Should We Open the VA to All Comers?

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, The American Prospect and The Washington Post. Until March of 2009, Merrill directed the Integrity in Science project at the Center for Science in the Public Interest. His first book, The $800 Million Dollar Pill – The Truth Behind the Cost of New Drugs ” (University of California Press, 2004) won acclaim from critics for its treatment of the issues facing the health care system and the pharmaceutical industry in particular. You can read more pieces by Merrill at  Gooznews.com,where this post first appeared.

Public plan proponents point to Medicare and its low administrative costs as their primary argument for why a similarly-structured public insurance product, offered through a Massachusetts-style insurance exchange (the connector), would dramatically lower health care costs. Not so, says blogger and health plan consultant Joe Paduda, who offered a persuasive rebuttal on the Campaign for America’s Future website last week. Joe made the following points:

1) Medicare has no underwriting or sales expenses or marketing costs. No commissions, either. This saves a lot of admin dollars. This differential would disappear in a health connector-type system, with the playing field leveled by dramatically reducing commercial healthplans’ marketing costs and elimination of their underwriting expense.

2) Medicare has one-time enrollment and dis-enrollment, and greatly simplified eligibility processes. This cuts their costs, but would not continue under a connector model.

His solution? Make the public plan an extension of the Veterans Administration, which he points out has lower costs, higher quality, higher patient satisfaction and lower utilization rates than virtually every other public or private insurance plan.

Good points. But what Paduda failed to note was that the VA also is a single-payer-type system that delivers health care directly, just like the British National Health Service. All its physicians are salaried; it owns its hospitals and clinics. The problem with using the VA as a model for the public plan is that those who would accuse its proponents of advocating for “government-run health care” would be right. How many of those proponents would be willing to stand up and say at that point: “Yes, that’s what we’re for.” Even Physicians for a National Health Plan over its more than three decades of advocacy for a single national health payer (“Medicare for all”) has never called for nationalizing the provision of care.

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  1. I am an honorably discharged veteran of the Marine Corps. I need help in getting medical treatment from the Detroit and Ann Arbor Veterans Medical Centers. The last few years have been very difficult and I don’t know how long I can hold out. I feel I am losing myself. I have pleaded for help from both hospitals without success. I have called the suicide hot-line four times trying to get help. I have called and written the hospital directors office, the patient’s advocates, I have contacted the Marine Corps league, American legion, Congresswoman Kilpatrick, John Dingle, and Debbie Stabeanow, President Obama, and no one will help me. I have a substance abuse, depression history and I feel that they use this to justified not treating me. I am scared of the staff member because of staff’s constant use of hospital security guard to threaten and harass me. I have never had a violent incident at any Veterans hospital; however the hospital staff consistent lies and profiles me as a violent person with no adequate evidence or history.
    Please help this is a very serious matter, I want to get better. I struggle with homelessness and maintaining a residents, I can’t sleep, focus, I am isolating, and I am very depressed. Veteran’s hospitals have some great services for Veterans who suffer with the same or similar conditions, but I can’t excess treatment. I know for a fact that there conduct is a vicious malicious deliberate act to harm me. I can explain and provide evidence for why I feel this way. Please, don’t dismiss me as just another crazy veteran who is making up conspiracies; I am not crazy or delusional I am not making this up, I can prove it. Please I have no criminal background; I have served my country and worked most of life until I became disabled around 2001. I am a large African American male (connect to profile). I have not broken any veterans hospital rules although I am sure they will tell you I have. I beg you; please don’t take their word for it someone needs to investigate. I will sign any release necessary. You will find staff misconduct and violations of federal laws in their effort to deny me treatment and services. I can’t access any appeals or due process procedures. I don’t know what to do. I don’t feel I can make it if I don’t get help. Please help me. Marvin Ivery 313-736-0640, Marjune13@yahoo.com eight years in the Marines.

