Does Privatization Hurt the Troops?

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The Washington Post reports on more veterans reporting crappy medical care in their far-flung hospitals, all the information tumbling forth in the wake of the Walter Reed scandal.

Across the country, some military quarters for wounded outpatients are in bad shape, according to interviews, Government Accountability Office reports and transcripts of congressional testimony. The mold, mice and rot of Walter Reed's Building 18 compose a familiar scenario for many soldiers back from Iraq or Afghanistan who were shipped to their home posts for treatment. Nearly 4,000 outpatients are currently in the military's Medical Holding or Medical Holdover companies, which oversee the wounded. Soldiers and veterans report bureaucratic disarray similar to Walter Reed's: indifferent, untrained staff; lost paperwork; medical appointments that drop from the computers; and long waits for consultations.

Sandy Karen was horrified when her 21-year-old son was discharged from the Naval Medical Center in San Diego a few months ago and told to report to the outpatient barracks, only to find the room swarming with fruit flies, trash overflowing and a syringe on the table. "The staff sergeant says, 'Here are your linens' to my son, who can't even stand up," said Karen, of Brookeville, Md. "This kid has an open wound, and I'm going to put him in a room with fruit flies?" She took her son to a hotel instead.

It provides more context to this Raw Story report, which claims that Walter Reed's problems can be partially traced back to a half-assed privatization.

A five-year, $120 million contract awarded to a firm run by a former executive from Halliburton – a multi-national corporation where Vice President Dick Cheney once served as CEO – will be probed at a Subcommittee on National Security and Foreign Affairs hearing scheduled for Monday.

"We have learned that in January 2006, Walter Reed awarded a five-year $120 million contract to a company called IAP Worldwide Services for base operations support services, including facilities management," Waxman continues. "IAP is one of the companies that experienced problems delivering ice during the response to Hurricane Katrina."

It was only a year or so ago that congresspeople were outraged, outraged that Walter Reed might be closed. Too bad they worked over the symbolism of the facility without checking out the conditions inside. Still, the important issue here is whether the government knows how to contract out services without making an incredible hash out of everything. Jim Henley:

Basically, if it's a situation where the service has many buyers and the new private entity will have to sell to them, presume in favor of privatization. But if the new arrangement would have a private corporation selling to one buyer, the government, presume that the "prvatized" situation would suck much, much worse than good old fashioned bureaucracy.

This seems completely true.

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  1. Huh? I don’t see how having more buyers helps. What’s needed is more service providers. You know, competition.

  2. Still, the important issue here is whether the government knows how to contract out services without making an incredible hash out of everything.

    I understand the dilemma, but I personally am always in favor of incredible hash.

  3. The lesson: if the government does something and it turns out poorly, it proves that they need to privatize.

    If the government privatizes and it turns out poorly, it proves that the government doesn’t know how to properly privatize.

  4. Can someone tell me why the government even provides stateside care to the wounded? I mean care, not insurance. Wouldn’t it be cheaper just to have the government send them to hospitals and act as an insurance company? Would the cost of transporting the wounded be that much worse?

    I can understand the military getting involved in treatment for kinds of injuries that are rare in civilian life, but is treating battlefield trauma that much different than treating car crash trauma?

  5. Basically, if it’s a situation where the service has many buyers and the new private entity will have to sell to them, presume in favor of privatization.

    This depends on whether the “many buyers” act independently of each other. If they are able to engage is parallel behavior and tacit co-operation, then the difference between one buyer and many buyers is one of form, rather than substance, and the benefits that we expect to see from competition will not be realized in fact.

    Do the employment contracts of those employed by the military require that wounded soldiers be given long-term care? Maybe the best solution is to cut that benefit. This is sort of akin to the healthcare benefits in the auto industry making that sector less competitive. The military would be more cost effective is they do not go overboard on medical benefits.

  6. Does Privatization Hurt the Troops?

    No, the war does.

  7. Ok, so you’re going to stop providing health benefits to soldiers long-term….

    Good Lord. Given the low pay of a soldier, the risk involved, the one-sidedness of any contract (“we can do anything we want to you, break any promise we made, and you can’t say boo”) and NOW you want to remove the possibility of taking care of these people when they get back to the US with quasi-permanent disabilities?

