The Structure of the Programs Varies Significantly

The purpose of the four federal compensation programs we examined is  similar in that they all were designed to compensate individuals injured by  exposure to harmful substances. Responsibility for administering two of the programs has changed since  their inception. Funding of the four programs varies. Although initially funded through  annual appropriations, the Black Lung Program is now funded by a trust  fund established in 1978 that is financed by an excise tax on coal and  supplemented with additional funds. EEOICP and RECP are completely federally funded. Actual Costs of Benefits Paid Exceeded Initial Cost Estimates for Two Programs and Annual Administrative Costs Varied

At the time of our review, total benefits paid for two of the programs—the  Black Lung Program and RECP—significantly exceeded their initial  estimates. The initial  estimate of benefits for the Black Lung Program developed in 1969 was  about $3 billion. Actual benefits paid through 1976—the date when the  program was initially to have ended—totaled over $4.5 billion and benefits  paid through fiscal year 2004 totaled over $41 billion. For RECP, the costs  of benefits paid through fiscal year 2004 exceeded the initial estimate by  about $247 million. Table 1 shows the initial program estimates and actual costs of benefits  paid through fiscal year 2004 for the four programs. Actual costs for the Black Lung Program have significantly exceeded the  initial estimate for several reasons, including (1) the program was initially  set up to end in 1976 when state workers’ compensation programs were to  have provided these benefits to coal miners and their dependents, and (2)  the program has been expanded several times to increase benefits and add  categories of claimants. The reasons the actual costs of RECP have  exceeded the initial estimate include the fact that the original program was  expanded to provide benefits to additional categories of claimants,  including uranium miners who worked above ground, ore transporters,  and mill workers. At the time of our review, the annual administrative costs of the four  programs varied. For fiscal year 2004, they ranged from approximately  $3.0 million for RECP to about $89.5 million for EEOICP (see table 2). The Number of Claims Filed Generally Exceeded Initial Estimates and Program Structure Affected the Time It Took to Finalize Claims

The number of claims filed for the three programs for which initial  estimates were available significantly exceeded the initial estimates and  the structure of the programs, including the approval process and the  extent to which the programs allow claimants and payers to appeal claims  decisions in the courts, affected the amount of time it took to finalize  claims and compensate eligible claimants. The number of claims filed  through fiscal year 2004 ranged from about 10,900 for VICP to about  960,800 for the Black Lung Program. The agencies responsible for  processing claims have, at various times, taken years to finalize some  claims, resulting in some claimants waiting a long time to obtain  compensation. For example, it can take years to approve some EEOICP  claims because of the lengthy process required for one of the agencies  involved in the approval process to determine the levels of radiation to  which claimants were exposed. In addition, claims for benefits provided  by programs in which the claims can be appealed can take a long time to  finalize. Conclusions

The federal government has played an important and growing role in  providing benefits to individuals injured by exposure to harmful  substances. All four programs we reviewed have been expanded to  provide eligibility to additional categories of claimants, cover more  medical conditions, or provide additional benefits. As the programs  changed and grew, so did their costs.
Why GAO Did This Study

The U.S. federal government has played an ever-increasing role in providing benefits to individuals injured as a result of exposure to harmful substances. Over the years, it has established several key compensation programs, including the Black Lung Program, the Vaccine Injury Compensation Program (VICP), the Radiation Exposure Compensation Program (RECP), and the Energy Employees Occupational Illness Compensation Program (EEOICP), which GAO has reviewed in prior work. Most recently, the Congress introduced legislation to expand the benefits provided by the September 11th Victim Compensation Fund of 2001. As these changes are considered, observations about other federal compensation programs may be useful. In that context, GAO's testimony today will focus on four federal compensation programs, including (1) the structure of the programs; (2) the cost of the programs through fiscal year 2004, including initial cost estimates and the actual costs of benefits paid, and administrative costs; and (3) the number of claims filed and factors that affect the length of time it takes to finalize claims and compensate eligible claimants. To address these issues, GAO relied on its 2005 report on four federal compensation programs. As part of that work, GAO did not review the September 11th Victim Compensation Fund of 2001.

What GAO Found

The four federal compensation programs GAO reviewed in 2005 were designed to compensate individuals injured by exposure to harmful substances. However, the structure of these programs differs significantly in key areas such as the agencies that administer them, their funding, benefits paid, and eligibility. For example, although initially funded through annual appropriations, the Black Lung Program is now funded by a trust fund established in 1978 financed by an excise tax on coal and supplemented with additional funds. In contrast, EEOICP and RECP are completely federally funded. Since the inception of the programs, the federal government's role has increased and all four programs have been expanded to provide eligibility to additional categories of claimants, cover more medical conditions, or provide additional benefits. As the federal role for these four programs has grown and eligibility has expanded, so have the costs. Total benefits paid through fiscal year 2004 for two of the programs--the Black Lung Program and RECP--significantly exceeded their initial estimates for various reasons. The initial estimate of benefits for the Black Lung Program developed in 1969 was about $3 billion. Actual benefits paid through 1976--the date when the program was initially to have ended--totaled over $4.5 billion and, benefits paid through fiscal year 2004 totaled over $41 billion. Actual costs for the Black Lung Program significantly exceeded the initial estimate for several reasons, including (1) the program was initially set up to end in 1976 when state workers' compensation programs were to have provided these benefits to coal miners and their dependents, and (2) the program has been expanded several times to increase benefits and add categories of claimants. For RECP, the costs of benefits paid through fiscal year 2004 exceeded the initial estimate by about $247 million, in part because the original program was expanded to include additional categories of claimants. In addition, the annual administrative costs for the programs varied, from approximately $3.0 million for RECP to about $89.5 million for EEOICP for fiscal year 2004. Finally, the number of claims filed for three of the programs significantly exceeded the initial estimates, and the structure of the programs affected the length of time it took to finalize claims and compensate eligible claimants. For the three programs for which initial estimates were available, the number of claims filed significantly exceeded the initial estimates. In addition, the way the programs were structured, including the approval process and the extent to which the programs allow claimants and payers to appeal claims decisions in the courts, affected how long it took to finalize the claims. Some of the claims have taken years to finalize. For example, it can take years to approve some EEOICP claims because of the lengthy process required for one of the agencies involved in the approval process to determine the levels of radiation to which claimants were exposed. In addition, claims for benefits provided by programs in which the claims can be appealed can take a long time to finalize.