The Veterans Confidence Racket

The Veterans Health Administration is a con job. I'm sure that many of those working as part of it do not recognize it as a con job. I'm sure that some of those working for it recognize that it is a con job but believe that it can be something more and better, and have been struggling towards that goal. But it is a con job and it will remain a con job so long as it has anything much like its present form.

The declared purpose of the VHA[1] is to provide health-care to military veterans. This mission appeals to those voters who see veterans as deserving reward or compensation for their military service, and it appeals to those contemplating entering such service.

In theory, the provision of this health-care could be entirely by a voucher system, allowing veterans to acquire health-care at state expense but through a market of private producers. The reason that a voucher system is not used is because of its expense.

To control costs, provision has largely been by state-run facilities. Some people imagine that costs will be kept in check because of elimination of profit, because of technical efficiencies achieved through vertical integration, and because of recruitment of superior personnel willing to work for lower salaries. But the elimination of profit means the elimination of the profit-motive, which elimination in turn inhibits the search for new and better ways of doing things. Vertical integration might be able to exploit technical efficiencies, but a greater problem of economic calculation confronts any attempt to administrate a large-scale allocation programme. And the state is simply not very good at recruiting superior people on-the-cheap.

The problem of economic calculation bites especially hard, and the VHA cannot actually get its costs down to those of private provision through the market. The VHA can, however, lower its evident pecuniary costs by reducing the quantity or the quality of the health-care that it provides. In other words, it can shift the cost to veterans, in the form of unmet promises; in the form of suffering and in the form of death. That is how the VHA can and does control costs.

When the VHA was launched, there was almost surely a sincere belief that it could deliver at a discount. However, there have since been many decades for state officials to observe that it has not; there has been ample time to recognize that it cannot. Yet instead of being forthright in explaining what it would take to provide veterans with the benefits that they were promised, and instead of preparing to meet the promises now being made to recruits, the deception continues. As failure continues to come to-light, there will be further reforms that fall short of what is actually needed to meet the promises, because fraud saves the state a considerable amount of money, and protects the mythology under which the state preserves and accumulates power more generally.

I have noted that health-care could be provided to veterans by way of a voucher system, but if one respected the sensibility and character of military veterans, and trusted the strength of voters, then a better thing to do would be simply to give veterans enough money that they could buy the same amount of health-care (in part by purchasing insurance), but to allow them to spend that money as they chose. At the margin, a bit more or less of something else may reasonably be more important to some veterans than a bit more or less of health-care.

If veterans are intelligent, economically rational, and of good character, then they will use the money appropriately. If they are stupid, irrational, or sociopathic, then they may spend the money inappropriately, and later seek a bail-out from the tax-payer in the event of an emergency, and voters might give that to them.

I leave each reader with responsibility for his or her judgment on that matter.

[1] The VHA is the best-known part of the U.S. Department of Veterans Affairs, aka the Veterans Administration, to the point that VA usually refers to the VHA, and that VHA and Veterans Heath Administration aren't much used. None-the-less, I'll employ the more precise term and abbreviation hereïn.

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