The VA Health System Is a Tragic Warning Against Government-Run Health Care

Liberals love the now-scandalized veterans health program, but even at its best, it's not worth copying.


A damning report released by the Department of Veterans Affairs (VA) Inspector General will likely leave Democrats and their liberal allies clamoring for reforms to the government run health system for those who have served in the military. The report found that workers in the Phoenix VA network systematically manipulated wait time data, leaving thousands of military veterans waiting for medical appointments, and some 1,700 stuck in limbo after being left off the waiting list entirely. According to the report, the average initial wait time for a primary care appointment in the Phoenix VA system was 115 days—a far cry from both the system's 14-day goal and the 24 days Phoenix officials had reported. 

Until recently, Democrats have not been particularly shy about expressing their feelings about the VA health care system. For years they have been telling us that it's great—a model system from which the rest of the nation's health care systems could learn a thing or two. 

In 2011, New York Times columnist Paul Krugman called the program a "huge policy success story, which offers important lessons for future health reform." A few years earlier, he lauded it as a "real live case of impressive cost control." Writing in Slate in 2005, journalist Timothy Noah dubbed the program a "triumph of socialized medicine."

It's not just liberal advocates. Democratic politicians have made their fondness for the program known as well. In the lead-up to the passage of Obamacare, Sen. Dick Durbin (D-Ill.) praised the Veterans Administration, and all government health care, as a "godsend"—and then mocked a Republican Senator for imagining a future "government [health] plan where care is denied, delayed, and rationed." That future, Durbin said, was "fictitious."

Around the same time, Democratic Sens. Sheldon Whitehouse (R.I.) and Sherrod Brown (Ohio), gave a statement describing the "government health care" provided by the VA as "among the very best health care in the world." In another speech, Sen. Durbin piled on, insisting that veterans reliance on the "quality care" offered by the VA proved critics of government health care wrong. The White House got into the game too, posting a "health insurance reform reality check" declaring veterans' health care to be "safe and sound."*

The ongoing VA scandal over falsified records, and the deadly long wait times for care that appear to have been the result, seems to suggest otherwise: Veterans are not safe and sound within the fully government-run system, its quality control leaves much to be desired, and its lengthy wait times are not a fictitious prediction but an all-too-grim reality.

In other words, it's hardly a triumphant, model system. But even if there were no scandal at all, the VA wouldn't be a system worth emulating.

West Point—The U.S. Military Academy (CC BY-NC-ND 2.0)

When Obamacare passed, we dodged getting a provision that was supposed to emulate the VA. The outbreak of Democratic praise over the program noted above revolved mostly around the possibility of a "public option" in the president's health care overhaul—a government-run health insurance plan intended to compete with private sector alternatives. The idea was scrapped, and Obamacare became law without it.

So what happens when the federal government actually makes an attempt to take an idea long used by the VA and apply it to the rest of the system? For that, we can look at recent efforts to spur adoption of electronic health records.

In health policy wonk circles, the VA has an electronic records system that is legendarily good. Yes, it's comparatively expensive, judged against other types of health records systems, but studies have found that the expense pays off with even greater savings. And it helped coordinate better health care too. "The VA's investment in the Veterans Health Information Systems and Technology Architecture is associated with significant value through reductions in unnecessary and redundant care, process efficiencies, and improvements in care quality," wrote a team of health IT researchers in a 2010 study for Health Affairs.

When the federal government earmarked about $20 billion (to start with) to help encourage health providers to install health IT systems in 2009, as part of the stimulus, it was hoping for a similar payoff. Just a few years earlier, researchers at RAND had published a report estimating that widespread adoption of electronic health records could eventually save $80 billion annually. The stimulus boost was a down payment on the potential for massive future savings.

The stimulus money was sent out to hospitals all over the country, and, with federal funding and a slew of incentives to act, new electronic records systems were rapidly installed. But the hoped-for savings never arrived. In fact, the health IT push may have helped drive federal health spending upwards, by making it easier and more efficient for hospitals to send bigger bills to Medicare.

The system-wide efficiency improvements never appeared either, because too many of the new health records systems couldn't communicate with each other. The federal government's health IT investment was supposed to make health care better and cheaper. Instead, it made it more expensive and worse.

The operating theory of most health policy wonks often seems to be that if something works somewhere, it will work everywhere. But the history of health care administration is littered with failed attempts to replicate small successes on a larger scale. All we really know is that if something works somewhere, it will work somewhere.

Defenders of government health care might argue that electronic health records adoption hasn't worked in the U.S. because of its fragmented, partially private health system. But Britain's fully socialized National Health System spent more than a decade trying to make a $20 billion health IT overhaul work before scrapping it entirely. It was the most expensive health policy failure in history.

The point is that even when and where the VA works well it's not necessarily a system to emulate. That goes for the VA's vaunted cost control methods too. Paul Krugman is right when he says that the system offers a real-life example of cost control; it really is cheaper than many competitors. But that's only part of the story. It's also necessary to account for how the system achieves its savings.

And one of the chief methods the VA uses to control spending is to organize its beneficiaries into eight "priority groups" that determine who gets the most care. The sickest and the poorest are at the top of the list, but everyone else gets shuffled into lower priority groups. And not all types of care are covered, which means veterans in most of the priority groups get the majority of their care outside the system. In 2007, the Congressional Budget Office reported that none of the eight priority groups received more than 50 percent of its care from the program. In 2010, the VA reported that just two of the priority groups—the two groups that have the highest cost per enrollee—had barely crept above 50 percent usage.

It's not a full-featured system designed to handle the complete health care needs of the population it covers. But it is an example of how government controls costs in health care: through strictly defined prioritization systems and limitations on treatments.

And that's how the system is supposed to work. Add the systematic lies and manipulations that the recent scandal has brought to light, and you have an accurate enough picture of how government health care works in practice. 

That's the government system that Democrats and liberal advocates say they like, and that we should learn from. The scandal shows how bad a government-run system can get, but even the best-case scenario mostly provides lessons in what not to do.

*Hat tip to Phil Kerpen for unearthing a bunch of these examples