  2. The VA is the very best public option. You could take the whole ‘health care bill’ off the table and make a simple policy change.
    Just open enrolment in VA health care and allow people to pay premiums, just as they would if they had private care, except it would be lower and have the VA terms.
    This would expand the VA system and create more jobs. It is likely that if you get a V.P. job at Bank of America the package won’t include VA care, it will be a Cadillac plan from Tufts, Blue Cross etc. just like it is now.
    For small business owners, they can go either way. This whole thing could be solved just by changing enrollment rules and writing no new laws.

  3. The Veterans Administration Hospital System is a mess and needs its own government overhaul. Adding millions of uninsured people to its list would be a huge mistake!

  4. Does anyone know what percent of VA hospitals are teaching hospitals i.e have residents doing a good bulk of the scut work ?
    I am wary of comparing teaching hospital models (e.g Mayo) where docs are salaried but get help from interns and residents, to the fee-for-service private sector . They are totally different beasts.

  5. Has anyone heard of a plan by Senator Kyl, and the Republicans to privatize the VA health care, and medicare if they are successful in killing the public option in the health care bill. Seems they believe the private insurers can do it better, after all, “they are regulated”

  6. Let me be clearer Jack, I do not now nor have I ever in my life worked for an insurance company. When you grasp that let me know.

  7. Yea, really, Nate. But no disclosure? What insurer do you work for?
    And fine. You have to make your points to protect your employer, but please, keep them accurate.
    Interested in how good the Advantage plans are? Click on my name to go to a website that will educate you.
    Really great programs Nate.

  8. Just to set the record straight on one point:
    Care at the VA improved, not over the last 5 years, but back in the 1990s when Kizner was running the VA.
    He ushered in the electronic medical records, and evidence-based guidelines.
    Over the last 5 years (in fact, over the past 8 years, the Bush administration underfunded the VA, and it has had huge problems with long waits for appointments, etc.
    Obama is now pouring additional funding into the VA which should solve the problem.
    The infrastructure that Kizner set up is still in place. See the book “The Best Care Anywhere.”

  9. “Nate, if Medicare is less efficient than private insurance, why are we paying 17% more for private Medicare plans (Advantage)????”
    Wow Jack I hope your not serious with this question. MA is more expensive because their benefits are considerably higher then normal Medicare. To do an accurate comparison you need to compare the cost of MA to Medicare A&B, Part D premium, and a high level Medicare supplement plan. Another great example of the left comparing Apples and Oranges.
    Studies have shown MA delivers Medicare benefits a couple percentage cheaper then Medicare does.
    Public plans must pay for graft and corruption, double digit fraud and abuse rates, and waste. Those add up to a lot more then CEO salaries, marketing, etc. You also don’t seem to have a clue how Medicare works so let me remind you the same insurance company CEO with the bloated salary you complain about for private insurance is paying the Medicare claims. Private insurance companies have 1 CEO, public plans have 500, how ever many members of Congress there is. Medicare spends a ton on advertising and marketing, they just do it under CMS and other departments, who do you think pays for the commercials and educational material? Medicare also has actuarial cost, again just borne under different departments like HHS, GOA, and Congress. If you would stop ignoring half the cost of Medicare and Medicaid you would see how inefficient they are.
    With the insurance industry, depends how you define insurance industry. I process claims for employers who assume part of the liability in exchange for greatly reducing the premium they pay evil insurance companies. And I do it for a fraction of what Medicare spends.
    John you apparently have never been to a public clinic or the VA during it’s not so good days. On paper the simple concept of providers on salary sounds great and a sure fire success. In reality when you implement it you see sever productivity and quality issues. Something about being a salaried public employee cuts productivity compared to those that get compensated on production or success. This is not universal and you can surely find pockets of great people willing to work and sacrifice for the good of others, like those that serve in and to our Military. The greedy doctors that would not work well under that system obviously are not in it. To think you can take every doctor, put them on a salary and everything will work out is….not feasible. Do even a little research into public hospitals and see how efficient your idea is. You can start with Killer-King in CA, King Drew is the proper name before they, well, started killing patients. My Local hospital UMC in Las Vegas is another great example of why your idea would be a complete failure. For every successful or even mildly successful community health clinic you can name I could name you 3-4 disasters. While your idea might work or rural or red areas, you only need to look at LA, DC, LA, Detroit, etc to see how they tend to turn out.

