Department of Veterans Affairs

The V.A.'s Biggest Problem Isn't Who's In Charge—It's Centralized Government Control

With Trump's nominee Ronny Jackson out, here's how to fix veterans health care.

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The Department of Veterans Affairs is really hard to staff.

Its Veterans Health Administration (VHA) has 30,000 vacant clinical positions. Eligibility-claims processers are in such short supply, there remains a waiting list 75,000 veterans long. Appeals of eligibility denials have a backlog of more than 300,000 and take an average of 2.5 years to resolve. The VA even lacks undersecretaries to supervise those areas.

picture alliance / Ron Sachs/Con/Newscom

To top it all off, President Trump ousted former Secretary David Shulkin over differences about whether to pay for veterans to receive care from private providers, and his pick to succeed Shulkin—Rear Adm. Ronny Jackson, M.D.—recently withdrew his name from consideration over allegations of on-duty drunkenness, harassing female coworkers, and such and such.

This ongoing soap opera, however, keeps anyone from asking the right questions or proposing the right reforms.

Shortages and waiting lists at the V.A. are hardly surprising. Its health care system, the VHA, is the United States' version of the U.K.'s single-payer National Health Service. It is an entirely socialist enterprise, where the government owns the means of production (hospitals, clinics, CT scanners, bedpans), employs the workers, decides how much everyone gets paid, and generally chooses how to allocate all those capital and human resources.

In other words, it's a system without true prices—and that's why it doesn't work.

The purpose of the price mechanism is to get the right amount of stuff to the right place at the right time. Instead of using prices to allocate resources within the V.A., Congress relies on its own wisdom and that of V.A. bureaucrats. So it's no surprise that thousands of veterans die waiting for eligibility-appeals rulings, and others kill themselves while waiting for mental health services.

As is the case in Britain, Canada, and all other countries where government runs health care, in some regions the VA has too much stuff and not enough patients. In other areas, it has too many patients and not enough stuff.

Some complain the problem is not misallocation of resources but garden-variety underfunding. It's hard for the VA to hire doctors when it pays so much less than the "private" sector, where doctors' main source of income is, well, other government programs that pay more. Perhaps government should overpay VA clinicians as much as it overpays non-VA clinicians.

It's impossible, absent a price mechanism, to know whether V.A. salaries (prices) and overall spending are too low, but there is reason to think they might be. Sub-optimal access to care may be a durable political equilibrium in a government insurance program structured like the V.A.

Congress faces strong political incentives to renege on the commitment it makes to take care of active-duty personnel if they suffer a service-related illness or injury. At the moment Congress issues that promise, it costs Congress nothing. By the time the bill comes due, most veterans don't need the V.A., and those who do have nowhere else to go. Veterans who depend on the VA are a small and captive clientele who cannot compete with the political power of other interest groups (defense contractors, the elderly) in the battle for ever-larger shares of federal spending.

Trump dismissed Shulkin, we are led to believe, because Shulkin opposes increasing access to care by having the VA pay private providers to care for veterans in areas where the VA's waits for care are severe. Shulkin derides the idea as "privatization." It's nothing of the sort.

Privatization is when government transfers ownership of a resource from itself to private individuals. It's what many former Soviet-bloc countries did after the Berlin Wall fell.

By contrast, Trump wants the V.A. to work like Medicare—i.e., to have government write checks to private doctors and hospitals, instead of government doctors and hospitals. It's not privatization when you remodel the VA on Medicare, any more than it is privatization when Medicare switches from writing checks to private doctors and hospitals to writing checks to private insurance companies.

True privatization would look very different from what Trump proposes. It could even create a new political equilibrium that provides better care to veterans and prevents so many soldiers and sailors from ending up dead, injured, and sick in the first place.

Privatization would transfer ownership of the V.A.'s physical capital (land, structures, gizmos) to private citizens—ideally, to the people the VA exists to serve: veterans. Privatizing the V.A. would constitute a hefty transfer of wealth to veterans that would be a large and welcome step toward making good on Congress' promise to care for them.

