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The VA scandal and socialized medicine

The VA scandal and socialized medicine

This article originally appeared on heartland.org.

The continued scandal of the Veterans Health Administration provides a good example of the downside of government-run medicine. But when it comes to comparisons to Obamacare, Avik Roy illustrates why the VA is much worse:

The most important thing to understand about the Veterans Health Administration is that it truly is socialized medicine. We often throw the term “socialized medicine” around to describe any government health care program, but the distinction is really important to understand. Socialized medicine, properly understood, is a system in which the state owns and controls everything. The government owns the hospitals; it employs the physicians; it pays for the health insurance and the health care. That, in a nutshell, is the VA. It’s also, for the most part, the system in place under the British National Health Service.

Single-payer health care, on the other hand, is only partly socialized. In a single-payer system, the government is the sole insurer, but hospitals can be widely privately owned and operated, and doctors can work for private hospitals or for themselves. Medicare and Medicaid, at the outset, were designed as single payer programs.

Subsidized private health care is the next step downward, in terms of government intervention. In countries like Switzerland, for example, there are no government insurers or “public options.” Instead, the Swiss government offers premium support subsidies for low-income individuals to shop for private insurance. Under this model, the government often regulates the types of insurance products that are eligible for subsidies.

Why do these distinctions matter? Because they have a huge impact on the quality of health care. The Swiss system isn’t perfect, but it is renowned for its high patient satisfaction, low wait times, and access to the latest technology. Medicaid, on the other hand, provides poor-quality coverage, and many doctors refuse to accept it. Medicare is better off on this metric, but it’s heading down the same path. On the other hand, while private hospital care in the U.S. is wildly expensive, no one disputes that its quality is generally good, and in many instances world-class.

Obamacare expands coverage in two ways: first, by creating Swiss-style exchanges where people can buy subsidized, regulated private insurance plans; and second, by expanding Medicaid. For all of the exchanges’ flaws–especially their high premiums–the quality of coverage they will offer is decent, and we should expect that uninsured people will do reasonably well on them, so long as they can afford the premiums. Medicaid is a different story; the literature shows that Medicaid does not improve health outcomes relative to being uninsured.

But the VA is an altogether different beast. The VA is not merely single-payer health care; its vast network of hospitals is also government-financed and government-operated. And that is why the VA is the worst health-care system in America.

The reality of the current VA scandal is that it represents the government failing at one of the few things it’s actually supposed to do – provide for the care for those who defended the country. The scandal has already moved into the territory of a political hot potato, where controversies over figures and wait times turn into a sea of numbers that ignores the human cost borne by this mismanaged program. The real question now is whether the scandals will lead to a sustained push to privatize the VA’s health offerings entirely. Such a proposal, which was recently endorsed by House Speaker John Boehner, would go even further than steps endorsed by the likes of Sen. John McCain, who has called for allowing veterans to seek care outside the system.

A number of bills on this front could advance in the coming weeks in Congress. For the sake of future veterans, let’s hope the reforms chosen are ones that engage in broad reform of the system as opposed to mere tweaking at the edges. As long as the bureaucracy of the VA is maintained as-is, it will be more about serving the priorities of bureaucrats than the patients it ought to put first.

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