  10. Thanks John, and I’ll do the same. I’m not a doctor but I spent 40 years in health care before retiring, the last 25 as a CEO of an independent lab that billed Medicare. I’ll take Medicare over a for-profit insurer that denies care to increase profits any day. Remember the 17yo girl in California that died because she was denied a transplant because it ate into the profits of Cigna?
    No thanks. Let Nate do it.

  11. It’s sure easy to pick out the insurance company people in this comment thread.
    Not only veterans health care but a worldwide network of military hospitals and dispensaries represent a national treasure of resources more important than the strategic oil reserves.
    I see no reason that those resources shouldn’t be put to better use, augmented by a network of better-organized local health clinics staffed by medical professionals working at reasonable and competitive professional wages (not fee-for-service) taking care of any citizen who wants to go there.
    I’m a Medicare beneficiary and would go the a local clinic any time for routine medical attention rather than watch helplessly as CMS fights providers and insurers over money, more preoccupied with the financial challenges of my care than whether or not I’m getting any. As a citizen and tax payer, the system we have makes me feel more sick than better.

  12. Nate, if Medicare is less efficient than private insurance, why are we paying 17% more for private Medicare plans (Advantage)????
    Private plans must add dollars to compensate for high CEO salaries and bonuses, marketing and actuarial costs, broker commissions, shareholder profits, and even the lobbying and compaign contributions that are passed on to the patient.
    A little disclosure here… are you with the insurance industry?

  13. DCDan and Jack your completely off base because you start with a fallacy, Medicare is not more efficient then private insurance, it’s not even close. What Medicare does do is process claims cheaper; in exchange for that cheap administration and complete lack of stewardship of assets they have a double digit fraud and error rate. Medicare loses more to fraud then it cost to administer private insurance.
    Jeffrey if you look at history the government “options” have never been passively offered. Read the history of HMOs and how Ted Kennedy and congress forced them on America and America into them. It’s not an option when the Federal government tells you that you must offer it then subsidies it so it cost less. When 10-20% of your premium is due to cost shifting from public plan your no longer discussing options.
    Anyone saying Medicare E would be cheaper to administer then private insurance doesn’t know how to add. How are you going to offer Medicare E as an option and not abide by COBRA and HIPAA? Medicare doesn’t send annual women’s health notices or any of the other numerous regulation required junk mail. The waste in Medicare is far greater PMPM then the cost of CEO salaries, marketing, and profit. Just because the left ignores it in discussions doesn’t mean the cost isn’t there. Medicare doesn’t pay State premium taxes, are the needs for those dollars just suddenly going to disappear because the liberal tooth fairies wave their wand? States use those tax dollars to fund indigent care and other expenses.
    The entire argument from the left is apples and oranges. That is how they passed Medicare and every other bit of failed reform to date, lie and obscure.

  14. The proposal is that Americans have the option to join an health care system that is government run. It is not meant to be single payor and it is not the only option. Why shouldn’t we all have an option the our tax dollars support?
    Additionally, the VA model can and should be exported. The VA’s VistA EHR has been taken open source via the freedom of information act and is being rapidly adopted. Senator Rockefeller has proposed legislation to make the VA’s VistA electronic health record system a open source public utility available to provider organizations who can not afford expensive proprietary solutions. It would provide an affordable option as a foundation for quality care delivery. This legislation would speed the adoption process by helping under-resourced organizations with loans to fund the deployment of this proven public asset. Again, it is only an option and why shouldn’t hospitals and clinics be able to leverage the proven tools that we all paid for?

  15. Until five years ago, the VA would not even be in the running. But in the last five years they’ve improved their system quite a bit. And IF the VA were made an option to the public I can assure you that whatever weaknesses were there will sonn be gone as employees put their best foot forward to becoming the best system in the country.

