Firing Veterans Affairs’ Eric Shinseki Was Only the Start: Give Vets Choice and Competition in Choosing Health Care

Government should put money into veterans’ hands to purchase insurance tailored to their special needs.
June 2, 2014 • Commentary
This article appeared in Forbes on June 2, 2014.

Medical care for veterans has become Washington’s latest scandal du jour. But this case truly is an outrage. Those injured while serving their country deserve prompt, quality medical attention.

The fate of Eric Shinseki, Secretary of Veterans Affairs, was sealed well before his ouster Friday. The facts were easily understood by the American people. Secretary Shinseki didn’t appear to be engaged and in charge. President Barack Obama needed a scapegoat.

With Shinseki gone attention now turns to policies instead of personalities. Everyone agrees that forcing veterans to wait, and possibly die waiting, for medical care is outrageous. But what to do?

Caring for veterans isn’t cheap. Promiscuous war‐​making over the last decade has generated an influx of patients, many with debilitating injuries. VA has 327,000 employees, second only to the Pentagon. This year VA is expected to spend roughly $151 billion, making it the fifth most expensive federal bureaucracy. Department outlays have more than trebled since George W. Bush took office in 2001. (VA provides more than medicine: income security, mostly disability payments, is the agency’s single most expensive program.) Unfortunately, the Congressional Budget Office reported that VA was still dramatically underfunded even though the number of vets has fallen with the passing of the World War II generation.

The government has a solemn duty to care for those injured in war. The department claimed to be fulfilling that responsibility. VA said its latest strategic plan “builds on past accomplishments to drive further improvements in quality, customer service, preparedness, and management systems by shifting the focus from improvement within a service or benefit delivery program to coordinating and integrating across programs and organizations. It also includes an emphasis on outcomes for the Veteran, and putting the Veteran in control of how, when, and where they wish to be served.”

Alas, the reality is very different. Many veterans have trouble accessing care. VA estimated that it has a case‐​processing backlog of 344,000. On average it takes vets 160 days to become eligible for benefits. Estimates of the error rate start at nine percent. The average wait for vets who appeal is 1598 days, or about 52 months. Former Sen. Robert Kerrey told how it once took him 12 days to change his address.

After being declared eligible, many vets get stuck in line. For instance, according to the Department’s Inspector General vets had to wait an average of 115 days for a primary care appointment at VA’s Phoenix facility. Some 1700 vets didn’t even make the official waiting list and may not have received any care. As many as 40 vets may have died waiting.

The IG found such practices to be “systemic.” In Fort Collins, Colorado, thousands of vets waited months for outpatient treatment. There and elsewhere—including Albuquerque, Austin, Cheyenne, Chicago, Durham, Jackson (Mississippi), and San Antonio—VA employees apparently manipulated data, falsified reports, and employed other misleading practices, “gaming” the system, as some staffers put it, to hide patient deaths as well as delays. House Veterans Affairs Chairman Jeff Miller said whistle‐​blowers reported being threatened: “Fear was instilled in lower‐​level employees by their superiors, and those superiors did not want long wait times.”

No one should be surprised. The latest IG audit is the 19th since 2005 on delays in appointments and care.

However, the more basic problem is rationing care to meet budget targets. The agency is short hundreds of primary care physicians. VA uses a system of “priority groups” which limits care to those with lower ratings; indeed, in most priority groups patients get most medical treatment outside of VA. The pharmaceutical formulary has roughly one‐​third of the drugs available to Medicare patients; access to the newest medicines often is denied. Available psychiatric services have declined in recent years.

Ultimately, the agency is “our own, homegrown experiment in 200‐​proof socialized medicine,” observed Avik Roy, a doctor now writing for Forbes. VA is a highly political creature controlled by Congress. Legislators prefer to promise extensive benefits while reducing money spent. Even those resources provided are manipulated politically. Noted my Cato Institute colleague Michael Tanner: “VA hospitals with low utilization rates are built or kept open not out of need, but because they reside in the districts of powerful congressional committee leaders. At the same time, other hospitals without political clout are overflowing.”

Unfortunately, better management alone cannot fix the agency’s problems. A couple decades ago veterans’ care was widely criticized. In 1994 former Rep. Robert E. Bauman wrote: “VA is the quintessential government bureaucracy—administratively officious, laden with red tape and meddlesome regulatory minutia destructive of both quality care and staff conduct.” As a result, he added, “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.”

