Is There a VA Advantage? –Evidence from Dually Eligible Veterans

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      (you can download as pdf,)

      We find a significant VA advantage. The VA outperforms the non-VA alternative in a wide variety of locations and for all types of patients that we consider. Importantly, the VA also reduces total spending by 21% relative to non-VA providers, which points to higher productivity in the VA than in the private sector. We demonstrate striking differences in the procedures reportedly performed at the VA vs. those reportedly performed by non-VA providers. These differences relate to the underlying arrangements in which public vs. private providers are funded in the US (and other developed countries). For example, veterans with prior VA care (and those who are more likely to use the VA) have larger survival gains from VA assignment.

      Our results contribute more broadly to two streams of literature on the efficiency of production. First, we contribute to the descriptive analysis that compares the performance of the US health care system to systems in other developed countries (Blank, Burau, and Kuhlmann 2017). By almost all accounts, comparisons of US health outcomes and health care spending are unfavorable with those of other developed countries (Garber and Skinner 2008; Rice et al. 2013). Our analysis points to a potentially significant source of inefficiency in the US context: its version of private provision of health care. This arrangement rewards costly but not necessarily efficient care. Although several developed countries that outperform the US also feature private provision of care, the US system arguably has the most complex configuration of financing and delivery, with high levels of uninsurance, administrative costs, and fragmentation (Cebul et al. 2008). These well-known information and coordination gaps may be fatal, at least for veterans in emergencies.

      Second, we provide empirical support in the context of health care for the general idea of production complementarities among three innovations in production: workplace reorganization, products and services, and information technology (IT). Hospitals without a broad network of clinics and a clear mandate for a population’s health may find it difficult to reorganize and redefine their services to optimize patient health. Complementarities in health care production may pose barriers for replicating the VA advantage in the fragmented private landscape of US health care.

      Comment by: Don McCanne of PNHP: With the high costs and gross inefficiencies in how we pay for health care that have left so many without care and with financial hardship, we have been working for decades on reforming the system. Rather than converting health care to a predominantly government owned and operated system, we have left the delivery system owned largely by private non-profit and for-profit entities, while professing to support public financing of care. Yet we are in the process of turning over the administration of Medicare and Medicaid to private entities, with well documented adverse consequences. Private equity firms have moved into health care en masse with the expected dire consequences for health care justice.

      Contrast that with the government health care program that lies before our very eyes: the US Department of Veterans Affairs (VA). The government-owned and operated system (i.e., designed and operated coherently) saves lives and reduces costs! Lest one be tempted to challenge the qualifications of the authors, one of them, David Card, was a co-recipient of the 2021 Nobel Prize in Economic Sciences.

      We have the money to provide high quality, comprehensive care to everyone. We obviously do not have the correct policies in play. It is time that we take a step back and see where we have gone wrong, and then correct our policies. We are long past due for providing health care justice for all.

      Editor’s note: Although Medicare-paid services fared worse in this comparison, let’s not blame the funding. Public financing won’t yield top results if private insurers meddle and providers are profit-driven. We need a commitment to access and quality from coverage through care. – JGK

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

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