Veterans Affairs

Suppose you’ve just joined the army and expect to serve for, oh, say, four years before returning to civilian life.

Which would you rather have when you get out: a lifetime-guaranteed annual check for $7500 (adjusted each year for inflation) or a package of VA benefits?

To help you decide: The VA benefits include payments of anywhere from about $100 a month to almost $3000 a month in the unlikely event that you are partially or fully disabled, a pension on the order of $15,000 a year in the more unlikely event that you are both disabled and poverty-stricken (rising to more like $20,000 a year if you need regular aid and attendance), educational benefits under the GI bill, and health care of whatever quality the government chooses to provide.

Me, I’d take the guaranteed $7500-a-year in a heartbeat. If that’s the typical response, then it’s hard to see why we have a Veteran’s Administration in the first place, seeing as how the VA’s annual budget would just about cover those payments.

Under a system of guaranteed payments, there will surely be some veterans who end up poor, disabled, and wishing we still had a VA. But insofar as these veterans preferred upfront to take the payments and risk a bad outcome, it’s hard to see that as a failure of the system.

Of course, impoverished disabled veterans might make the rest of us feel a little squeamish. But if that’s why we have a VA, let’s at least admit upfront that the VA is there not for the benefit of veterans, but rather to make non-veterans feel good at veterans’ expense.

Of course, it’s possible that many or most enlistees do prefer the current system. I think it would be interesting to find out.


16 Responses to “Veterans Affairs”

  1. 1 1 Advo

    As a veteran, you couldn’t even get the healthcare/health coverage the VA provides for $7500 let alone all the other stuff.

    Well, I guess you could now that you have the ACA. But that would involve other types of subsidies. There was absolutely no way for the average veteran to get the kind of healthcare/coverage the VA provides prior to the ACA.

  2. 2 2 Adam Daniels

    You would take the $7500 because you have not enjoyed the endowment effect of having the VA entitlement.
    Also you need to remember the risk-aversity caused by fearing a loss more than you would enjoy an equal gain

  3. 3 3 Daniel

    @ Landsburg,

    If they’re not getting money from the VA for disability wouldn’t that put them under SS disability instead? That’s fine with me as it consolidates disability programs and gives Veteran’s a little extra (the $7500 a year) for putting themselves in harms way. As as Advo said, their healthcare is now covered under Obamacare, so I think you’re right that the VA is pretty much redundant at this point

  4. 4 4 Mark

    I believe the first three respondents miss your point: they’re not really getting healthcare, at least quality healthcare.

    But for a different take, I do believe that your last point is correct in that it’s not there for the vets, but instead to make us not feel bad about the real damage done to vets who put their lives in danger. This is not only physical danger, but the emotional trauma as well.

    With that said, your system would eliminate a terrible incentive that has gotten worse over the past decade or so. Military medical personnel routinely advocate vets who are leaving the service to apply for disability. One vet told me that a doctor asked if he had nightmares from his time served in Iraq. His yes response qualified him for disability. Consequently, his is eligible for things like additional benefits from the VA and preferential treatment for government contracts. The system is being abused.

    BTW – This same person followed up his yes answer to the question if he was having nightmares about his time served in Iraq with, “I also have nightmares from my time in high school.”

  5. 5 5 Zero M. Ocean

    @ Mark

    The system is abused on the daily.

    That’s similar to my dad: He just retired a few years ago from the Air Force, and the entire time he was enlisted, he suffered from Sleep Apnea. Now, in the Air Force, you can be medically discharged for myriad reasons — to include Sleep Apnea, Somnambulism, Asthma, and much more. So. . . of course he never mentioned it.

    About a year ago he paid the VA a visit regarding his Sleep Apnea. Apparently, he now receives supplemental income along with his retirement BECAUSE of the Sleep Apnea he’s had for years. The doctors were all for it, too. How this came to be, or how he finagled this favorable result was beyond me. And to be sure, he had learned of this from a coworker whose Sleep Apnea was so alarming, they outfitted him with this nifty little machine that keeps him from dying every night. He too had experienced his Sleep Apnea during the entirety of his tenure in the Air Force.

    Don’t hate the player, hate the game. Right?