Shulkin also warns privatization would dismantle the VHA, but that too is incorrect. It would transform the VHA from the largest government-run integrated health system in the United States to the largest private integrated health system in the United States. Veterans could continue to receive care from the same specialists as before, but through a system that veterans themselves own, operate, and choose. If veterans-cum-shareholders so choose, that system could also treat non-veterans, injecting much-needed competition into every health care market in the country.

Current V.A. enrollees would still need Congress to underwrite, Medicare-style, the care they receive through that system, or whatever system they choose. But further reforms would allow active-duty personnel to receive future veterans benefits from entities who face incentives to keep rather than renege on those commitments. Indeed, such reforms could make Congress and the president less likely to engage in unnecessary wars, thereby reducing the risk that active-duty personnel would need veterans benefits in the first place.

Instead of making an implicit, unfunded promise of veterans benefits, Congress should immediately increase military pay enough to allow active-duty personnel to purchase a standard package of life, health, and disability benefits from private insurance companies at actuarially fair rates. Private veterans-benefits insurance would begin paying claims the moment military personnel leave active duty. Since active-duty personnel could choose their veterans-benefits insurers, those who treat veterans the way Congress has would soon find themselves put out of business by those who keep their promises. Like a privatized VHA, some of the insurance companies could be owned and operated by veterans, or by financial institutions on which active-duty personnel already rely.

The most dramatic change, however, would be in the incentives the president and Congress face. As noted above, Congress currently makes an implicit, unfunded promise to care for veterans. Pushing the cost of veterans benefits into the future artificially hides the cost of current military spending—particularly when war increases those costs.

Forcing Congress to pre-fund veterans benefits with an immediate bump in military pay would force Congress to strike a better-informed balance between military spending and other priorities. And since the bump in pay would be tied to the cost of actuarially fair veterans-benefits insurance premiums, those premiums and military pay would automatically rise at the moment Congress or the president commits troops to battle. Congress would have to grapple with the additional veterans-benefits costs war creates at the moment it (or the president) chooses between war or, say, diplomacy. Forcing Congress to give up more butter to use its guns will cause Congress to enter fewer unnecessary wars, and to exit them faster.

Many veterans groups understandably oppose false "privatization" efforts out of fear that they could result in fewer resources for the system on which many veterans are utterly dependent. They might have a harder time opposing actual privatization, which would transfer massive amounts of wealth to veterans, as well as save soldiers' lives.

Michael F. Cannon (@mfcannon) is director of health policy studies at the libertarian Cato Institute.

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  1. In other words, it’s a system without true prices?and that’s why it doesn’t work.

    Prices mean the rich get what they want and everyone else gets the sloppy seconds! It’s not fair! Better to have shit services for everyone because it screws over the rich! That’s fair!

  2. I’ve never understood why Republicans haven’t hammered the VA harder whenever anybody mentions universal healthcare. Everytime Bernie opens his elitist mouth they should open a big case against the VA.

    1. I think it has to do with the right’s worship of those who use violence for the government. Cops and soldiers. They won’t admit that the VA sucks because then they might have to actually do something about it.

      1. Well,l I think it is either as you say, they don’t want to face the angry wrath of their veteran base, or, it is that they aren’t really opposed to socialized health care, given their record on ObamaCare repeal.

        1. Its third rail politics to fuck over veterans. More than just veterans will vote against a politician.

      2. The GOP has submitted multiple bills that allow Veteran’s to seek out private care when the VA system has a backlog or is X (I can’t remember the number) miles away from their place of residence. The bills keep being blocked by Democrats. They do try to hammer the issue, but the media doesn’t amplify it.

    2. The VA is not good but its better than single payer because the pool of veterans receiving medical care is relatively low compared to everyone in the USA being in a single payer system.