Quality suffered. Roy, who performed clinical rotations at the Yale‐​New Haven Hospital, wrote that “heading out to the West Haven VA was like traversing the Iron Curtain. The problems facing the VA system will be familiar to anyone who has dealt with the British NHS: unsanitary conditions, leading to higher rates of hospital‐​borne infections; rationing of drugs and procedures, leading to poorer health outcomes; and on and on.”

The Clinton administration put Kenneth Kizer in charge of the department and he made dramatic improvements. But this “success story” of government health care, promoted by Paul Krugman, among others, didn’t last. After leaving Kizer complained that “The culture of the VA has become rather toxic, intolerant of dissenting view and contradictory opinions. They have lost their commitment to transparency.”

Even today VA doesn’t do everything badly. In fact, in some areas—trauma cases, IT, and case management—it performs well. But access is fundamental. Complained Hal Scherz, a doctor who served in VA hospitals in San Antonio and San Diego: “patients were seen in clinics that were understaffed and overscheduled. Appointments for X‐​rays and other tests had to be scheduled months in advance, and longer for surgery. Hospital administrators limited operating time, making sure that work stopped by 3 p.m. Consequently, the physician in charge kept a list of patients who needed surgery and rationed the available slots to those with the most urgent problems.”

Today vets are not receiving the care they deserve. And they are unlikely to do so as long as they are forced to rely on a politicized monopoly.

Organizations such as Veterans of Foreign Wars traditionally backed a specialized system for vets. However, many of veterans’ health care needs are not unusual. Indeed, the longest waits today are for primary care. Even much specialized care is for common illnesses such as cancer. Finally, while VA receives a disproportionate share of patients suffering from combat trauma, there is no reason that only its facilities can provide necessary services. In fact, in recent years urban hospitals have treated large numbers of patients with gunshot wounds.

The federal government should separate the functions of guaranteeing from providing vet access to health care. Having sent men and increasingly women into battle, Uncle Sam has an obligation to ensure that they receive treatment on their return. That does not, however, mean VA must build the hospitals, hire the doctors, and provide the services.

In fact, the existing system arose almost by accident. Early Americans found themselves at war, generating disabled veterans, before there was much of a private health care system. The first known government care for vets came from the Plymouth Colony in 1636 for those injured in the Pequot Indian wars. In 1776 the Continental Congress promised disability pensions for enlistees. In 1811 Congress authorized the first federal veterans’ facility, the U.S. Naval Home (for disabled seamen). The Civil War dramatically increased demand for such homes.

The Veterans’ Bureau, Veterans Administration, and Department of Veterans Affairs were created successively in 1921, 1930, and 1989. After the greatest war of all, World War II, Washington had to care for some fifteen million recent service members on top of four million aging World War I vets. The Korean and Vietnam Wars added new patients to the many aging members of the “Greatest Generation.”

However, the U.S. health care system has matured over the last four centuries. It remains distorted by counterproductive government policies, such as the tax preference for health insurance, but quality private treatment is readily available. There is no reason to keep veterans apart. Especially since the number of vets, assuming no major new wars, is expected to drop from 23 million in 2010 to 14.4 million in 2040.

Government should put money into veterans’ hands to purchase insurance tailored to their special needs. Existing VA facilities could be either privatized or focused on combat‐​related ailments common to vets. Giving vets more choices would not be a jump into the unknown. Specific services are outsourced locally when they are unavailable at a VA facility. According to a 2010 survey one‐​third of vets already get most of their health care outside the VA. Another third rely on the system mostly as a safety net. Only 16 percent rely on Veterans Affairs as their principle caregiver. The most important objective of reform should be to give the latter vets additional alternatives.

Some officials are thinking of real reform. House Speaker John Boehner forthrightly proposed privatizing the system. Sen. John McCain, a Vietnam veteran, argued: “Let’s let our veterans choose the health care that they need and want the most and not have to be bound to just going to the VA.” Chairman Jeff Miller suggested that VA at least allow vets who have to wait for more than 30 days to go outside for care at government expense.

Washington created the VA crisis. Foolishly aggressive military policies put far more Americans than necessary in harm’s way. Then Uncle Sam failed to adequately care for veterans when they returned home. Business as usual is not an acceptable response to the latest VA scandal. We should transform how the government cares for those who performed the toughest service of all.

Eric Shinseki’s ouster at VA doesn’t solve its problems. Give vets a choice of where and how to receive medical care.

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