VA as an argument against socialized health care

Topics: Health
07 Sep 2007

From: Ervan Darnell


Now old, so this becomes a quick point regarding the VA:

> Donna Shalala, Co-Chair, Wounded Warriors Commission :
> One of our soldiers that was injured who is on the panel said he
> couldn't remember the names of all the coordinators that he had to
> deal with.
> [ Judy Woodruff: ] And, yet, one of your panel members who heads up
> the National Rehabilitation Hospital here in Washington, said today
> there's a 20-25 percent vacancy in jobs, the kinds of jobs, the
> therapists who treat that. Where do you find the people to do the
> work? [1]

In other words, the VA system has too much overhead and doesn't pay
enough to staff its positions. One of the claims for socialized
medicine is that reduces the paperwork. Someone saying that the
government reduces paperwork should be laughed out to start with. But
people do seem to take this seriously, so here is some evidence it is
not so.

But it's worse than this in at least two ways:

1) The VA is actively competing with the private alternative so we can
tell just how bad it really is, and thus there is some impetus to
improve it. With a complete take over, that will disappear.

2) In the case of vets, we are talking about a small subset of the
population who have a defined benefit that we really want to provide.
That is, there is a lot more interest in caring for vets than there is
the random slob, and there are sufficiently few vets that price is
affordable (and I believe that price is much more than is available for
a country wide program, though it's hard to compare as vets obviously
have more injuries).

Despite these differences in its favor, the VA is doing a terrible job
(think back to the Walter Reed scandal of this summer). Despite the
ability to compare externally to private care, vets are mostly a captive
audience with no alternative provider. It's not surprising the quality
of facilities drops in such a case. Apparently, the doctors are as good
as anywhere, but then again these are largely military people with a
commitment to helping fellow soldiers. That's great of course, and I
want vets to get the best possible care, but it's not a model that will
extend to the rest of the population. It is rather the ordinary
economic goods (like janitors to mop the floors) that aren't provided
efficiently. Population wide, doctors are an economic good as well.

The inability to fill positions is interesting as well. It's worth
looking inside the efficiency claim a little bit. Private health
insurance has the ugly job of saying 'no'. That is, it contains costs
by denying care, ideally because the procedure is not needed or wasn't
covered by the plan. All too often it denies care capriciously, but in
the long run, it's the same effect, cost containment (or at least full
privatization of the cost). Making these decisions requires lots of
documentation. Thus, there is high overhead. Medi* is 'efficient' only
in that it's a free rider by paying less than the market rate for care.
Doctors ration the care since they are losing money on providing it, and
then cost shift the profit margin to private carriers for care that is
necessary for Medi* patients. The private carrier then picks up the
real burden of vetting the necessity of care (though Medi* also does
some of this). This is not a miracle of efficiency. The other aspect
is that Medi* paperwork often appears as laws rather than filing
requirements, thus shifting the paperwork burden to doctors and not
being fairly charged against Medi* (e.g. [2]). Both of these are a
hidden tax. The whole system cannot be run just by transferring the cost.

That the VA cannot fill its positions is because it pays too little.
Price fixing is an inevitable feature of socialized medicine, and the
rationing that comes with it. Here we see a tiny bit of that here.

[1] http://www.pbs.org/newshour/bb/health/july-dec07/wounded_07-25.html
[2] http://www.cato.org/pubs/regulation/regv21n3/v21n3-ftr3.pdf. in
fairness this disagrees in part with my cost shift argument.
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