      If the GOP uses the bad VA medical system as an example of how bad single payer will be, then the politicians are admitting that they have a bad medical system for veterans. Its third rail politics to fuck over veterans.

  3. Universal healthcare enjoys strong public support in Britain. I judt think of it as national defense. We’re defending Americans from the most immediate and greatest threats to their well being. Of course the system should be administered efficiently. That’s not even an argument. The real question is whether you agree people should have the same access to medical care regardless of their ability to pay for it. We all apparently agree that people should be defended from terrorism and foreign invasions. Should we privatize national defense and lets say deploy missile defenses only in the parts of the country that pay the most taxes? Is that what ya’ll want?

    1. But who will save the British from the NHS?

    2. It’s nice of you to feed your pet strawman all that tasty pie-in-the-sky.

      Real Talk: the whole point is that universal health care can’t be run efficiently because price signals don’t factor into government calculus. And anyway, Defense is the very last department you should look to as an example of “efficient.”

      1. Don’t mention rationed care though. That’s fiction

        1. Rationed care? Your ass would let these poor people die in the street. If you can’t pay then that’s that is apparently the libertarian/conservative position. Oh, but then there’s charity. As if charity isn’t rationed care.

          1. Yes, people died in the streets before Medicare and Medicaid. I like make believe

          2. Zebra, cite one single instance of people dying on American streets because they didn’t have access to healthcare.

          3. Charity still has a price signal. So, you’re just skipping the central point of X’s argument.

            1. You are assuming a degree of economic literacy that he lacks.

      2. I never said defense was a model for efficiency.

    3. If you want universal health care, make the government stop deciding who can be a doctor and where hospitals and clinics can be built.

      1. I agree with that.

      2. There’s too much bullshit there. I’ve wondered this for awhile, when did Medical Schools become so quota restricted? I’ve met very smart people, people with very good grades well above the cut-off’s for medical school that do not get in due to quotas. And I wonder why this is such a particularly restricted field.

        Why don’t more schools open up, or schools extend their programs, to meet the demand for medical school? It’s very strange..

        1. I might be wrong, but I’m fairly certain that most, if not all, states limit the number of doctor and nurse licenses that get issued. And since you can’t be a real doctor or nurse without a license, it kinda makes sense for a school to limit how many students they’ll allow into med school.

          1. No, you are wrong, there are no quotas for professional licensure. Application requirements are standardized, and with most professions the licensure examination is of a multi-state variety, with a defined passing grade. Anyone who qualifies gets issued a license.

            Too many people hold licenses in multiple states to try to restrict the market in this way.

        2. We do import doctors. All of them still need to complete a US residency and the rest of the requirements before practice. So the VA exploits this to basically trap newly minted doctors to work for them.

          A lot of these docs come in on J-1 visas and cannot work after finishing the residency except for the VA or other government employment as the await the years it takes to get a green card if they want to stay here.

          There are more residency slots than there US med school grads. That does benefit them because all of them will find a residency after graduation with remaining slots filled by foreign grads. I do think that just building more schools is not the answer. There will have to be a change in admission standards.

          Nursing is in more of a crisis now. I think medicine as a career is less attractive.

    4. “The real question is whether you agree people should have the same access to medical care regardless of their ability to pay for it.”

      The companion question is whether you agree that people should be forced to work in some jobs for less pay than they can get from another employer.

    5. Should we privatize national defense….? No, because national defense is a public good. We can’t provide it only to those that pay. But if that wasn’t an obstacle then yes, we should provide only to those willing to pay. It’s an insurance policy. Some people might want to roll the dice and save on the premium, and they should be free to choose to do so. (What we do with those who can’t afford to pay is a different matter, with the same public policy issues as other services)

      1. I would propose that the reason not to privatize national defense is because a private military force of that size could easily overthrow the government. The government keeps the military under its control for reasons of self preservation.

