Stoa Topic: Reform USFG Policy Toward Veterans

Resolution wording: Resolved: The United States Federal Government should substantially reform its policy regarding veterans. Discussion of resolution on Stoa page here notes: “…the Department of Veterans Affairs is woefully underperforming…” Ethos Debate Voting Guide here.

Earlier posts looked at the other two Stoa policy topic choices- monetary/finance/banking regulation and labor policy-and made the case that federal programs and regulations have caused a wide range of problems over the last century.

It should be no surprise that economists are also critical of the Department of Veterans Affairs. An American Enterprise Institute post, Five things to think about with VA reform (April 27, 2017), provides overview of the VA and main services provided:

Employing over 340,000 individuals, VA ranks as the second largest federal department. The majority of its employees work within one of VA’s three major subdivisions or “service line organizations”—in the Veterans Health Administration, Veterans Benefits Administration, or in the National Cemetery Administration. VA today provides “services and benefits” through a nationwide network of hospitals, outpatient clinics, Vet Centers, regional offices, and national, state, or tribal cemeteries. In 2016, VA completed 5.3 million in-system medical appointments, answered over a million disability compensation ratings claims, cared for 3.6 million gravesites, interred 130,488 veterans and eligible family members, and processed 365,179 more headstone and marker applications for cemeteries worldwide.

Many debaters would focus on widely publicized problems with the Veterans Health Administration (VHA), including cost overruns, long waits, and coverups. The AEI article notes ongoing mission creep with the VA. Medical treatment used to be for injuries sustained in military service and war. Not any more: “In 2008, two-thirds of patients treated by the VA health system did not have a service-connected disability.”

So the VHA has become a national health care service for veterans, rather than one focused on addressing medical conditions sustained during war and military service.

The AEI article also looks at the costly and mismanaged Veterans Benefits Administration:

VA’s largest financial outlay doesn’t come from the VHA, but from the Veterans Benefits Administration, through its income security programs. Within income security, the top dollar spending is related to compensation paid to veterans for disabilities incurred in, or aggravated during, active military service.

The concern is that a disability system set up this way may create perverse incentives by rewarding unemployment. But most veterans, like most people, want to work: “work is perhaps the best therapy of all. It gives sense of purpose, while providing daily structure and opportunity for socializing.” As it stands, the current system definitely creates disincentives to the veteran to rehabilitate back into civilian life, which is vital both for the veteran and for society.

Why don’t we just abolish the VA?, Washington Post, April 22, 2015 mentions ongoing scandals, but then looks at the key incentive problems with the VA:

The latest VA scandal involves a still-unfinished 182-bed hospital in Aurora, Colo., that has already cost $1.7 billion and may require another $830 million from Congress. Similar cost overruns plague VA projects in Las Vegas, Orlando and New Orleans, as The Post’s Emily Wax-Thibodeaux recently reported. …

Fundamentally, though, VA staff and officials were responding to perverse incentives and impossible demands presented by a health-care organization that — unlike almost any other in American society — is not only single-payer but single-provider. Without market signals to help allocate resources, long waits and other patient frustrations are inevitable, no matter how sincerely, or how threateningly, Washington orders their elimination.

It’s a Soviet-style structure, minus the coherence of the one-party state. Instead, VA answers to 535 members of Congress, their episodically disgruntled constituents and a plethora of veterans’ lobbies, whose raison d’etre is linked to the existence of a large VA bureaucracy and whose political power is “impossible to overstate,” as former George W. Bush administration domestic policy aide Yuval Levin noted in a revealing National Review article at the height of last year’s scandal.

The National Review article mentioned is The Veterans Affairs Scandal (Ethic and Public Policy Center, May 30, 2014).

Reform proposal are discussed in the Washington Post article:

A new market-oriented policy group, Concerned Veterans for America, recently proposed splitting the VA’s health program into two new entities — a subsidized health insurer for all vets and a nonprofit corporation that would run a streamlined hospital system focused on vets with service-related medical needs.

And the link here is to a pdf with detailed reform proposals, Fixing Veterans Health Care. Outside conservative groups entering the fight over VA health care reforms (MilitaryTimes, October 23, 2017) is critical of conservative organizations advocating market-based reforms.

A coalition of conservative groups typically not connected to Veterans Affairs issues sent a letter to House leaders on Monday pushing them to rein in department spending and shift more resources to private-sector medical appointments for veterans who want them.

“Americans who put their lives on the line for our country should have the freedom to choose to use their VA benefits in the private health care market,” the letter states.

The Cato Institute’s Handbook for Policy Makers (8th Edition, 2017) includes 14. Veterans Benefits provides overview, economic analysis, and proposals to provide promised veterans services from private providers. The Cato Handbook notes reviews VA problems caused by not allowing prices and competition to operation within the VA system:

In 2014, whistleblowers and watchdogs discovered that 60 percent of VHA facilities were falsifying official records to make wait times appear shorter. Veterans at one facility in Phoenix were waiting 115 days for appointments. Congress responded with $5 billion to hire additional clinicians and expand VHA capacity, and $10 billion to pay for veterans to see private-sector doctors at taxpayers’ expense. The additional bureaucracy associated with this option left many veterans waiting even longer than before.

Heritage Foundation offered a June 2016 report, Reforming Veterans Health Care: Now and for the Future, and Congress passed it.

For a positive looks at the VA, as background for meaningful reform, see, The Misunderstood Brilliance of the VA (Washington Monthly, April, 9, 2019):

Ten of the sixteen Democrats now seated on the [Veterans Affairs committee] panel are freshmen.

These new representatives would do well to read Suzanne Gordon’s Wounds of War. Over the course of seventeen chapters, Gordon provides a comprehensive introduction to VA health care, and she proves that the agency is a national treasure within America’s fragmented and dysfunctional medical system.