America’s system for compensating disabled veterans is in crisis.
It encourages talented young men and women to think of themselves as broken, coaxing nearly half of all separating servicemembers these days into investing time and effort in identifying themselves as disabled. This tidal wave of new disability claims drives up processing time and hinders prompt attention to severe cases where lifelong support is truly necessary. Worst of all, the siren’s call of disability payments is luring hundreds of thousands of men and women in their prime of life out of the spirited, mission-oriented, teamwork of military service and into the isolation of a mailbox economy—waiting at home for disability checks that disconnect them from the active habits, personal satisfactions, and social linkages of self-supporting work.
What’s more, this soaring reliance on entitlements is becoming a heavy burden on taxpayers. The lifetime cost of just the Iraq-Afghanistan veterans already enrolled on disability compensation exceeds $425 billion. That price tag will grow a lot more as upward of one million new veterans of these wars enter civilian life during the next five years.
Our military disability system is old and outdated, based on medical diagnoses that date back to World War II, with little acknowledgement that revolutions in assistive technology, in new workforce structures, in legal protection, and in mainstreaming of the disabled have taken place over the last generation. We should be experiencing much more activity, employment, and self-support among today’s disabled, but thanks to the perverse incentives in today’s entitlements there are actually fewer of the disabled working now than in the past.
With the best of intentions—to create a safety net for those injured in service to our country—we are encouraging veterans to invest their time and effort not in overcoming or making accommodations for their injuries, but in proving that they can’t. This system is reinforced by powerful and long-standing political interests that protect the status quo. So even though our current mechanism is not sustainable, not necessary, and not in the best interests of many of today’s veterans, it grinds on. It will continue to shamble along, backlogged and often harmful, until someone can demonstrate that there is a better way—an alternative built on independence and earned success for veterans with injuries, rather than monetary patronization.
Investing up front
What if, rather than giving veterans a lifelong trickle of monthly payments, we instead invested heavily up front in treating and accommodating their injuries and training them to succeed at their dream jobs? Private philanthropists could kickstart this very process by setting up a voluntary trial for injured veterans transitioning to civilian life. Participants could surrender all or part of their lifetime entitlement to disability pay in return for a one- to three-year stream of medical, rehabilitative, educational, and job-placement resources that would prepare them to thrive.
For the first time, veterans would have a choice. They could stick to the old system of modest compensation checks for life if they wanted, or they could avail themselves of intensive resources focused on maximizing their strengths and future potential. There is evidence that the challenge of rising to a major personal remake will appeal to many 9/11-era vets.
This alternative track would begin with a battery of diagnostic evaluations to determine physical and mental health, innate aptitudes, interests, and personality traits. Then intensive training and accommodations would be offered to enable professional and social success. Private disability insurers have offered such supports for years, and a potent, personalized course could be crafted for each vet by a range of nonprofit, private, or government vendors competing on the basis of their long-term success rates.
Veterans already have training options on paper, but few high-quality programs exist in practice. This track would offer the nation’s best resilience and rehabilitation programs for physical and mental health, drawing from projects like the Shepherd Center’s SHARE Program and the University of Texas’s Brain Performance Institute. It would enroll participants in programs that strengthen individuals mentally and physically through adaptive sports, peer support groups, wilderness training, addiction and depression programs, and other proven tracks. It would offer top-level internships, mentoring, and entrepreneurial training for those interested in self-employment. There could be training and assistance for family members.
This alternative track would supply equipment like specially adapted computing devices, smart-home features, Segway transporters, and other new technologies. Research shows that these technologies can make a real difference in getting veterans back to work, yet they are not broadly available. Intensive doses of independence-bolstering resources like these would be made available on the new track. The old technique of pensioning veterans off, effectively placing them up out of the way on a dusty shelf, would be avoided.
Much of today’s pressure for veterans to opt into a permanent stream of disability payments plays to financial insecurities—they must all at once change careers, adapt to new medical conditions, move into civilian communities, and start budgeting for expenses the military previously covered, like housing, health care, and child care. Disability entitlements can be alluring in the face of these changes. But real financial security doesn’t come from a string of small government checks.
The alternative path for disabled vets would include an intensive financial planning element focused on helping them reach major goals (car ownership, home ownership, college tuition for their children, retirement), prepare for unforeseen expenses, budget their resources, and figure out how much they need to earn to achieve all of these. As an added benefit, the financial security component of this track could offer incentives like matched savings accounts. Organizations like the Corporation for Enterprise Development have years of experience with such incentives.
Perhaps most importantly, this program would work with veterans to set education and career goals, connect them with the right schools and training, provide guidance as they navigate the academy, and ease transitions into family-sustaining careers. For a veteran interested in software development, this might mean supporting him or her through an undergraduate degree in computer science, arranging summer jobs and mentoring, and eventually offering headhunter services. For another interested in starting a business, this program might put him or her through top-notch entrepreneurship training, arrange for membership in an incubator, and provide seed funding for an initial business investment. Veterans interested in vocational career paths would be provided the training they need, funds for tools and equipment, and access to workshops. Temporary wage subsidies might be employed to create a powerful updraft of job opportunities for new graduates.