  4. I have a great anecdote: I put in a VA claim about my GI Bill college plan after the college used the incorrect formula to calculate my attendance time. There are various veteran college benefits and the system can be complex. Under the Montgomery GI Bill, you are either full-time or part-time and the amounts paid each month could vary significantly.

    I spent over 7 years explaining how the college was using the incorrect formula to say that I was part time attending college when I was attending college full time. This claim went to various people’s desk at the VA and even an administrative judge could not understand the wrong formula was being used. I finally was successful after moving my claim up the federal court of veteran’s appeals where I won and the college changed the formula changed for all future veterans that attend that college.

    They recently changed the military college money plan but the sheer bureaucracy of the VA can lead to problems like mine.

    1. So if we had universal healthcare then you wouldn’t have had to spend all that time trying to qualify and those resources could have been put to use somewhere else.

      1. “If we had a massive bureaucracy you wouldn’t have had to deal with a smaller one!”

        Thanks, but not really at all.

      2. Sorry, I’m not too into having bureaucrats deciding to kill my kid because they know better than me

        1. He does highlight the one true advantage of giant bureaucracies though. Less paperwork.

      3. Zebra, Montgomery GI bill is education related not health related.

        1. Zebra, I see your a lefty hack visiting us so your lack of reading comprehension is understandable.

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  6. Its Veterans Health Administration (VHA) has 30,000 vacant clinical positions. Eligibility-claims processers are in such short supply, there remains a waiting list 75,000 veterans long. Appeals of eligibility denials have a backlog of more than 300,000 and take an average of 2.5 years to resolve. The VA even lacks undersecretaries to supervise those areas.

    Not to worry, as soon as we go to single payer, then everyone else’s healthcare will be just as shitty. Equality!

    1. But think of the re-training opportunities for unemployed coal miners!

  7. Forcing Congress to give up more butter to use its guns will cause Congress to enter fewer unnecessary wars, and to exit them faster.

    It’s cute that he thinks Congress still has any say in when and where we go to war.

  8. The purpose of the price mechanism is ….

    This irks me no end. The price system is natural and has no more purpose than self-defense or owning the fruits of your labor. Economists may rationalize prices in this manner, just as legal scholars rationalize the Second and Fourth/Fifth Amendments, but purpose implies design and alternatives. Go ahead and claim socialism has a purpose, it is unnatural and (poorly) designed, and it can easily be knocked down. But not prices.

  9. I’m going through the process of having my claims reviewed for eligibility right now. I’m not confident that they’ll approve any of it. I’m not sure how they’ll look at it all. Is the burden of proof on me to say something is service related? Or, is the burden of proof on them to show that it’s not. I fear it’s the latter.
    Oh, well. The good news is – if this article is any indication – I won’t have to worry about it until they get back to me… in 8 to 12 months.

    1. You needed to claim service connected disability with the VA within their time limit. Hearing loss, injury, asbestos exposure, etc. You need an honorable discharge from the military or you will have problems.

      They send you to a non-VA doctor to evaluate your claims for service-connected issues. The VA takes the doctors report and determines a % of disability based on some bureaucratic mess. Anything less than 20% service connected disability and you will be so far down the list you will never get into a VA medical clinic.

      The service-connected disability can be shown by testing the VA does (hearing loss) or via your military record. If you believe that your disability percentage is wrong, you can appeal it. Then you get in a quagmire of bureaucracy that should shame congressmen.

      The VA pays you a disability payment and wants you in every year for a checkup. All your prescriptions and other medical bills can come out of that VA payment.

      FYI: States usually have a state veteran organization to help veterans wade thru the bureaucratic bullshit. Contact them for help.

