A Better Way Than The VA?

From The CATO Institute:

A Better Way Than the VA?


by Michael D. Tanner





Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on October 21, 2010



This article appeared on National Review (Online) on October 20, 2010.



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ShareThisIf you listen to Democratic campaign ads in Colorado, Nevada, or Delaware, among other places, you will discover yet another perfidious plot by evil Republicans — they want to "privatize the VA."



Which makes one respond, "This is a horrible thing because ... why?"



Admittedly, the quality of VA health care has improved since the 1980s, when it was the butt of jokes and a source of health-care horror stories. It provides some of the world's best care for highly complex trauma cases. It has been an innovator in the areas of health-care IT and case management.



And everyone agrees that we owe our veterans the best health care we can provide, especially those who have been injured because our government put them in harm's way.



But is a government-run system really the only — or the best — way to provide that care?



[T]he dust-up over privatizing VA services is a microcosm of the political debate today.

Like all single-payer health systems around the world, the VA controls costs by imposing a "global budget" — a limit to how much it can spend on care. Thus year-to-year funding varies according to the whims of Congress, not according to what consumers want or are willing to spend. With tens of thousands of wounded soldiers returning from the wars in Iraq and Afghanistan, the demand for care is rising dramatically. Enrollment in VA services has increased by 11 percent since 2003. Despite a nearly 95 percent increase in funding ($23 billion) over that period, the program still suffers from chronic budget problems. In fact, the Congressional Budget Office estimates that it would require as much as a 75 percent increase in funding for the VA to treat all veterans.



When resources can't meet demand in a given year, the VA does what other single-payer systems do: it rations. For example, it maintains a very restrictive pharmaceutical formulary that often denies veterans access to the newest and most effective drugs. A separate analysis by Alain Enthoven and Kyna Fong of Stanford University estimates that less than one-third of the drugs available to Medicare beneficiaries are on the VA formulary. According to a study by Prof. Frank Lichtenberg of Columbia University, the restricted availability of drugs has reduced the average survival of veterans under VA care by as much as two months.



Rationing is also beginning to delay or deny care to some veterans altogether, particularly in specialized areas like mental health. The average veteran with psychiatric troubles gets almost one-third fewer visits with specialists than he would have received a decade ago, and several have been turned away from VA hospitals entirely, which helps to explain the recent rash of suicides of veterans with post-traumatic stress disorder. Several lawsuits are now pending, charging that the VA fails to provide necessary services.



Because funding decisions are determined through the political process rather than by patient preference, the money is often misallocated. VA hospitals with low utilization rates are built or kept open not out of need, but because they reside in the districts of powerful congressional committee leaders. At the same time, other hospitals without political clout are overflowing.



Further, the system remains buried under the bureaucracy common to all government programs. Patients and their families are shuttled from office to office, their complaints unanswered. When problems are uncovered, no one takes responsibility for fixing them.



Even accessing the system can be a major problem. Currently, the case-processing backlog exceeds 186,000 claims. Although the VA has a policy of processing claims within 125 days, it is actually taking an average of 160 days for a veteran to gain access to his health benefits. Moreover, the VA itself estimates that it has at least a 17 percent error rate in processing claims. Outside groups claim the error rate is closer to 30 percent.



Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.



More by Michael D. TannerDuring his campaign for president, John McCain, not generally known as an enemy of veterans, proposed giving veterans a card that they could use to obtain care at private medical facilities. Giving injured and sick veterans more choices and allowing them to seek treatment from the best doctors and facilities available hardly seems like a bad thing. Shouldn't veterans with cancer stemming from exposure to Agent Orange, for example, be free to seek treatment at Sloan-Kettering or the Mayo Clinic, if they want to? And by removing routine or specialized cases from the system, it would also allow VA facilities to focus on the things they are best suited for, like combat trauma. (Notably, current operations in Iraq and Afghanistan account for only about 6 percent of all patients and 3 percent of the total spending for veterans' health care.)



McCain's proposal is one option. Another might be to simply ensure that veterans have access to private health insurance, perhaps with the government picking up part of the cost.



Actually, the dust-up over privatizing VA services is a microcosm of the political debate today. Increasingly, Democrats seem more concerned about preserving "the system" than about results. The idea of giving people a private choice rather than keeping them confined to a government system is regarded as "radical" and "extreme." You see it on issues ranging from education to Social Security. Apparently, the VA system has now become another such sacred cow.



Unfortunately, as with other systemic sacred cows, Republicans have so far responded all too defensively. But they should not be intimidated. What matters is not "the system," but providing our veterans with the best health care available.



Republicans should say so.