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Republicans Call for Privatization of Veterans' Health Care

May 21, 2014

With its shameful backlog and secret waiting lists at some of its facilities, the Veterans Health Administration is facing an urgent crisis. But the only reform certain to make things worse would be to privatize the system of 1,700 VA facilities that serve 8.76 million American vets. Despite its troubles, studies consistently show that VA health care is very popular, delivers quality service and costs less than private sector alternatives. Nevertheless, the usual suspects on the right like John Fund and Charles Krauthammer are predictably calling for its replacement by a voucher program.
Appearing on Fox News on Monday, Krauthammer declared, ""Well, if you would suggest that we go to a voucher system, where everybody will get a voucher for treatment in any hospital he or she chooses, and I were a vet, I would choose that," adding, "I would rather go to Georgetown University Hospital than to a VA." If that formulation sounds familiar, it should. During the 2012 presidential campaign, GOP nominee Mitt Romney floated the same trial balloon, which just about every veterans' group in the nation quickly shot down:

"Sometimes you wonder if there would be some way to introduce some private-sector competition, somebody else that could come in and say, you know, that each soldier gets X thousand dollars attributed to them, and then they can choose whether they want to go in the government system or in a private system with the money that follows them," said Romney. "Like what happens with schools in Florida, where people have a voucher that goes with them. Who knows?"

Actually, many people know exactly what would happen, among them (as ThinkProgress noted) AMVETS, Disabled American Veterans, Paralyzed Veterans of America, and the Veterans of Foreign Wars. Sending millions of older, sicker Americans--many of them requiring specialized care for rare and complex health problems--into the waiting arms of private insurers, private doctors and private pharmaceutical firms is a recipe for chaos and de facto rationing on a grand scale. As the nonpartisan Congressional Budget Office (CBO) concluded its assessment of Paul Ryan's premium support proposals for Medicare, the result would be a dramatic shift of health care costs onto patients.
As the RAND Corporation explained in 2012 ("'Socialized' or Not, We Can Learn from the VA"), the VA system delivers care as good or better than its private sector counterparts, all while doing a much better job of controlling costs for American taxpayers.

RAND's study, led by Dr. Steven Asch, found that the VA system delivered higher-quality care than the national sample of private hospitals on all measures except acute care (on which the two samples performed comparably). In nearly every other respect, VA patients received consistently better care across the board, including screening, diagnosis, treatment, and access to follow-up...
Among chronic care patients, VA patients received about 70 percent of recommended care, compared with about 60 percent in the national sample. For preventive care, the difference was greater: VA patients received 65 percent of recommended care, while patients in the national sample received recommended preventive care roughly 45 percent of the time...
After adjusting for a changing case mix as younger veterans return from Iraq and Afghanistan, the CBO calculated that the VA's average health care cost per enrollee grew by roughly 1.7% from 1999 to 2005, an annual growth rate of 0.3%. During the same time period, Medicare's per capita costs grew by 29.4 %, an annual growth rate of 4.4 %. In the private insurance market, premiums for family coverage jumped by more than 70% (PDF), according to the Kaiser Family Foundation.

Sadly, it wasn't always this way. The turnaround at the VA isn't merely, as Paul Krugman explained, "one of the great policy success stories of the past two decades." Writing in the Washington Monthly, Steve Benen highlighted the 2005 findings of Phillip Longman in "The Best Care Anywhere":

As Longman explained at the time, "Who do you think receives higher-quality health care? Medicare patients who are free to pick their own doctors and specialists? Or aging veterans stuck in those presumably filthy VA hospitals with their antiquated equipment, uncaring administrators, and incompetent staff? An answer came in 2003, when the prestigious New England Journal of Medicine published a study that compared veterans health facilities on 11 measures of quality with fee-for-service Medicare. On all 11 measures, the quality of care in veterans facilities proved to be 'significantly better.' ... The Annals of Internal Medicine recently published a study that compared veterans health facilities with commercial managed-care systems in their treatment of diabetes patients. In seven out of seven measures of quality, the VA provided better care."

In June 2010, Elizabeth McGlynn, associate director of Rand Health, a division of the Rand Corp., concurred with the assessment that "it's hard to top veterans' health care."

"You're much better off in the VA than in a lot of the rest of the U.S. health-care system," she said. "You've got a fighting chance there's going to be some organized, thoughtful, evidence-based response to dealing effectively with the health problem that somebody brings to them."
The combination of its information system and support tools, routine performance reporting and financial incentives for managers who hit quality targets gives it an edge, said McGlynn, who co-authored a comparative study published in the Annals of Internal Medicine in 2004 that found the VA outperformed its community health-care counterparts by 20 percentage points in preventive care. It also performed significantly better on chronic disease care and in overall quality.

Just as telling, a June 2011 study by Amal Trivedi and Regina Grebla published in the journal Medical Care found that the VA delivered much better results than for elderly patients than private sector Medicare Advantage (MA) plans:

Among persons aged 65 years or older, the VA health-care system significantly outperformed private-sector MA plans and delivered care that was less variable by site, geographic region, and socioeconomic status.

Back in 2006, the Defense Department reported that "VA Outranks Private Sector in Health Care Patient Satisfaction." President Bush's VA Secretary R. James Nicholson called the findings of the annual American Customer Satisfaction Index, "the greatest story never told."

Veterans who recently used VA services and were interviewed for the 2005 ACSI survey gave the VA's inpatient care a rating of 83 on a 100-point scale -- compared to a 73 rating for the private-sector health care industry. Veterans gave the VA a rating of 80 for outpatient care, five percentage points higher than the 75 rating for private-sector outpatient care and 9 percent higher than the average satisfaction rating for all federal services.
"Although VA has received many wonderful endorsements recently, the support of our veterans -- the people who know us best -- is the highest praise," Nicholson said.

As the Washington Post noted last month, "The American Customer Satisfaction Index for 2013 shows that the VA health network, which serves more than 8 million veterans, achieved marks equal to or better than those in the private sector." (The latest ACSI report is available here.)
At the end of the day, the fiasco at VA could not come at a worse time. While Congress is wrangling over the size of the defense budget, the total costs of the wars in Iraq and Afghanistan could reach up to $6 trillion once veterans' pensions and health care are factored in. Over the next 10 years, the Veterans Administration will need more money, not less. And redirecting those resources to the private sector as Mitt Romney, Charles Krauthammer and the conservative commentariat urge can have only one outcome. As Krugman summed it up in 2011:

You know what voucherization would mean in practice: the vouchers would be inadequate, and become more so over time, so that veterans who don't make enough money to top them up would fail to receive essential care. Patriotism!

It's no wonder the Veterans of Foreign Wars tersely responded to Mitt Romney's proposal by simply declaring, "The VFW doesn't support privatization of veterans' health care."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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