    Yeah, that’ll show how much we “support the troops.”

    It’s statements like that which are why Libertarianism will never be considered more than a fringe doctrine by the bulk of the US populace.

  8. If we privatize Army healthcare, where will the people who graduate in the bottom half of their med school class find employment?

  9. “The military would be more cost effective is they do not go overboard on medical benefits.”

    I don’t like a military draft for a lot of reasons, but I wouldn’t mind conscription into a chain gang for people who actually believe such nonsense.

  10. I don’t like a military draft for a lot of reasons, but I wouldn’t mind conscription into a chain gang for people who actually believe such nonsense.

    Well, I don’t think long term medical care for people who were conscripted into the military should be cut. However, for volunteers, caveat emptor is probably the preferred rule from a libertarian perspective. If the volunteers wanted guaranteed benefits, then they should have made sure that was in the contract before signing. If the US military would not put that in, then they did not have to sign and could have worked in the private sector instead.

  11. We shouldn’t forget that African American soldiers get much better medical treatment than their civilian counterparts. They probably eat better, too.

  12. I’m certainly not against providing long term permanent care to servicemen and vets, but it would probably be cheaper and more effective to just have the government pay for private care outside of some privatization contract. Just put the soldiers in regular hospitals. It also might make it possible to put them in a place convenient for family visits.

    I mean the VA has always been a basket case, and it might be better to eliminate most of its functions in favor of using the private sector.

    1. I totally agree with placing hospitalized vets in civilian hospitals. I had a horrible experience this past summer as an inpatient at a VA hospital. Care was haphazard, food abominable and some of the staff stupid.

  13. “Does Privatization Hurt the Troops?”

    Whose side are you on?

    “This seems completely true.”

    What does that mean?

  14. The problem is that “privatization” is sold as a way to get something for nothing. The car is expensive and it is underfunded. The sollution to this is always to “privatize”. This does two things, it makes Congress feel good because they can pretend that they have done something about the problem without spending any money that could otherwise be used for useful things, like pork and it allows them to reward political chronies with fat government contracts. What is not to love?

    Of course, the soldiers are screwed because privatization, while a good thing in some cases, is not a magic wand and won’t produce money and assets where there were none before. The soldiers end up with crappy care from a private provider rather than the government.

    The Army needs to be held responsible for this. At the same time, Congress has oversight and spending authority. How long before anyone ever holds them accountable for underfunding and deliquent oversight?

  15. Ok, so you’re going to stop providing health benefits to soldiers long-term…

    I had to turn off my Dave W filter to actually see what you were babbling about.

    You’re two very diverse trolls: a ranting conspiracist loon and someone who keeps going on about how he’s sympathetic to libertarianism but can’t ever manage to express anything but disgust at any libertarian ideas actually voiced. It’s downright heartwarming seeing you guys work together.

  16. I can understand the military getting involved in treatment for kinds of injuries that are rare in civilian life, but is treating battlefield trauma that much different than treating car crash trauma?

    One difference is that the military trauma centers often get to use all sorts of new, innovative treatments that are denied to civilians. From peripheral nerve blocks that allow major surgery to be conducted on appendages without traditional anaesthesia, to new compounds that can be injected into broken bones to speed healing, they have all the cool stuff that would help out the rest of us, but which is inevitably a “few years” from civilian deployment.

    For those reasons, if I were a soldier, I would prefer to be treated in a government trauma center rather than a private one that’s tied up by the FDA…

    -Fenevad

  17. I keep seeing references about filters to keep some people’s comments out of the list. How do you do this?

  18. Anyone who has served in the U.S. military already knows that military medical sucks, has always sucked, and will always suck.

    That fact that it is being reported on is the only thing that is NEW.

  19. You’re two very diverse trolls: a ranting conspiracist loon and someone who keeps going on about how he’s sympathetic to libertarianism but can’t ever manage to express anything but disgust at any libertarian ideas actually voiced. It’s downright heartwarming seeing you guys work together.

    I am proposing that government benefits be cut.

