VA Scandal Exposes Greedy Socialism (Glenn Harlan Reynolds)

VA Scandal Exposes Greedy Socialism – Glenn Harlan Reynolds

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So Secretary Eric Shinseki is now ex-secretary Shinseki, and cleaning up the Department of Veterans Affairs’ health care mess will now be someone else’s job. But there’s a good chance that no matter who is in charge, the cleanup will be, basically, impossible. That’s because the VA is government health care.

Not all that long ago, some people were boosting the VA’s government-run nature as a plus. Writing in the Washington Post during the debate over Obamacare, Ezra Klein suggested that we should expand VA coverage to non-veterans, because the government just does health care better than the private sector: “Medicare is single-payer, but VA is actually socialized medicine, where the government owns the hospitals and employs the doctors… If you ordered America’s different health systems (from) worst-functioning to best, it would look like this: individual insurance market, employer-based insurance market, Medicare, Veterans Health Administration.”

A couple of years later, in 2011, Klein hailed the VA health system as an example of “when socialism works in America“: “The thing about the Veteran’s (Affairs’) health-care system? It’s socialized. Not single-payer. Not heavily centralized. Socialized. As in, it employs the doctors and nurses. Owns the hospitals… If I could choose my health-care reform, I don’t think I’d go as far towards government control as the VA does. But the program is one of the most remarkable success stories in American public policy, and it needs to be grappled with.”

Now that the VA has erupted in scandals involving phony wait lists, and people dying because of treatment delays, an audit reveals a “systemic lack of integrity” in the system. According to the auditors, “Information indicates that in some cases, pressures were placed on schedulers to utilize inappropriate practices in order to make waiting times appear more favorable.”

In other words, they cooked the books. And what’s more, they did it to ensure bigger “performance bonuses.” The performance may have been fake, but the bonuses were real. (One whistle-blower compared the operation to a “crime syndicate.”)

And that captures an important point. People sometimes think that government or “nonprofit” operations will be run more honestly than for-profit businesses because the businesses operate on the basis of “greed.” But, in fact, greed is a human characteristic that is present in any organization made up of humans. It’s all about incentives.

And, ironically, a for-profit medical system might actually offer employees less room for greed than a government system. That’s because VA patients were stuck with the VA. If wait times were long, they just had to wait, or do without care. In a free-market system, a provider whose wait times were too long would lose business, and even if the employees faked up the wait-time numbers, that loss of business would show up on the bottom line. That would lead top managers to act, or lose their jobs.

In the VA system, however, the losses didn’t show up on the bottom line because, well, there isn’t one. Instead, the losses were diffused among the many patients who went without care — visible to them, but not to the people who ran the agency, who relied on the cooked-books numbers from their bonus-seeking underlings.

And, contrary to what Klein suggests, that’s the problem with socialism. The absence of a bottom line doesn’t reduce greed and self-dealing – it removes a constraint on greed and self-dealing. And when that happens, ordinary people pay the price. Keep that in mind, when people suggest that free-market systems are somehow morally inferior to socialism.

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