    Still, as someone who has served, I’ve never been particularly thrilled by the assiduousness of the VA. I’ve seen extremely ill people treated very well, and very poorly — kinda depends on who you’re dealing with, and that sucks. I’ve also seen cases of outright negligence as a medical technician and personnelist while in the Air Force.

    Irrespective of that. . . I’d gleefully yoink the annual $7,500.00 — but then again, I’m twenty-four. I have a good job with benefits, and the typical package offered wouldn’t do much for me in my present circumstance. Hopefully these circumstances surround me throughout my entire life.

    **PS: Forgive any typos. I wrote this from my Blackberry.

    Very Sincerely & Respectfully,


  6. 6 6 RJ


    You would take the $7500 because you have not enjoyed the endowment effect of having the VA entitlement.

    But the endowment effect could be priced into the annual income. I’m sure the $7,500 was just an arbitrary number for the sake of simplified example.

    Of course, impoverished disabled veterans might make the rest of us feel a little squeamish. But if that’s why we have a VA, let’s at least admit upfront that the VA is there not for the benefit of veterans, but rather to make non-veterans feel good at veterans’ expense.

    Now that’s a bit unfair. VA was created by Congress to consolidate the administration of benefits during WWI and WWII due to the surge in veterans, a time in history where practically everything was command and controlled due to the war efforts. Once a bureaucratic organization of that magnitude is established, its rather hard for it to go away without someone running the risk of seeming ‘unpatriotic’. This ‘scandal’ just now brings into question whether the VA is still an effective way to serve our soldiers.

  7. 7 7 Daniel

    @ RJ,

    I think you could spin it by saying, we want to pay our vets more money. We have systems in place for disability under SS and health care through either medicaid or the private sector which is affordable at any income level (depending on whether your state has expanded medicaid) under ACA. Perhaps instead of eliminating the VA we could shrink it substantially so that its only job is to help people find the right programs for them, and gives the proceeds back to the Veteran’s as guaranteed $ as Steve suggests. As long as you focus on the positives, I think this is a government program that you could have bipartisan support in shrinking now that we have other safeguards in place.

  8. 8 8 Bennett Haselton

    Maybe the difference is that, unlike other insurers, the military needs its soldiers to be willing to put themselves in danger. That might not work as well if they just gave everyone extra cash but told people they were on their own if they ended up needing medical treatment.

  9. 9 9 Frosty

    But insofar as these veterans preferred upfront to take the payments and risk a bad outcome, it’s hard to see that as a failure of the system.

    If after studying human behavior, a policymaker concludes most veterans would choose poorly, would it be a failure on the part of the policymaker to design a system offering such a choice?

  10. 10 10 Pete

    Never dealt with the VA, but active duty have our own doctors as well. I have definitely seen the advantages of having our own primary care physicians that know the ins and outs of the extra requirements (medication limitations, for instance). I can also see how there could be a benefit to doctors that cater to ailments specific to the military or that afflict military personnel more frequently, but there are things like dentists that that can’t apply to. Furthermore, all my guesses as to the benefits of active duty doctors go out the window when you consider that dependents also see the military doctors too.

  11. 11 11 Harry

    Given the choice I too would take the $7500 per year and do not need to pull out my calculator to figure that one out. Granted, if one wanted a low deductible soup-to-nuts Blue Cross plan it would cost more, but $7500 per year from the time, say, from when you are 25 to when you are 80 is worth a lot of money. If you want me to capitalize that, I can.

    I am neither a veteran nor an expert on the inner workings of the VA, so I cannot contribute worthwhile facts to your question about the success of single-payer government-run health care, but that puts me in the same category as Paul Krugman, who might also take the $7500, even after writing his thousandth column promoting socialist life.

    Put the first four thousand in a medical savings account and buy a $4000 deductible major medical policy covering everything else and I bet you would have some money left over to save for premium increases or something else.

  12. 12 12 Advo

    There’s two things worth mentioning:

    1. Veterans have substantially higher health costs on average because they’re sicker than the rest of the population.

    2. A command-economy style healthcare system like the VA or the British NHS is apparently the most cost-efficient way of providing healthcare. Just look at the per-capita cost of the NHS. And the VA spends only about 12,000 USD a year on healthcare for category 1 (most disabled) veterans.