    That is a libertarian idea for obvious reasons.

    The problem is not that I never propose a libertarian idea. rather, the problem is that when I do propose a libertarian idea, as I do on this thread, then you fail to recognize it and credit it as such.

    This is not the first time I have made the libertraian suggestion of cutting back on the military here. I am not sure whether those previous comments have been deleted or allowed to remain, but I swear this is not the 1st time.

  20. FFF,
    Presumably you would want military trauma cases in a specialized military hospital. The injuries that hit servicemen are quite different than the types of injuries suffered by the general public. Having specialized hostpitals would likely reduce total cost.

  21. I wouldn’t say that its a particularly libertarian idea to cut care for soldiers given that libertarianism is comfortable with a military being used to defend the country, to defend our life, liberty, and property. In order to ensure a supply of suitable recruits, providing long term care may be necessary. It is certainly better than supplying a rum ration to drunks to get them to join.

  22. Mr. Balko,

    I curse dynamic IP addresses in your name, sir.

  23. “Presumably you would want military trauma cases in a specialized military hospital. The injuries that hit servicemen are quite different than the types of injuries suffered by the general public. Having specialized hostpitals would likely reduce total cost.”

    The military sends its doctors to be trained in inner-ciy trauma centers during peace time. It is the only place you get to see a lot of bullet wounds. So, I am not sure that is true. A bullet wound is a bullet wound and being burned is the same whether it comes from an IED or an explosion at a natural gas plant.

    Dave W,

    Sending people to war and then telling them we won’t provide them medical care because it “wasn’t in the contract” is not libertarian, it is just cruel inhumane and stupid.

    Sorry to feed the troll.

  24. How different are war injuries than general injuries, at least after the immediate emergency stage? I mean, a lost leg is a lost leg, isn’t it. But yes, if military hospitals are better at providing care for injured servicemen, I’m for that.

  25. I wouldn’t say that its a particularly libertarian idea to cut care for soldiers given that libertarianism is comfortable with a military being used to I wouldn’t say that its a particularly libertarian idea to cut care for soldiers given that libertarianism is comfortable with a military being used to defend the country, to defend our life, liberty, and property. In order to ensure a supply of suitable recruits, providing long term care may be necessary. In order to ensure a supply of suitable recruits, providing long term care may be necessary.

    On the other hand, lifetime care for volunteers helps the government wage wars that are not neccessary (or even particularly helpful) with defending the country, and defending our lives, liberty, and property.

    In the case of these unneccessary wars, the spending of my taxes dollars on government benefits is not just repellant for the same reason that spending my tax dollars on government benefits is always repellant. It is repellant for the further reason that it is part of what makes it possible for the government to bring an unneccessary, wasteful war in the first place.

    Besides, private charity is a better way for volunteers to get long term medical care. Priate, voluntary charity is quite efficient, and wounded volunteers would be sure to bring out plenty of this money if called on to do so.

  26. In theory, privatization makes sense; in practice, it rarely yields either increased efficiency or cost savings because of the method by which the government contracts out for required services. Program managers prefer “best value” cost / technical trade-off award criteria permitting them to pay a cost premium where the added bang-for-buck warrants paying a higher price. That makes sense in theory. However, too often in practice the only constraint in the award decision is whether there are sufficient funds available to pay for the higher priced offer, evaluators are more comfortable with incumbents (better the devil you know…), cost / technical tradeoff analysis is superficial, cost and price analysis is almost nonexistent and the contracting community’s focus is almost entirely on contract award, not contract administration.

    I could write a book on this subject. In fact, it would be a shorter book if it focused on what works in government contracting. Meanwhile, the privatization process conceals the continued growth of government — the number of actual federal employees is constant or shrinking, which would be a good thing but for the fact that the missions continue to expand and are thus performed by contracted personnel. Smoke and mirrors.

  27. My point was less about the specific injuries and more to do with the mix of injuries. Normal hospitals do deal with burns and amputees. However, and I am speaking ex rectum currently, there is a higher proportion of certain injuries in military situations than everyday life.