  16. If people knew, really knew, that doctors’ salaries go up the more doctors did, we might get understanding about the inherent conflicts and perversity that we have. Consumers should be able to choose: see a salaried clincians (VA or wherever) and pay a lot less to get care, OR, pay a lot and get clinicians who run medicine as a business and make decisions based on what they can do/order/treat, not on what’s best for the patient.

  17. Perhaps the first and most important step to opening up the VA to non-veterans, or establishing a VA – like system to do so, would be for the VA to begin to care for its own employees. This would give the employees additional incentive towards providing good quality of care since they have the potential to be its recipient, while further lowering the VA’s cost, since the VA currently subsidizes conventional insurance for their own employees rather than caring for them. This would begin the process of developing a system that could provide care to populations with needs not currently met by the VA.
    The VA does not typically provide for much major emergency and major trauma care. (Injured soldiers are on active duty and treated within the Department of Defense). Civilian trauma disproportionally affects the uninsured and Medicaid population, and is going to be a big financial aspect of any universal health care system. A robust trauma care system would be another important component of a high quality medical care system.
    Steven Zeitzew, a VA Orthopaedic Surgeon
    “The contents of this message are mine personally and do not reflect any position of the Government or the Department of Veterans Affairs.”

  18. There are many things to like about a salaried quasi-VA staff model as the public health benefit plan. The budget model offers cost control mechanisms. The IT capabilities support interoperability and efficiency of care. And the virtue of community clinic-based care as an option to loosely affiliated health plan networks is that it can emphasize primary and preventive care, in contrast to the current sick care model. We need basic health care infrastructure, not a high-end PPO plan.

  19. The VA looks good because it selects what it does with sick people. When a vet comes in to my ER and is sick, a transfer to the VA is nearly impossible. The VA wants a four page form filled out and faxed to them. Then THEY will decide if the patient is “stable” or not. THEY will decide if they are stable enough for the transfer (about 70 miles). And THEY will decide in their own sweet time. I see vets in the ER because they could not get a VA appointment. We put vets in our hospital because the VA will not take them if they are too sick. This is also true for TriCare patients who want military hospital care. Members are told there are no appointments available so they should go to a “town” doctor or ER.
    A local clinic system, heavily funded by Federal grants, has no doctors who meet eligibility for credentialling at our hospital.
    But the work they actually do, at their selected acuity level, may indeed look like quality work. But they are not taking care of a community of patients that span the gamut of needs of a random population.
    Classic apples and oranges stuff

  20. Am pleased to see the suggestion regarding the VHA, a gem of health systems which I wrote about in a report unfortunately in French for a thinktank in Paris. Why does the VHA work so well? 1° Because quality is the backbone of the system and without this commitment Congress would have closed it up in the 90’s. The Office of Quality reports to the Undersecretary and establishes measurable objectives. 2° As a result, hc professionals can’t work without IT for the data. 3° The regions are in competition with one another, which brings down the geographic disparities. 4° The capitation approach frees up the use of telemedicine and … anything that works well, since there is no fee for service. 5° Doctors know that VHA training is top quality; so the best come for that. etc etc. Nurses have much greater responsiblity at the VHA, at the medical center level.
    Why doesn’t the average American consumer know all of this? The private practice physician lobby doesn’t want the salaried route to become the model…Unfortunately, VHA’s capacity is seriously constrained by buildings, budget, and number of professionals who would accept these salaries. But it is a fantastic model

  21. Health Insurance Guy,
    The reason the current public plans DON’T NEGOTIATE is because those lobbyists who go to happy hour with your insurance lobbyists — from the Rx companies.
    They all need to go under the bus, if we want a just system.

