clinics, 136 nursing homes, 43 residential rehabilitation treatment programs, and 207 readjustment counseling centers, it provided care to approximately 5 million individual patients and hosted 54 million outpatient visits (DVA, 2006b).

Overall, VA has the second-largest1 number of employees among the federal departments, more than 235,000 in 2006 (DVA, 2006b), and its estimated FY 2006 outlays were the fifth largest2 among all federal agencies (OMB, 2006a), with total FY 2006 appropriations of approximately $73.15 billion.


As detailed in Chapter 2, the U.S. government has long recognized a need to provide compensation to veterans for health problems associated with military service. The current legislative mandate, contained in Title 38 of the U.S. Code, specifies a single criterion for determining the level of compensation:

The Secretary shall adopt and apply a schedule of ratings of reductions in earning capacity from specific injuries or combination of injuries. The ratings shall be based, as far as practicable, upon the average impairments of earning capacity resulting from such injuries in civil occupations (38 USC §1155).

However, there is abundant evidence that both the VA and the Congress take other criteria into account. The 1956 Bradley Commission report on veterans’ benefits observed:

In the Veterans’ Administration system, the law specifies that the percentage awards are to be based on average impairment of earning capacity. This recognizes that the fundamental purpose of disability compensation is to assure the disabled veteran and his family the essential means for economic maintenance. In actual administration, however, it is clear that the Veterans’ Administration has not been able to adhere to this basic criterion as set forth in the law (Bradley Commission, 1956).

A 2002 GAO report noted that VA had rejected a GAO recommendation to revise the ratings schedule based on economic factors. VA’s June 24,


The Department of Defense (DoD) is the largest.


The Department of Health and Human Services, Social Security Administration, DoD, and Department of the Treasury had greater outlays.

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