    Any attempt to achieve a similar level of care via private market fee-for-service healthcare providers and insurance is going to be far more expensive since under any fee-for-service system the patient will get overdiagnosed and overtreated because of the diagnostics/treatment provider is incentivized. Measures to counter this problem like motivating the patient to decline diagnostic or treatment measures or through restrictions imposed by the insurer are very blunt instruments and have a substantially negative impact on the quality of care provided because the patient usually has no idea what he’s doing and the insurer restrictions are necessarily going to be imprecise and bad in many individual cases.

  13. 13 13 Zero M. Ocean


    Veterans are sicker than the rest of the population?

    This is unclear to me: Veterans by and large are just as healthy or unhealthy as the rest of America. In fact, due to the stringent physical criteria the military requires their personnel to sustain, if I were a betting man, I’d wager a recently retired veteran would be healthier than the average citizen. At least they wouldn’t be obese like the other 35% (according to the CDC) of Americans.

    Now, if your argument is that some very disabled veterans normally have a higher cost for healthcare because of circumstances directly related to injuries they sustained during their tour of duty, I’d still say you’re talking about a relatively small portion of veterans. Consider: of the 1.5 million to serve in the war, approximately 32,000 were wounded.

    I don’t mean to marginalize the sacrifice, or the degree of the injury by encapsulating it into a number, but with over a 90% survival rate, and only a few thousand out of 1.5 million having been injured, I very seriously doubt veterans have a significantly higher cost of healthcare on average. Even when accounting for mental health conditions, it’s a minority that are ultimately incapable of assimilating back into society. Hell, apparently, extreme poverty causes more post-traumatic stress and mental incapacities in America than war. A Princeton article somewhere in the web I read the other day even mentioned much of the penurious population of the world experiences sharp decreases in IQ.

    Idk. That’s just my two pennies.

    Very Sincerely & Respectfully,


  14. 14 14 iceman

    “A command-economy style healthcare system…is apparently the most cost-efficient way”
    “restrictions imposed by the insurer are very blunt instruments”

    I submit there is a cognitive dissonance here

    I wonder, if the choice is between getting more or less than the “optimal” amount of care, which option people would prefer?

  15. 15 15 Zero M. Ocean


    Iceman (let me know if the capital I is too much), I think it depends on the circumstances. Sometimes over treatment means long stays in the hospital or frequent visits to the doctor, time off from work — which you may or may not have to spare. Maybe even addiction or dependence on medication Likewise, not being treated well enough can result in the exacerbation of one’s condition in a fashion not so dissimilar (ironically).

    My guess would be anything short of “If I’m wrong, you might croak in your sleep,” coming from the good doctor will probably cause people to “under” treat themselves? To me, it makes sense that you’d go with what’s recommended, but treatment isn’t a one-time choice. You know? If I go to the doctor tomorrow and he tells me I have bad gas, that’s why my stomach hurts, and I “under” treat and go home only to come back twelve hours later to discover I have appedicitus, I’ve reached the “optimal” care-level.

    I take it this kind of tomfoolery happens everyday. I’m positive insurers do implore you to take the chill pill, and I’m sure another external influence may cajole you into overtreatment, but in the aggregate with multiple recurring visits for either choice, do you really think it’s cost effective? I’d say no on average. Granted, that’s assuming you don’t get it right the first visit.

    Very Sincerely & Respectfully,


  16. 16 16 Daniel


    While I agree that a command and control system is viable in healthcare (See U.K.), I don’t think it applies to subsections of the population that are routinely ignored. It just doesn’t make much sense to me to have totally separate healthcare systems for veterans and for non-veterans. My fear is that by having this separate healthcare system off to the side where the vast majority of the population will never interact with, you allow veteran voices to be drowned out over the noise of everyday going on’s for the rest of the population. I understand that the VA has a more specialized system for veteran care, but what prevents their specialized doctors from have an operation unit within the private hospital. Why have separate administrations, separate beds, separate equipment, separate record keeping systems, when all that is required is a specialized doctor? Supplemental income should allow them to get preferred status treatment within our private healthcare system, and since there’s extra money coming from this sub-section of the population, they should still have access to specialized care for their needs.

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