    There are civilian equivalents. Think of burn clinics. You can get treated for burns at a regular hospital, but you’ll get much better care at a burn clinic due to specialized facilities and staff expertise.

  28. D.A. Ridgely,

    Your book contracting failures would be pretty damn long. How about a whole chapter on the “small business set aside”. No you can’t buy that new computer for $800 from Best Buy and get it today, you must bid it out and get it six months from now for $1,500 from mom and pop computer store.

  29. Blogimi Dei is on the money. I’ve seen the former Long Beach Naval Hospital where they gave my buddy, Ray, Metamucil instead of cancer surgery. I’ve been in Balboa Hospital in San Diego. The VA hospital told us that grandpa had senile dementia but when we sent him to FHP (a fargin’ managed care operation fer gawd’s sake) he came home sane in just a few days and was fine for the rest of his life.

    I always thought it was such irony that the military, who is charged with defending a free nation, is run like a socialist workers paradise. Everybody gets the same pay, same medical benefits, same housing, unless your married, then it’s each according to his needs. People rarely get promoted on merit, they tell you when to eat, sleep, piss, & get a haircut. And btw Private, if This Man’s Marine Corps wanted you to think we would have issued you a got dam brain.

  30. Man, I can see the liberals using this as an argument against privatization. And that is crap.

    FinFangFoom,
    There are a lot of cases, which, though not unique to military are a lot more common in to soldiers in this war, than in civilian life
    egsamples I can think of:
    PTSD – Is actually really common (anecdotally).
    Mental problems from the brain being subject to blast pressures.
    physical injuries from blasts.

    There are probably a few others that I am not thinking of.

    Still I am sure that in a free market hospitals would meet this need. Doctors could pool experience and information.

    I think that the initial surgury that many get in Germany would be ok to be from a miltary, and then troops could go home and pick their hospital for follow on care. And troopers would, and could travel to any part of the country where hospitals created a good name for themselves.

  31. I’ve seen the former Long Beach Naval Hospital where they gave my buddy, Ray, Metamucil instead of cancer surgery.

    Was his cancer related to his military service?

  32. Warren: one of the rules of thumb in economics is that a “monopsyny,” a market with a single buyer, will eventually create an equal and opposite “monopoly,” a market with a single seller. Despite occasional attempts to spread the work around to various firms, the US defense industry has steadily consolidated since World War Two.

    DA Ridgely has the right of it. “Privatization” has become the mantra of the Republican Party and it carries with it everything that’s gone wrong with the Republicans: outright dishonesty about “shrinking government,” open corruption in the contracting process, and voodoo economics in assuming that all the inefficiencies of government accumulate not in the idea of taking on another responsibility, nor in the political process that leads to lowest-common-denominator policy, nor in the inept planning and overoptimistic assumptions they use to establish the budget, but solely in the actual delivery of the service.

    Hell, at the employee level, the whole government is already made up of “private contractors.” Apparently, the cure for Congress’ inability to task or discipline government employees is to hire outsiders that are even more unaccountable to do the same work.

  33. Ah, well, John, it wouldn’t be about only small business set-asides, but would have to include small disadvantaged business set-asides (i.e., unconstitutional Section 8(a) awards), hub-zone preferences, the Buy American Act (as modified by NAFTA, the Trade Agreements Act and the Balance of Payments Act), required small business subcontracting programs, the Service Contract Act with DoL wage rate determinations, Davis-Bacon, and blah, blah, blah.

    Oh, and back to the thread topic for a moment, it typically takes something like the uproar over Walter Reed’s problems before any serious thought is given to exercising the options on a base operations services contract or any contract including option years, for that matter. More typically, such option exercise decisions are purely pro forma because the requiring activity would prefer suffering merely poor performance and / or paying a higher than market price than the much more painful prospect of another competition.

  34. Not to mention that soldiers who come home with disabilities, brain injuries, lives shattered have to navigate through the most insulting bureacracy you can imagine. Trying to get benefits from the military is a process heavily stacked against the soldiers.

  35. How about giving the soldiers a pizza if they heal quicker? From Dominos – that’s the fundie-owned one, so it’s like faith based n all, too.

