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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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MARVIN iVERYRichardK. MillerAcademic  MDTim Recent comment authors
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MARVIN iVERY
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MARVIN iVERY

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,… Read more »

Richard
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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… Read more »

K. Miller
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K. Miller

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!

Academic  MD
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Academic MD

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.

Tim
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Tim

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”

Nate
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Nate

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.

Jack E Lohman
Guest

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.

maggiemahar
Guest

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.”

Nate
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Nate

“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… Read more »

Jack E Lohman
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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.

John Ballard
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btw, Mr. (or Dr?) Lohman, I just added your blog to my aggregator.

John Ballard
Guest

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… Read more »

Jack E Lohman
Guest

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?

Nate
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Nate

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.… Read more »

Edmund Billings MD
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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… Read more »