VOUCHERS FOR THE VA

Recently, the Wall Street Journal made the rather offhand suggestion that the solution to the VA situation is simply to replace the entire VA healthcare system with vouchers.  “At the very least veterans ought to receive vouchers that allow them to seek subsidized care from private providers that removes the VA as the choke point.”  (Lead editorial, 5/22/14)  But that, my friends, is a more profound and potent suggestion than you might think.

The Journal’s point, the obvious point, is twofold:

  • Vouchers work.  If properly administered, they cannot be reduced to street currency and they are usable only if/as/when the holder decides to use them to purchase treatment for service-related injuries, diseases, and conditions.  In some ways, they resemble Health Savings Accounts.  As with an HSA, a vet with a healthcare issue and a VA voucher in hand would decide whether to seek treatment, where to seek it, and which treatment to undergo – he could go to the hospital or doctor of his choice rather than being limited to a VA hospital, and he could obtain whatever treatments were prescribed by his physician of choice.
  • Vouchers for vets can be limited, as they should be, to use for healthcare issues that arise from the vet’s military service.  Biggest example:  vets’ vouchers should not be used for treating conditions or diseases caused by simply getting old.  Service-related injuries?  Treat them for life.  Alzheimer’s disease?  No way – that is not a disease caused by military service.

The VA, as we know it today, should vanish.  And good riddance.  The VA’s only remaining role, its only appropriate role, should be to determine who is a vet and what constitutes a service-related injury, disease, or condition.   Should the VA be tasked with determining the dollar amount of voucher credit to be awarded for particular injuries/diseases/conditions?  Absolutely not; the coverage should be for unlimited amounts when it comes to treatment of any service-related injury, disease, or condition.  When it is truly service-related, there should be no such thing as a cap on what we spend on our veterans.

The temptation for the VA, as it has been for the US healthcare system in general since the invention of Medicare, is to go beyond merely providing financial assistance to the intended beneficiaries of a particular program, and to micromanage the entire process of the provision of healthcare.  Governments, in general, seem unwilling to settle for following the Milton Friedman playbook and just giving vouchers for particular services to those who need them but cannot afford them.  Instead, governments always decide that they can do a superior job of micromanaging the entire process – not just determining the need for the services, but selecting the provider and selecting the services and setting the prices for the services.  And once you go down that route, price controls lead to shortages, which lead to rationing of services (for all but those wealthy enough to bypass the system), just as inevitably as night follows day.  The government eventually determines eligibility, services, providers, and pricing, and all of those determinations are merged into a single process.   With both Medicare and ObamaCare, the process is implemented through the fiction of a kind of “insurance” that is not really insurance at all, and the end result is that no one really knows what anything costs and no one has any incentive to shop for price or service, and the normal benefits and efficiencies of free-market forces are eliminated, which is why the costs of healthcare and insurance soar, providers eventually disappear, and services eventually must be cut.  In the case of the VA, the monetary side becomes a budget issue (rather than a matter of the pricing to the vet), but denial of care is so rampant that it has become a scandal and a national disgrace.

The solution?  Let’s just do to ObamaCare and Medicare the same thing as what the Journal has suggested for the VA:  let’s dismantle them and reduce Medicare and ObamaCare benefits to vouchers and let everyone – not just the vets – shop for their own healthcare.  The government’s only role should be to determine who should get financial assistance and (in the case of all but the vets) how much they should get, and then dole out the money to honor the vouchers.

Are we talking about merely returning American healthcare to where it was before the adoption of the respective “entitlement” programs – about merely dismantling them and returning to the unsatisfactory status quo ante, as the Democrats seem to think?  No, not at all.   In the case of the VA, the solution is, as the Journal suggests, the conversion to a voucher program – not a reduction in the care provided to vets.  In the case of Medicare and ObamaCare, it will take more than just trashing the mechanics of those programs and substituting vouchers, but the rest of the agenda is already out there and has been obvious to everyone but the Democrats for quite some time:

  • tort reform (medical malpractice suits, etc.)
  • tax reform (end the differences between tax treatment of holders of individual insurance policies and tax treatment of beneficiaries of group policies)
  • abolishment of bans on interstate offerings of individual policies and group policies
  • making HSAs (healthcare savings accounts) available to all – individuals as well as group members

Additionally, healthcare insurance in general should be stripped of all of its hidden or indirect subsidies and should be resurrected as real insurance, priced strictly upon actuarial calculations.   For example, everybody loves the hand-out known as coverage of pre-existing conditions, but that, strictly speaking, is nothing more or less than another form of subsidy – a way of providing insurance to certain people for less than the true cost of insuring them and one that, as with all other subsidies, should be addressed through the voucher mechanism rather than through phony and invisible contortions that are built into the pricing of insurance policies and thereby undermine the efficiency of the market for the policies.  Same solution for everyone else who is needy – whether because of financial need or unfavorable risk-profile:  determine need, and then dole it out through vouchers, but don’t disguise it by building it into the pricing of healthcare and insurance.

The table has already been set, the solutions are already out there.

One thought on “VOUCHERS FOR THE VA

  1. Mike:

    I love the solution to the VA problem. In addition to the obvious benefit to our veterans, we would also disembowel a shameful bureaucratic mess.

    With respect to Medicare and Obamacare, your suggestions are intriguing.

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