Cato Policy Analysis No. 207 April 27, 1994

Policy Analysis

70 Years of Federal Government Health Care:
A Timely Look at the U.S. Department of Veterns Affairs

by Robert E. Bauman

Robert E. Bauman represented Maryland in the U.S. House of Representatives from 1973 until 1981. From 1990 to July 1993 he was an attorney in the Office of the General Counsel of the U.S. Department of Veterans Affairs in Washington, D.C., and in the Office of VA District Counsel in Florida. Parts of this paper originally appeared on the Wall Street Journal, December 6, 1993, editorial page; used with permission.


Executive Summary

An important historical fact is being completely ignored in the national debate on health care reform: for most of this century the U.S. government has owned and operated the largest health care system in the nation, the Veterans Health Administration of the U.S. Department of Veterans Affairs. With 171 hospitals, 362 outpatient clinics, 128 nursing homes, a $16-billion 1994 budget, and 266,000 employees, the VHA is socialized medicine writ large.

Although the VHA has produced many worthwhile results, thousands of patients wait for medical attention for hours every day, hundreds of millions of dollars are paid out in medical malpractice claims, and billions of dollars go for annual taxpayer subsidies. Furthermore, 90 percent of eligible veterans choose private alternatives over VHA health care and the massive bureaucracy running it.

The history of the VHA provides cautionary and distressing lessons about how government subsidizes, dictates, and rations health care when it controls a national medical monopoly. The record of the VHA also reveals what happens when politicians attempt to micromanage a health care system to meet the demands of well-organized consumer groups. The major question raised by the VHA experience is why anyone seriously advocating improved health care for all Americans would support government control and regulation of medicine.

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