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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