATION OF THE [VA] RATING SCHEDULE STUDY The Veterans Disability Compensation Program Disability compensation is a cash benefit paid to veterans who are disabled by injuries or diseases incurred or aggravated during active military service.
From page 341...
... The Operational Basis for the Cash Benefits in the Veterans Disability Compensation Program While the purpose of the cash benefits in the veterans disability compensation program is to compensate for work disability, the program is similar to the Wisconsin and California programs in the use of a proxy or proxies for work disability as the operational basis for the benefits. The Rating Schedule used for the program is contained in the Code of Federal Regulations (38 CFR Ch.1)
From page 342...
... The results were tabulated by the diagnostic codes used in the Rating Schedule and by the rating degrees for the veterans' medical conditions. We examined the results for disabled veterans with 10 medical conditions.
From page 343...
... The median disability benefits for veterans are shown in Panel F Because the benefits are a function of the rating category, there are no variations in benefits among veterans with the same percentage disability  Military personnel separated from the service because of disability are eligible for disability compensation from the Department of Defense (DoD)
From page 344...
... 4 Defective visual acuity 7,576 8,262 7,241 7,439 7,018 6,993 7,209 7,243 7,008 7,507 5 Hearing impairment 7,821 7,425 7,293 7,223 7,263 7,203 6 Chronic respiratory diseases 7,844 7,069 6,605 6,502 7 Hypertensive vascular disease 7,672 7,519 7,275 8 Gastrointestinal ulcers 7,287 7,023 6,691 9 Scars 7,692 7,592 7,447 7,215 10 Diabetes mellitus 7,547 7,617 7,709 7,500 7,035 11 Average 7,696 7,530 7,320 7,213 7,160 7,079 7,241 7,268 7,263 7,015 Panel C Median earnings losses (in dollars) a 1 Amputation, upper extremity 335 899 775 1,733 1,747 2,500 2,269 2,283 1,977 2 Spine disorders 479 703 1,401 4,144 3 Impairment of knee (other than 700 1,047 755 ankylosis)
From page 345...
... a 1 Amputation, upper extremity 252 480 720 984 1,356 1,632 1,932 2,232 2,508 2 Spine disorders 252 480 984 1,632 3 Impairment of knee (other than 252 480 720 ankylosis) 4 Defective visual acuity 252 480 720 984 1,356 1,632 1,932 2,232 2,508 3,600 5 Hearing impairment 252 480 720 984 1,632 2,232 6 Chronic respiratory diseases 252 720 1,632 3,600 7 Hypertensive vascular disease 252 480 984 8 Gastrointestinal ulcers 252 480 984 9 Scars 252 720 1,356 2,232 10 Diabetes mellitus 252 480 984 1,632 3,600 11 Average 252 480 720 984 1,356 1,632 1,932 2,232 2,508 3,600 345 continued
From page 346...
... TABLE C-3 Continued 346 Percent Rating Medical Conditions 10 20 30 40 50 60 70 80 90 100 Panel G Replacement rates: Benefits as proportion of earnings losses 1 Amputation, upper extremity 0.752 0.534 0.929 0.568 0.776 0.653 0.851 0.978 1.269 2 Spine disorders 0.526 0.683 0.702 0.394 3 Impairment of knee (other than 0.360 0.458 0.954 ankylosis) 4 Defective visual acuity 0.504 0.692 0.585 0.501 0.678 0.557 0.523 0.461 0.448 0.599 5 Hearing impairment 1.151 0.539 1.316 1.216 1.284 1.065 6 Chronic respiratory diseases 0.335 0.441 0.323 0.651 7 Hypertensive vascular disease 0.538 0.338 0.564 8 Gastrointestinal ulcers 0.397 0.518 0.631 9 Scars 0.840 0.921 1.937 0.821 10 Diabetes mellitus 0.315 0.589 0.675 0.604 0.647 11 Average 0.572 0.544 0.858 0.694 1.130 0.636 0.687 0.831 0.858 0.632 aIn 1967 dollars.
From page 347...
... This test requires that actual wage losses generally increase as the disability ratings increase. In most instances, as the percentage disability ratings increase for a particular medical condition, the percentage earnings losses also increase.
From page 348...
... 120 Figure C-14 100 Percent Earnings Losses 80 60 40 20 0 10 20 30 40 50 60 70 80 90 100 Percent Rating Chronic Respiratory Diseases Hypertensive Vascular Disease Gastrointestinal Ulcers Scars Diabetes Mellitus FIGURE C-15 Percentage earnings losses for veterans with five types of injuries. Figure C-15
From page 349...