  22. Merril-=
    It seems to me that as long as the VA is simply an option, and no one is forced into it, that should answer
    conservative critics. (I realize that the conservatives would still scream “socialized medicine”–but so be it. As long as Rush Limbaugh, Rick Scott and O’Reilly are the conservatives spokespeople, their creidbilit t will continue to shrink. )
    The only difference between the VA and MedicareE (for everyone) as a public option is that VA doctors work for the VA. But many Medicare patients receive care from doctors who work on salary at Kaiser, Geisinger, Mayo, Intermountain etc. .
    On HealthBeat I have proposed making Both the VA and MedicareE options, alongside private insurance.
    See: http://www.healthbeatblog.com/2009/01/dr-atual-gawande-on-realitybased-reform-why-dont-we-open-the-va-to-the-uninsured-.html
    Dr. Atul Gawande had mentioned the VA as an option in one of his New Yorker articles, and when I interviewed him, he expanded on the idea here: http://www.healthbeatblog.com/2009/01/atul-gawande-talks-about-measurement-accountability-and-the-va.html
    As for the notion that Medicar E’s administrative costs wouldn’t be that much lower than private insurers if we had an Exchange . . . For-profit insurers still would have to provide profits for share-holders, enormous salaries for exectuives ( and not just CEOs). They would still spend a fortune lobbying, and even with an exchange they would be marketing and advertising.
    They only big savings is that they wouldn’t have to spend as much as they do now on underwriting because they wouldn’t be allowed to charge sick and older patients more.
    Finally, while I like the idea of opening the VA to more people, this would mean providng a large amount of additional funding to the VA–and finding more prinary care doctors.
    Obama has authorized new funding for the VA, which is great, but it is still going to be under real pressure trying to care for all of the soldiers coming back from Iraq with serious physical and psychological problems.
    Meanwhile, the Vietnam vets are aging–and having psychological problems of their own.
    We would want to make sure that Vets didn’t wind up in long lines because the VA had been opened up to civilians.
    If we had both the VA and MedicareE as options it would probably work out. Many more people would choose Medicare– until word got out about just how good VA docs are. (And those who make a commitment to the VA are, as one doctor noted above, a self-selecting group of excellent, caring physicians.) My brother-in-law gets much of his care at the VA.

  23. Actually, Jeffrey, consumers pay 100% of health care if only when corporations add their costs to the price of their product and we reimburse them at the cash register. But we also pay in increased cost shifting, bad debt and bankruptcy costs.
    We are far better off paying for the system with taxes — as we do fire and police and national security — and eliminate all of the middleman waste and spend it on healthcare instead. For the same dollars we pay to cover 85% of the public we could instead provide first class care to 100% of our population. Where are our heads?

  24. Veterans also have the benefit of less expensive prescription drugs from the VA – however that is subsidized by the govt and comes at a cost to the taxpayers. Expanding this program to include non-veterans will only increase govt obligations more and thus the question is then, would this money be more wisely spent elsewhere?

  25. Dr Zeitzew points to an important difference: in addition to costs, quality, utilization and satisfaction, integrated networks are, by the definition of integrated, able to leverage information-based assets much more efficiently – and one can assume that this is at least one source of the VAs better product. In the future, it certainly will be as outcomes-driven healthcare will become more dependant on information than our current system permits, as integration technology improves, …
    Any government-funded option should include mandates for information technology that further integrate physician- and patient-maintained medical records, collaboration, etc.
    So add to the list of our current healthcare systems that seem better options that lower cost, higher quality, higher patient satisfaction, lower integration, better integrated, and more likely to deliver better product from better information.
    What’s not to like?
    By the way, taxpayers already pay most of healthcare – 50% is CMS (‘care and ‘caid), 10-15% of total is uninsureds covered by “the system” – 30-35% is private pay – right? It’s not a matter of fighting against government-funded options – it’s a matter of changing the game and funding better options, and improving them.

