Nearly 15 Million Veterans and Their Family Members Could Be Harmed by Default

In January, Treasury Secretary Janet Yellen reported to Congress that the federal government had reached its borrowing limit—known as hitting the debt ceiling. Without congressional action to raise, suspend, or eliminate the debt limit, the United States could default on its legal obligations and be unable to meet its obligations as early as June.

The nation has never intentionally defaulted before. No one can be sure of what exactly would unfold if the U.S. Treasury Department reaches the end of its “extraordinary measures” to manage cash and borrowing and draw down its cash reserves—even the date of default is uncertain. But regardless of timing or details, it is certain that default could have severe consequences for programs in the federal budget, threatening the livelihood of millions of Americans.

New analysis from the Center for American Progress demonstrates the enormous consequences of a default for veterans and their families across the country. (see methodology) Veterans are particularly susceptible to the delay in payments potentially caused by a default, as programs such as pensions, disability compensation, and educational allowances—as well as health care for veterans and their dependents—are federal obligations. A protracted default could potentially lead to delayed payments to health care providers, including those who provide care to veterans and their families. This could, in turn, result in care delays for patients and discourage providers from participating in public programs.

The federal government has many fiscal responsibilities, but one of its longest-standing and most agreed-upon obligations is to support those who have contributed to the country’s national security.

Veterans and their families depend on benefits, health care, and retirement as a crucial part of their financial security after a family member serves in the military. Hundreds of thousands of children, for example, have health insurance coverage as dependents of military or veteran parents. (see Table 2)

Without immediate action to raise, suspend, or eliminate the debt limit, Congress will put the economy at risk and could cause millions of veterans to face the threat of delays in receiving the critical support they and their families need and deserve.

The authors would like to thank Emily Gee, Jean Ross, Bobby Kogan, Rose Khattar, and Jessica Vela for their assistance and input.

Methodology

State-level counts of veterans are from the U.S. Department of Veterans Affairs’ (VA) National Center for Veterans Analysis and Statistics, found by state here for fiscal year 2020 and rounded to the nearest thousand.

All count data pertaining to financial support and health care coverage are from the 2022 Annual Social and Economic Supplement of the Current Population Survey (CPS), rounded to the nearest thousand. Counts of veterans who received any nonzero pretax income from the VA during the previous calendar year include service-related disability compensation, survivor benefits, pension, educational allowance, or other veteran payments for 33 states. Counts of people with military or VA health insurance include coverage through CHAMPUS/TRICARE, VA, or other military health care during the previous calendar year. These counts include child and adult dependents (i.e., children and spouses) covered by the policy of the household member enrolled in CHAMPUS or other military health care in 49 states and the District of Columbia. Blank cells in Table 1 indicate insufficient sample size. The CPS survey includes those living in noninstitutional group quarters (i.e., military barracks, group homes, and shelters) but does not include those living in institutional group quarters (correctional facilities and nursing homes).