... Inter-Injury Horizontal Equity for Ratings Inter-injury horizontal equity for ratings requires that the earnings losses for veterans with the same disability ratings and different types of 120 100 Percent Earnings Losses 81.4 80 60 53.1 44.3 41.2 40 41.1 21.2 20.9 20 13.1 12.3 6.8 0 10 20 30 40 50 60 70 80 90 100 Percent Rating FIGURE C-16 Percentage earnings losses for veterans: averages for ten types of injuries.
From page 350...
... Adequacy of Benefits The data in Figures C-17 through C-19 could be used to assess the adequacy of benefits provided by the veterans disability compensation pro 140 120 Percent Replacement Rates 100 80 60 40 20 0 10 20 30 40 50 60 70 80 90 100 Percent Rating Amputation, Upper Extremity Spine Disorders Impairment of Knee (other than ankylosis) Defective Visual Acuity Hearing Impairment FIGURE C-17 Replacement rates (benefits as a percentage of earnings losses)
From page 351...
... 120 113.0 Figure C-18 100 Percent Replacement Rates 83.1 85.8 85.8 80 69.4 63.6 68.7 63.2 60 57.2 54.4 40 20 0 10 20 30 40 50 60 70 80 90 100 Percent Rating FIGURE C-19 Replacement rates (benefits as a percentage of earnings losses) for veterans: averages for 10 types of injuries.
From page 352...
... Observations on the Veterans Disability Compensation Program 1. We again note it is important to distinguish between the ability of the disability rating system to accurately predict earnings losses (discussed in entries 3 through 5 below)
From page 353...
... We use that framework to examine three different programs that provide cash benefits to persons with disabilities. We realize that the three programs -- the Wisconsin and California workers' compensation programs and the veterans disability compensation program -- are quite
From page 354...
... Inter-injury horizontal equity requires that workers or veterans with similar disability ratings but different types of injuries should experience similar earnings losses. We concluded there were serious inter-injury equity problems in the ratings systems used by the Wisconsin and California workers' compensation programs, as well as the veterans disability compensation program.
From page 355...
... Distinguishing Between the Purpose of Benefits and the Operational Basis for Benefits We distinguish between the purpose of benefits and the operational basis for benefits. The purpose of the two workers' compensation programs we examined and the current purpose of the veterans disability compensation program is to compensate for work disability (loss of earnings)
From page 356...
... Intra-Injury Horizontal Equity and Outliers The preceding discussion essentially pertains to the virtues and deficiencies in the rating system for disabilities in two workers' compensation programs and in the veterans disability program using the criteria of vertical equity and inter-injury horizontal equity, and to some possible policies to deal with the deficiencies. Another topic we want to examine is intra-injury horizontal equity for ratings, which requires that workers or veterans with the same disability rating and same type of injury or medical condition should experience the same or similar levels of earnings losses.
From page 357...
... For example, if after controlling for the type and severity of injury, the addition of age to the disability rating system increases the accuracy of the predictions of loss of actual earnings, intra-injury horizontal equity will be improved. However, whether there are such variables that improve the accuracy of the rating system is an empirical question where logic is probably a poor guide.23 Fourth, the disability program can use the disability rating system to determine the amount of benefits for the majority of beneficiaries, but provide a safety valve for "outliers" who have earnings losses far in excess of the amount of losses predicted by the rating system.
From page 358...
... We have also briefly discussed benefits systems, and provided criteria for evaluating such systems -- horizontal equity, vertical equity, and adequacy. While we have concluded that the disability rating systems for the two workers' compensation programs and the veterans disability compensation program do a reasonably good job of providing equity, we have not attempted to make any judgment about the adequacy of the veterans disability benefits.
From page 359...
... The permanent partial disability benefits provided by most workers' compensation programs and the veterans disability compensation program do not in general link eligibility for the cash benefits to a demonstration of earnings losses and, consequently, the possible inducement to reduce
From page 360...
... Ideally, an empirical study of the relationship between disability benefits and earnings losses would separate the effects of the severity of the consequence of the injury from the effects of the benefits provided by the disability benefits system.27 We do not think these methodological issues detract from the primary conclusions of the current study. REFERENCES Berkowitz, M., and J
From page 361...
... 361 APPENDIX C Peterson, M


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