Another Veterans Day brought another round of lamentations about the Department of Veterans Affairs and promises to fix it.
President-elect Donald Trump promised to do so throughout the campaign. Paul Rieckhoff, founder and CEO of Iraq and Afghanistan Veterans of America, is skeptical. Veterans are "used to big promises and disappointing results," he says. "Fixing the VA might be one of the biggest challenges for President Trump. Every president says they're going to do it, yet we've still got a VA with backlogs and massive problems."
If Trump tries to fix the VA the same way other presidents have, he will fail. But there is a way he can succeed.
Trump's predecessors failed because they tried to work within a model of top-down, centralized economic planning. The Veterans Health Administration is America's only purely government-run health system. Its closest analogue is probably the United Kingdom's National Health Service. The VHA even produces the same results as the NHS: chronic shortages and long waits for care alongside idle and wasted resources, instances of horrific care, and often good care, you know, if you can get it.
Presidents can and have fixed such problems temporarily by moving resources from here to there, or investing in some new system. It never lasts, though. The VHA is a socialist enterprise. Unlike a market system, it has no price mechanism or competitive pressures that automatically fix such problems when they re-emerge. And not only do they always re-emerge, Congress usually takes forever to get off its duff. If Trump retains the VA's basic structure, he will join a long line of presidents who have failed our nation's veterans.
How to Privatize the VA
Trump can distinguish himself from other presidents by working with Congress to create a system of veterans benefits that fixes problems automatically. Here's how.
First, the federal government should increase military pay sufficient to enable workers to purchase--from private insurers at actuarially fair rates--a package of life, disability, and health benefits equivalent to what the VA provides. Benefits would kick in as soon as they leave active duty and cover veterans' service-related disabilities or illnesses for life.
Second, having privatized the insurance component of veterans benefits, the federal government should then privatize the delivery component. It should incorporate the VHA as a private company and issue shares to active-duty personnel and veterans based on length of service or other criteria.
You read that right. Military personnel and veterans would literally own the VHA, including its many hospitals and other facilities. Privatizing the VA would both increase the pay of active-duty personnel, and create a massive wealth transfer to active-duty personnel and veterans. Veterans would be able to receive medical care from health systems owned and operated by veterans, for veterans.
Third, the federal government should give current veterans vouchers to purchase insurance and medical care from the insurers and health systems of their choice, including the new veteran-owned and -operated systems.
Privatization Means Better Benefits for Veterans
Privatization would improve the quality of veterans' benefits immeasurably.
The federal government promises veterans' benefits to military personnel once they leave active duty. Only it's not an explicit promise. And Congress doesn't fund it. As a result, Congress can--and does--renege on that commitment.
A system run by veterans, for veterans would keep those commitments and focus on quality in a way the VA cannot, in part because it would eliminate the VHA's monopoly. Competing insurers and health systems would know their customers have options. If they provide service as lousy as the VA does, veterans would fire them and active-duty personnel would avoid them.
But that's not even the best part. As Radley Balko wrote five Veterans Days ago, "The best way to honor our war veterans is to stop producing more of them."
Privatizing the VA Can Prevent Unnecessary Wars
The greatest benefit of this system is that it could help prevent unnecessary wars.
Veterans benefits are one of the largest financial costs of any armed conflict. Yet Congress does not pre-fund those obligations. It only funds them once they come due. That allows Congress and the president to pretend these costs do not exist when they are making the decision about whether to send troops off to war.
The increase in military pay I describe here would effectively pre-fund veterans benefits. Congress would have to fund each soldier's and sailor's veterans benefits from the moment she joins the military until she leaves. Importantly, since the added pay would reflect the cost of purchasing veterans benefits at actuarially fair premiums, the added pay would rise when the United States is at war or when war is imminent. The added risk of deaths and injuries would cause premiums to rise, which would increase the amount of added pay Congress must provide each service member.
The result is that future Congresses and presidents would have to confront this enormous cost of war at the moment they decide to send U.S. troops off to war, and every day they decide to keep them there. Privatizing the VA would help future Congresses and presidents avoid unnecessary wars by making them confront more of the costs of war.
There are still further benefits to this approach. Read about them here and here.
Follow me on Twitter at @mfcannon.