Two Lessons from the VA Scandal

The press has been full of reports on the dreadfully low quality health care provided by several VA hospitals and the attempts to cover up this low quality by VA employees. As most all of us would agree, this really is a terrible and tragic situation but, as with almost every tragedy, there are lessons to be drawn from it. Two are worth mentioning here both of which have been stated previously on this blog.

One is that there is simply no good management in government by the Congress because of the sheer size of the organization. The federal government is now a gargantuan bureaucracy with thousands of employees (the Bureau of Labor Statistics provides data on government employment at bls.gov).  One of the best arguments for shrinking the size of the federal government is that it may be possible to do a better job of management if the government is smaller. It is hard to believe that anything like the VA scandal could arise if there was competent management by the Congress.

Second, the VA scandal reveals the reality of what government-run health care would be if we actually had socialized medicine as found in the U.K. and elsewhere. Barack Obama and other Democrats have expressed the opinion that what they would prefer is a single-payer medical insurance system or Medicare for all. On first glance, you might say that this system would not be what is found in other countries but look at the way Medicare currently operates. It sets the prices that it will pay for medical services and it determines the quantities (that is, the medical procedures) that it will cover. This is functionally equivalent to running almost all medical care facilities since, for the vast majority of patients, the Medicare insurance system will dictate how they are treated. People with the resources will go outside the system to get whatever care they deem best for their health. This is precisely how the U.K. system operates. People who stay in the system get lower quality care (for example, they may wait months to see a specialist) whereas those who go outside the system and pay their own way get higher quality care (they get to see the same specialist in a short time). Medicare for all will provide low quality health care for all are confined to it.

If you want to know why the VA scandal is a disaster for Democrats, it is not just because of the scandal itself which is indeed terrible. It is a disaster for what it reveals about the espoused health care policies of the Democratic Party.

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Economics One

A blog by John B. Taylor

The Grumpy Economist

One economist's views on economic policy.

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