  36. DA – re: your second paragraph…

    you stated it much more elegantly than I could have, but I’ve seen this kind of thing when I worked for the community college district here in Maricopa County. It wasn’t until a project had almost completely collapsed that a re-bid was ever done, if even then. I shudder to think about the amounts of money that was wasted there.

  37. I keep seeing references about filters to keep some people’s comments out of the list. How do you do this?

    Side note to Dee Watz: No, I am not doing anything to avoid the filter. Good luck w/ that.

  38. “Hell, at the employee level, the whole government is already made up of “private contractors.” Apparently, the cure for Congress’ inability to task or discipline government employees is to hire outsiders that are even more unaccountable to do the same work.”

    The fact that the entire Democratic party is a wholely owned susidiary of the public sector unions may have something to do with that fact. The complete inability to fire or dicipline or expect any work out of a government employee after the one year probationary period drives a lot of the move towards using contractors. If you don’t like the employee a contractor sends, you make one phone call and a new guy shows up the next day. If you don’t like a GS employee, get ready to start documenting every wrong thing they do in writing over the next six months to a year, followed by detailed counseling sessions and written reprimands, followed by a long grevience process and probably law suit after you do take action against them.

  39. Don’t need no stinkin’ congressional inquiries. Ask the student nurses that learn/practice in VA hospitals. Ever wonder why there are no young nurses or doctors in VA facilities.?

  40. “The problem is that ‘privatization’ is sold as a way to get something for nothing. The car is expensive and it is underfunded. The solution to this is always to ‘privatize.’ This does two things, it makes Congress feel good because they can pretend that they have done something about the problem without spending any money that could otherwise be used for useful things, like pork and it allows them to reward political chronies with fat government contracts. What is not to love? Of course, the soldiers are screwed because privatization, while a good thing in some cases, is not a magic wand and won’t produce money and assets where there were none before. The soldiers end up with crappy care from a private provider rather than the government.” – John

    The word “privatize” means something very different in DoD-speak and Congress-speak. It essentially means that more jobs are cut from the active duty sector but end up being performed by federal employees. (Only in Washington can hiring more federal employees be considered “privatization!)

    DoD is going to continue to take beatings like this until it learns that “do more with less” is a recipe for gradual and escalating failure when it comes to an organization that isn’t designed to make a profit by creating things, but to destroy things that belong to the enemy. Taking out a second loan with a higher interest rate than the initial loan payment costs doesn’t change lower how much the initial car loan costs and actually increases the amount you have to pay.

    Civilian corporate culture simply doesn’t EVER have to address most of the issues that the DoD does. They’re completely different entities, and trying to run one by the rules of the other just leads to ignominious failures.

    “In theory, privatization makes sense; in practice, it rarely yields either increased efficiency or cost savings because of the method by which the government contracts out for required services. ? the privatization process conceals the continued growth of government — the number of actual federal employees is constant or shrinking, which would be a good thing but for the fact that the missions continue to expand and are thus performed by contracted personnel. Smoke and mirrors.” – D.A. Ridgely

    Exactly! The more the DoD cuts back on active duty personnel, the more it hires GS civilians to take over the work that active duty personnel USED to do. While GS salaries and benefits are actually higher than most of their active duty counterparts, because their salaries come from a “different pot of money” it makes DoD appear to be downsizing and saving money on personnel when in reality it is just using other federal pots of money to fund larger and larger portions of its manpower bill. Smoke and mirrors is a painfully accurate description of this insane policy.

    Despite what guys like Ken Schultz (or whatever name he posts under these days) believes, firing the organization’s head is NOT necessarily a good solution. As much as I believe that there should be accountability, the trend is to fire whoever is at the top of the chain doesn’t really benefit the organization. That’s because there’s ALWAYS a fall guy by virtue of assignment or appointment, even if he had no ability to fix anything or any culpability for what is wrong. (Abu Ghraib comes immediately to mind – no organization’s leader has the ability to stop people from doing the wrong thing on the ground. It’s like firing the CEO of Wal-Mart because the Wal-Mart greeter punched a customer despite corporate policy to give them a smile, greet them and give the kids Wal-Mart stickers.)

