VA Hospital Scandal Harbinger of ObamaCare

By this time nearly everyone in America knows there’s a scandal involving the Veterans Affairs Hospitals that provide healthcare to our military veterans. The debate now is what to do about it, who to hold accountable, and what are the implications of this complete failure of the VA system for the future of ObamaCare.

For those of you not quite up to speed on this story, let me briefly review the known facts. According to the Inspector General report released this past week, the reports of fraudulent documentation of waiting times for veterans to receive medical treatment at the Phoenix V. A. Hospital are worse than initial claims. The IG report found primary-care waiting times averaged 115 days, nearly five times what the hospital reported and eight times the VA’s 14 day target. About 3100 veterans were actually waiting in line and more than half of them weren’t on the official waiting list. Whistleblowers at the hospital allege that forty or more veterans died while waiting to receive treatment.

This problem is not unique to the Phoenix VA Hospital alone. At this time 42 VA medical centers are under investigation for similar problems. This is not actually a new problem. According to an editorial in The Wall Street Journal, this is the 19th IG report since 2005 to document excessive wait times at VA Hospitals.

It is not the intent of this author to place blame on this administration alone for these failures. The problems at the VA have existed for years, through both Republican and Democratic administrations. It is true that President Obama was briefed on this exact problem when he first took the office of the presidency in 2009 and there is little evidence he has done much about it except increase the VA budget. This common liberal solution to any problem has failed miserably. But that’s precisely the point. More money is not the solution. The problems are more endemic to the nature of the institution.

Like most physicians, I spent time training in a VA Hospital. I was assigned to the VA Hospital of Philadelphia in the 1970s and the experience remains vividly imprinted on my mind. Nowhere have I experienced greater bureaucratic interference with the delivery of health care. Since there is no competition to the VA system there is no incentive for delivery of better care. Accountability for VA staff is lacking and union protections and regulations make firing incompetent workers nearly impossible. I could add to the war stories relayed by Hal Scherz in his Wall Street Journal article Doctors’ War Stories From VA Hospitals but the point was clearly made that veterans deserve better health care.


VA Hospitals v. ObamaCare

What are the implications of this VA scandal for ObamaCare? Is there reason to believe we will see the same horror stories with the changes ObamaCare brings to our system? The answer is complicated, like so much about health care. Let’s see what conclusions we can and cannot draw in comparison of the two systems.

The VA system of healthcare is true socialized medicine. The hospitals are owned by the government. The hospital staff, and all the physicians, are employees of the federal government. The government pays all the bills – which are financed through taxes. This is very similar to the British National Health Service.

Single-payer health care is only partly socialized. While the government is the sole insurer of health care, the hospitals and physicians may be privately owned and operated. This is similar to our Medicare and Medicaid systems. It is also much like Canadian health care.

Subsidized private health care is what exists in the country of Switzerland. The Swiss government provides premium support subsidies to citizens by means testing that allows these individuals to purchase private health insurance. The government regulates the insurance products available for subsidies. The government does not actually insure anyone.

ObamaCare is actually a combination of the last two. It provides government subsidies to purchase private health insurance, however it determines what choices are available in those insurance plans. It expands Medicaid, which is a single-payer system. Although it is not true socialized medicine, its proponents have always made clear their intention to have a single-payer system eventually, much like the Canadian system.

Some liberals would prefer true socialized medicine much like the VA system. Liberal New York Times columnist Nicholas Kristof argued for such a system during the debate before passage of the ACA in September 2009. He wrote:

The truth is that government, for all its flaws, manages to do some things right, so that today few people doubt the wisdom of public police or firefighters. And the government has a particularly good record in medical care. Take the hospital system run by the Department of Veterans Affairs, the largest integrated health system in the United States. It is fully government run, much more ‘socialized medicine’ than is Canadian health care with its private doctors and hospitals. And the system for veterans is by all accounts one of the best-performing and most cost-effective elements in the American medical establishment.”