  26. As you know, Steve, the VA docs are salaried and cannot drive up their income as in the private fee-for-service system. That’s what makes the Medicare system less efficient, though it is still more efficient than private coverage.
    And frankly, if the VA were expanded by letting others opt in it would by necessity spread the facilities nationally, which would benefit the vets.
    See http://moneyedpoliticians.wordpress.com/2008/01/07/ten-needed-fixes-for-the-health-care-system/

  27. At the very least, the uninsured should have access to the best gov’t-funded programs. If the VA happens to be better than most options, including the private options, that’s good news. Right?
    Secondly, if there is then a public option for a plan that is better and cheaper and not run at a loss to taxpayers (say you qualify at levels based on income, and pay based on income), then taxpayers should be proud to have a healthcare option or two depending on qualifications and need that starts to change the game for the better.
    Additionally, perhaps high costs, low quality, low satisfaction, high utilization healthcare models that include too many middle men (including stand-alone more-expensive MDs/caregivers, high-margin/subsidized life sciences firms, lobbyists, etc.) need to revisit their competitive positioning against integrated delivery networks that deliver better product by most all measures – whether government-funded or not. Fat, expensive, insufficient, down-market, and over-burdened is no way to go through life.
    Lastly, no one is saying that this is all or nothing – it is an option – so nobody has to stand up and say that everyone has to move to a government-funded system – they are saying that there should be government-funded OPTIONS. As a taxpayer, I want that to be a good option.
    Is Goozman really advocating against the lower cost, higher quality, higher patient satisfaction, lower utilization OPTIONs? What is your alternative?
    Why is THCB syndicating this sort of content/logic?

  28. This is an interesting but incomplete idea. The VA system is worth emulating in many ways, as are other cost effective yet high quality systems like the Mayo Clinic. Perhaps rather than selecting only one solution for all, we could identify such systems and encourage emulation of these successful solutions elsewhere and make them available as a choice for all, in addition to using them to provide access to cost effective care for those who are currently un-served. Medicare is hardly cost effective, and we already worry how to fund it.
    One reason the VA works well is the integration of its Computerized Patient Record System (CPRS). One can access all records across the whole system, inpatient and outpatient, across the country. The VA is a special case, and works as well as it does because of the efforts and qualities of the patients themselves. Our patients are veterans who have earned their healthcare by putting themselves at risk for our liberty. They have all by definition faced the potential of death or serious injury because of the obligations and uncertain nature of military service, and some have paid a very high price. Although they have earned their care they are grateful for it. The patients help each other and the VA benefits from the tremendous dedication and efforts of volunteers, veteran service organizations, community support, and by instilling a sense of higher mission and purpose in those who work here. For those of us who have cared for patients in private practice, county hospitals serving the uninsured, academic medical centers, and the VA, the contrast is dramatic. It is easier and more gratifying to care for veterans, and many who work for the VA do so in part to serve these patients. It would be difficult to encourage healthcare workers to put up with a VA style bureaucracy if also forced to deal with the ungrateful entitlement mentality one sees elsewhere. The VA is also far removed from much of the billing and coding that might be required to account for care given to additional patients. As a practical matter the VA lacks the capacity to care for millions of additional patients, especially in groups they don’t currently serve in large numbers; children, pregnant women, and those with congenital and early onset conditions that would have precluded military service. On the other hand, it would be interesting to propose widespread, perhaps obligatory, national service (not necessarily military), and provide later access to the VA as one benefit. People will value much more what they earn than what is given to them without obligation or cost.
    Steve Zeitzew, a VA Orthopaedic Surgeon
    “The contents of this message are mine personally and do not reflect any position of the Government or the Department of Veterans Affairs.”

  29. Unfortunately, Dan, you are correct. As long as the insurance industry is spending $46 million per year bribing politicians, we are at risk of the same shenanigans as in Canada. They will keep trying to undermine and underfund the system.
    Aren’t politicians great?
    No, the next step is to get the private money (bribery) out of the political system with public funding of campaigns. At $6 per taxpayer per year it’d be a bargain at 100 times the price.
    See http://www.wicleanelections.org

  30. The next game, after establishing a health interchange, will be lobbyists doing everything they can do to disadvantage the more efficient public option(s).
    If they stick in enough regulatory advantages for themselves, they can make a lot of money. Yeah for everyone!

  31. Wait a minute, Medicare is way to cost effective so we shouldn’t use that…
    Let me think about that, okay I’m done. That’s insane.
    It’s amazing the lengths we go to assure profits to companies in this country. We’ll sink the ship in order to make sure a few special sailors are well fed.