Much work has already been done along these lines. Programs like the Wounded Warrior Project’s TRACK offer lessons in higher education. The Posse Foundation has begun to group veterans into cohorts and put them through a kind of academic boot camp that allows them to succeed at high-caliber colleges. Companies like GE and Microsoft have piloted intensive training courses that give servicemembers the skills to fill great jobs. Syracuse University’s Entrepreneurship Bootcamp for Veterans with Disabilities and the Kauffman Foundation’s FastTrac programs have shown how to prepare veterans for business ownership, and could be beefed up even more for veterans on this track. Organizations like Workforce Opportunity Services have pioneered new approaches that strongly link veterans and employers. Philanthropists could draw from many existing models to create a whole new approach to compensating for disability.
The immediate goal for this recovery track would be to put veterans into meaningful long-term careers. Give them the tools to get hired and stay employed. Any number of excellent service providers could lead such career and life-success programs. Ultimately it would be best to have many organizations compete to empower and place disabled vets in jobs. The best providers would grow, and the weaker ones would be shed.
An appropriately modest revolution
The program outlined here would revolutionize our nation’s approach to reintegrating injured veterans. Rather than treating them as irreparably broken victims, we would treat them as talented national assets who are undergoing a life transition. This program would not disrupt the other benefits veterans receive after service. The only entitlement it would change is disability compensation. GI Bill benefits, health care, home loans, and other Department of Veterans Affairs support would remain. And no one would be forced onto this alternate route; veterans would simply get a choice: modest compensation for permanent disability, or a jolting jumpstart into an active life and career.
This program would not be entirely new, just new to American veterans. Private disability insurers like Cigna, Hartford Life, and Prudential discovered long ago that investing up front in helping individuals return to satisfying work after a disabling injury makes great economic sense, in addition to increasing human happiness. These companies routinely provide financial incentives for claimants to receive treatment for their injuries and return to employment and self-sufficiency.
Another precedent that philanthropists and program designers could borrow from is the set of 1990s disability reforms enacted in the Netherlands, a country which at one point made the highest cash disability payments in the world as a percentage of GDP. The Dutch required employers, physicians, and claimants to develop, within eight weeks of injury, a joint return-to-work plan overseen by a case manager. Under this practice, disability rolls declined dramatically, workforce participation increased, and the welfare of the disabled improved. Even foreign militaries like those of Canada and the United Kingdom are starting to shift disability compensation away from endless payment streams to upfront payouts or temporary support aimed at rehabilitation. There is no reason why American veterans should lag behind these more modern approaches.
Not every veteran will be ideal for this program. Some are so catastrophically injured as to be appropriate candidates for lifelong disability pensions. But a large proportion of the surge in cases since 2002 goes to veterans with moderate disability ratings between 30 and 60 percent. These are prime candidates for front-loaded rehabilitation instead of lifelong pensioning.
So what would the role of philanthropy be in all of this? Isn’t taking care of veterans a classic governmental responsibility? Yes, it is. The problem is politics. The reason we have such a dysfunctional system and such perverse incentives is because political timidity and special-interest pressures make it almost impossible for even enlightened leaders of government to touch veterans’ benefits right now.
In situations like these, philanthropy has long served as a kind of R&D force and prover of experimental principles. Demonstrating to politicians and the VA that there is a better way to compensate injured veterans would be a classic way to serve the public good. Donors don’t need to retrain every veteran. They don’t need to make payments for years and years. All they need do is set up a rigorous trial, with a volunteer experimental group and a control group that continues on the old path. A careful scientific assessment would track results for a few years. All available knowledge about modern ways of treating disability suggests that a front-loaded, independence-building, rehabilitating alternative like the one sketched here would be a great success. And at that point the VA and policymakers will beat their own path to this new door to the future, so helpfully opened by philanthropy.
Nobody wants a system that cripples young men and women with bad incentives. Every sane observer is alarmed as VA commitments for disability payments spiral beyond the trillion dollar mark. But risk aversion and political blowback make it difficult for government to innovate in this area on its own. That makes this prime territory for philanthropic invention and leadership.
Philanthropists have a golden opportunity here to pioneer a new, healthier solution for a serious social problem. They can do this by staging a voluntary trial that would run a couple years and cost a few million dollars, thus providing a base of evidence for a subsequent and long overdue update of government programs.
A final possible twist to this appealing opening: Because the investments described here would ultimately cut off a 40-year tail of government entitlement payments for each successful graduate, there could be large net savings available to be shared among service providers, participants, and government. This program could thus be an ideal candidate for pay-for-success financing, or so-called social impact bonds. This involves private investors putting up money to head off social problems that would otherwise entail large government expense, for which they are later compensated by the government if they succeed. Everybody wins.
Nearly all the large investment banks today, along with myriad organizations like Social Finance, the Nonprofit Finance Fund, and Third Sector Capital Partners, are now setting up divisions charged with finding opportunities where private capital could be used to repair public problems such that the considerable long-term savings could be shared out by the government as earnings on the initial investment. These organizations might find it financially attractive (as well as patriotically appealing) to compete to train veterans, knowing that they could share in the ultimate savings (cumulating to billions of dollars) if they succeed at placing these men and women on their feet as long-term successes, rather than wards of the state.
So public-spirited donors who want to help injured veterans blossom and thrive today needn’t lobby Congress or badger the VA. All they have to do is sponsor a high-powered rehab program. The voluntary experiments that result wouldn’t eliminate the current disability system. They would just offer injured veterans a choice: Do you want to be pensioned off, or do you want to be launched into proud self-sufficiency?
If even 10 or 20 percent of injured veterans volunteer for a recovery-based alternative, the 40-year difference in improved personal outcomes and reduced government spending would be enormous: hundreds of thousands of lives improved, and hundreds of billions of dollars saved. And philanthropy can lead the way.