End the Dysfunction, Deaths, Secrecy: Privatize Veterans Hospitals

EspañolThis week a scandal has racked the Department of Veterans Affairs (VA). It’s been revealed that secret waiting lists were kept at VA hospitals, leading to preventable deaths of veterans.

The revelations are new, but not surprising. It is broadly understood that the VA is one of the more dysfunctional government bodies, operating a massive bureaucracy which often fails to administer veteran’s benefits which are the very reason for their existence.

The VA has a budget of about $140 billion according to the last federal budget, with more than $80 billion in direct benefits to veterans. These benefits come in many forms, but the most prominent among them are education, housing assistance, and healthcare. Education largely comes in the from of “GI Bill” tuition assistance to attend college. Housing assistance is mostly made of subsidized loan guarantees for mortgages. Finally, the most notable is the system of VA-run hospitals.

Federal spending by agency 1970-2014
Chart via downsizinggovernment.org

It is commonly known that government-run hospitals have provided substandard care over the years. In 2007, the Washington Post revealed widespread neglect at the Army’s Walter Reed Medical Center. The problems arose from the setup of veteran health benefits themselves. The VA brags on its website that it is “America’s largest integrated health care system with over 1,700 sites of care, serving 8.76 million Veterans each year.” As more and more people come forward about substandard care and neglect at VA hospitals, the natural question is “Is there a better way?”

The answer is yes, and the benefits would be realized not just for veterans but the nation as a whole. Put simply, the VA hospitals should be privatized and the laundry list of veteran health benefits turned into simple healthcare subsidies. The actual setup of these subsidies could come in a few forms. One method would be to reform and extend  the military’s TRICARE health insurance system, which many veterans have already used while serving. TRICARE is, admittedly, another program that has seen high costs and pressure to reform. The other method would be to simply agree to some level of direct cash subsidies for veterans to compensate for service-related injuries. Such subsidies could be used to pay for care at private hospitals nationwide, without the need to wade through VA bureaucracy and the problematic hospital waits to receive care. Not only would this make veteran health benefits simpler and easier to administer, but it would cut much of the unnecessary VA bureaucracy that veterans regularly complain about.

Both options would free the VA from the need to own and manage its massive hospital network. This would allow the system to be privatized, which would eliminate the root cause of the problem of VA healthcare. Many, albeit not all, facilities could remain open, but would have more incentive to improve their care so as to compete for patients, veteran and non-veteran alike. One of the problems raised by the recent scandal was that VA doctors often are particularly unproductive. By introducing some form of profit motive, doctors at these hospitals would be forced to work harder, see more patients, and improve care.

Veterans would come out of these reforms better off, as they would no longer be limited to VA hospitals for care, and could seek out alternatives in traditional private hospitals. This would mean more convenience, simply different forms of care, or higher quality and lower wait times. All of this says nothing of the benefits to society at large, as privatization of VA facilities would open many of them to use by all members of the community, providing more choices. Plus, there would be one-off benefits of the sale of VA hospitals into the private sector, which, given the size of the system, would be notable sums and could offset the cost of transition to this public-private model of veteran care. Moreover, the overall administrative and maintenance costs of keeping this gigantic system working and in good repair would fall, as government procurement and building costs are notoriously high.

The fact remains that the VA has failed its one and only mission. It exists as a separate, cabinet-level department with a $140 billion budget, solely to provide benefits to those who served in the military and their families. The lack of productivity, the long wait times, and soaring costs all show that the department has not achieved its mission by any real standard. Veterans deserve better than to be mistreated by the bureaucracy explicitly meant to aid them upon their exit from the military.

If this scandal has taught us anything, it’s that government sponsored enterprises, even under the name of veterans hospitals, lack the incentives to do the best job they can to serve their customers, and will do all they can to appease those paying their salaries. Not all of the problems would cease to exist in this new, public-private system, but it would be better than now.

Really, can it get any worse?

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