    Unfortunately, everyone wants to fire the guy holding the bag when the music stops – even if he’s done a better job than anyone else in recent memory and a better job than most people could have done. Firing the lead guy, unless he’s committed actual misconduct or made actual mistakes that lead to the problem (like the former head of FEMA during Katrina), doesn’t fix anything. It just satiates the public’s anger for a little while, obscuring the initial issue long enough for the buck to be passed again at a later date.

    Frankly, I think Rumsfeld has had more positive influence on the DoD than any other SecDef – even MacNamara, who drug them screaming and kicking towards putting actual ORGANIZATION into the organization. But guys like Ken Schultz wanted the guy’s head – because scape-goating is easier than admitting that no one can control EVERYTHING. Of course, being the next possible scape-goat in the job just ensures that the new guy has to focus on fixing the one pin-point issue to the detriment of figuring out how the organization actually should be functioning.

  41. Government contractors != privatization. If it were truly private, it wouldn’t involve the Government at all.

  42. Granted, I haven’t covered every word of every post, but it seems to me that everyone has missed the chance to point out that this scheme is *NOT* privatization.

    The government (read: you and I) foots the bill. The G.I.’s have no choice for their healthcare. So, tell me, how is that privatized? Just b/c it’s run by a group that doesn’t have a room in Congress doesn’t mean it’s “private.”

    The fact that the government can farm out contracts of ANY sort is damning proof that the government is too large in the first place. Since the consumers have no choice, b/c the power of purchase has been taken away due to the Gov’t contract, they are forced into accepting what they’ve been given. As a friend puts it: “It would be like having a private company contracted to run the same Government school system where people are still forced to attend their local school.”

    Can we please stop referring to Government handouts to buddy companies, lobbyists, lowest bidders, Vice Presidential liasons, etc. as “privatization”?? It’s tacitly false.

  43. and I see Pat is faster on the keyboard than I…

  44. John: I guarantee it’s a lot easier to fire a civil servant (or at least reassign him) than it is to pull a corporation’s contract out from under it. In the end, given the “monopsyny-monopoly” relationship, you find yourself having to go back to the contractor you just fired because they’re the only ones that can do the work.

    The USG has a long history of becoming a prisoner of its contractors. Fine: you can fire a seventy-thousand-dollar-a-year employee you don’t like. That’s nice, but it doesn’t reimburse you for the hundreds of millions in padded bills the contractor sent before getting his pet politicians to fire the auditors.

    As sr2 pointed out, true “privatization” takes tax money off the table. Anything else is just a shell game in which money disappears into a politically connected black hole.

  45. The Walter Reed scandal is a travesty.

    However, it’s the poster child for what would probably occur in many places around the US under a single-payer health care system. I’ve said before, at best single payer would look like Wal-Mart; at worst, like the VA. I really wish this realization would dawn in more heads…

  46. Hey! its good for a growing economy….and the economy IS growing and that’s all that matters
    …mission accomplished.

  47. I keep seeing references about filters to keep some people’s comments out of the list. How do you do this?

    You can find a Greasemonkey-based filter (for Firefox) here. Installation details are a bit further down the thread.

  48. Why does privatization hate America?

    And I guess it depends on which soldiers you’re privatizing, and which branch you put them in. If you take a colonel in the Air Force and make him a private in the Marines, I’d say his chances of getting hurt go way up after privatization. But if you take a 2nd lieutenant on his first tour in Iraq and make him a private in the marines, he’s not only not much more likely to get nailed by an IED, but he’s much LESS likely to be fragged by his own men.

  49. Was his cancer related to his military service?

    No, but he was a 25 year vet and was entitled to medical as part of his retirement.

  50. Sweet! That is a hard deal to snag in the private sector these days. Did he see much combat in The Gulf War?

  51. The biggest problem is the bureaucracy that is set up to deny the claims of soldiers. They force the soldiers to prove things that the Army should have in its records, and are experts in denying the obvious.

    Would a private insurance company do any better? Given that such a high % of healthcare dollars goes to passing the cost to someone else, I can’t imagine the GIs would do much better under a private system.

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