    2. You’ll get a grocery list of your claims and the percent they rate you at. Some may be designated service connected but at 0%. Knee and back injuries are notoriously low balled, around 20%. PTSD is pretty much being rated at 50% bare minimum. Then they do their math magic and give you the overall rating. The more involved the claim, the longer it takes. A relatively straightforward one can be 6 months to a year, if they don’t keep cancelling your appointments the day before and rescheduling them for a month later (and then cancelling on you again)

  10. Privatization would transfer ownership of the V.A.’s physical capital (land, structures, gizmos) to private citizens?ideally, to the people the VA exists to serve: veterans.

    As long as that is ACTUALLY what privatization means, then it could work. And it could even be combined with and apply to Medicare/Medicaid.

    But reality is that privatization would, like always, turn into a cronyist boondoggle. The word ‘privatization’ would be used to corral the usual useful R idiots into supporting a massive transfer of assets and yet another legal monopoly to Wall St and their ilk. And actual healthcare outcomes would drop – just like they always fucking do in the US.

    1. That’s rather tinfoil hattish to say the least.

      Privatization of the VA would most likely take the form of a parallel version of medicare without the age requirement. And given the massive overlap in the types of services provided this makes at least a tad bit of sense.

      About the only thing I could see keeping ‘in-house’ would be the sorts of conditions that are more peculiar to the veteran population – complex trauma/burns/prosthetics and the associated rehab. Maybe also combat related PTSD, but the vast majority of VA psychiatric care is the usual stuff – depression, bipolar disorders, schizophrenia, etc.

      1. It’s not tinfoil hattish at all. VA spends $200 billion/year. I can guarantee you that private equity types will see that as a huge permanent gravy train with little need to deliver. And once they get hold of it; then the cheapest and most profitable way to keep it flowing is extremely small campaign contribs (say $50 million/year) to the key congresscritters so nothing gets challenged/reversed.

        I actually think both the VA/military medical – and retiree medical – needs are quite unique compared with the rest of the under-65 pop. And in both cases – military trauma stuff and aging/gerontology stuff – it is govt that is also going to end up funding research too.

        Competition and pricing (and tertiary specialization) could definitely work to improve both. But if it ends up occurring within the typical corporate privatization framework, it will fail and badly. It has to be one of those VA/Medicare subsystems competing with other VA/Medicare subsystems. Not those two ‘competing’ with some entity that mostly deals with healthy 30-somethings and spends more effort marketing gym memberships for annual enrollment than on providing info on or improving medical care.

        1. actually think both the VA/military medical – and retiree medical – needs are quite unique compared with the rest of the under-65 pop.

          Given that well under 10% of military personnel are actually coded for combat MOS’s, let alone the even smaller percentage who actually see it, no, their needs aren’t all that unique combat to the general population that the vast majority of them mirror.

          1. My guess is that that small % incurs most of the expenses – like most populations. And those drive how the systems themselves are set up. 50% of people incur 5% of the expenses. 5% of people incur 50% of expenses – and their’s tend to persist as well. Actual medical spending is very skewed.

            Most corporate healthcare business models for the under-65’s are set up to cherry-pick enrollees. It’s a big part of the reason why employers themselves age-discriminate starting at 40 or so. Vets and retirees – guess what – govt IS the payer of last resort so the cherry-picking model does nothing to ‘save money’. Govt will always get stuck with the big dollar liability.

  11. Hysterical! He ridicules his own “reform” of Medicare — the dumbass vouchers.

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  13. The vast majority of veterans being seen in our VA clinics are those who served for a single enlistment 2-4 years, have no other insurance or refuse to use Medicare with copays because they “were promished.” The VA system also keeps Veterans in a perpetual state of being “incurable” because a fit finding could cause a decrease their monthly compensation. The regional VA directors constantly circumvent any congressional ideas that could improve care because less money would go into their pockets. Am I harsh, nah. I’m a retired combat-service connected Vet working full time at VA clinic. I get berated almost daily by either administrators for going the extra mile to get needed care in the community or by the ungrateful, abusive self-entitled shits that could never work again since 1969 because they got spit on or such such story. Just saying.

  14. But the democrat progressive communists say the big government is groovy man.

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