I am wondering when Mr. Kristoff will write his follow-up column to distance himself from those remarks now that the VA system has been so heavily criticized. Jeffrey Dorfman, writing an op-ed for Forbes, has a much better grasp of reality.  He opines:

“The true scandal is not that people within the VA created fake waiting lists to hide the real, months-long wait which caused some veterans to die. The true scandal is that such a system was created in the first place. This is how government-provided, nationalized health care works. It budgets money for a certain amount of service and then rations that amount amongst its patients through a waiting system.”

This is precisely what happens today with Medicaid, and will happen soon with Medicare, as limits on payments to providers cause rationing of health care by limited access. Just as the veterans must wait increasingly longer times to receive health care, so too does this occur today with Medicaid patients. That’s why studies show that people with Medicaid are 40% more likely to seek their health care in hospital emergency rooms than people without insurance. Since the non-partisan Congressional Budget Office (CBO) has estimated Medicare reimbursement rates to physicians will fall below Medicaid rates by 2020, look for the same problems of access to physicians to plague Medicare in the near future.

No one expects to see an ObamaCare scandal exactly like what is happening at the VA because there are no financial incentives built into the law that reward phony waiting times. But expect the same increasing delays in providing healthcare as the system increases the number of insured without increasing the number of providers.


Real Solutions

Under bipartisan pressure, VA Secretary General Eric Shinseki resigned last Friday. Although this may soothe some of the political wounds the Obama administration is nursing, it is unlikely to make a significant difference in the functioning of the VA Hospital system. While a better manager of the VA is surely needed, the problems of socialized medicine will remain.

The real solution is to privatize the system. Avik Roy, writing in Forbes says:

“There is only one way to truly reform the VA, to truly ensure that veterans get the care they need. And that is to give vets the ability to take the money that the government spends on them and use it to buy high-quality, private insurance. There are two straightforward ways to go about it. One would be to give veterans subsidies with which to buy insurance from the Federal Employee Health Benefits Program, the popular private health insurance program for government workers. Another would be to allow those same subsidies to be used on the ObamaCare insurance exchanges. Either approach would allow veterans to seek care from private hospitals and private physicians.”

Considering that the ObamaCare exchanges offer only “narrow networks” shunned by the best doctors and hospitals, I would prefer our veterans be given option one. Dumping more people on the insurance exchanges will only exacerbate the waiting times those patients are likely to experience in the near future.

The Wall Street Journal editorial mentioned above offerred their solution:

“Instead of paying for shorter delays, a better option is to fix the structure that causes delays. That means decentralizing the VA and selling off most of the institution. There is no medical or biological reason that former soldiers require special hospitals for routine treatments or even most complex conditions. The VA can prioritize specialized care for combat trauma and rehabilitation unique to military service, insurance vouchers for vets can replace socialized medicine, and markets will discipline a now-unaccountable bureaucratic culture.”

Our veterans deserve at least as good health care as other Americans enjoy. The VA system has failed them miserably but ObamaCare won’t be much better. Let’s fix the system for everyone soon. There’s no time to waste while people die waiting for health care.


One comment

  1. I have just finished reading Dr. Bob Roberts’ book “The ObamaCare Trainwreck.” The book does an excellent job of pointing out why this important piece of legislation is doomed to failure. However, the most troubling statement for me in that book was this sentence. “There is no doubt that ObamaCare represnts the greatest achievement of the Progressives since the days of President Teddy Roosevelt over a hundred years ago.”

    Although I would not argue that some of Teddy Roosevelt’s programs were viewed as “progressive,” they pale in comparison to the social agenda of his fifth cousin Franklin D. Roosevelt.

    In fact, as dr. Rooberts traces the history of health care legislation leading up to the ACA, essentially nothing is said about FDR’s “contributions.”

    I was also somewhat troubled by the tendency of Dr. Roberts to paint Progressives as the ones wearing black hats, as compared to at least one liberal, Senator Joe Lieberman.

    In my opinion, “progressive” Republicans have been made unwelcome in today’s Republican Party. No wonder the Republican Party is unable to come together on alternatives to ObamaCare that have a chance of being accepted by the American people.

    Comment by Tom Hooker on September 19, 2014 at 3:34 pm