The Department of Veterans Affairs (VA) is never more than a few months away from scandal for the often-poor service it provides. Yet poor-quality service is not the agency’s greatest failing. The way Congress structures veterans benefits literally threatens the lives of active-duty service members.
The most notorious manifestation of poor quality at the Veterans Health Administration (VHA) is long waits for care. Long wait times persist because the VHA does not have a price mechanism to move resources from low- to high-value uses.
The VHA aims to schedule medical appointments within 14 days. In 2014, whistleblowers and watchdogs exposed that “more than 57,000 veterans have been waiting 90 days or longer for an initial medical appointment.” Actual waits were much longer because 60 percent of facilities falsified records to make wait times appear shorter. Veterans at a facility in Phoenix waited 115 days for appointments. One whistleblower claimed that 40 veterans died waiting for care.
Long wait times persist because the VHA does not have a price mechanism to move resources from low- to high-value uses.
Congress responded by offering to pay for care outside the VHA for such veterans. In 2019, the Government Accountability Office found the VHA was hiding that “veterans could potentially wait up to 70 calendar days to see a [non-VHA] provider.”
In 2021, more than 810,000 veterans were still waiting more than a month for appointments, while nearly 197,000 waited more than six months. More than 215,000 veterans waited more than four months for disability and pension benefits.
Rationing-by-waiting causes real suffering. Yet it is sort of a run-of-the-mill failure that plagues all socialized-medicine systems that completely banish prices, like Canada’s Medicare and the British National Health Service.
The VHA outdoes them all by threatening the health and lives of active-duty military personnel.
When Congress or the president commit troops to battle, the cost of providing veterans benefits to those troops rises. Veterans’ benefits are one of the most expensive financial costs of any military conflict. The VA reports that the present value of just the compensation and burial benefits that Congress has promised to current veterans—not including health care, long-term care, or life insurance benefits—reached $6.1 trillion in 2022.
If Congress funded those benefits at the moment it committed troops to battle, Members of Congress would approach that decision differently. Going to war would have required them to take the unpopular steps of spending less on other priorities or further increasing taxes. In marginal cases, pre-funding veterans’ benefits could prevent unnecessary wars or end them sooner.
That’s not how Congress operates. Instead of funding veterans benefits at the moment it commits troops to battle, Congress waits until those bills come due. That is often decades later. Disability payments, for example, typically do not peak until 30 to 40 years after the end of a military conflict.
Instead of funding veterans benefits at the moment it commits troops to battle, Congress waits until those bills come due. That is often decades later.
This “pay as you go” approach allows Congress to ignore what may be the greatest financial cost of that decision. It literally makes it easier for Congress to send active-duty personnel off to their deaths. In marginal cases, such as whether to enter Iraq or when to leave Iraq and Afghanistan, it may well have changed the outcome.
Congress should improve veterans benefits while eliminating the current system’s perverse pro-war incentives.
Congress should pre-fund veterans benefits by increasing active-duty pay. Pay increases should be large enough to enable all military personnel to purchase a standard package of private life, disability, and health insurance comparable to what the VA provides. Pay increases should therefore vary according to the risks to which each service member’s job category exposes them. Service members could then choose among private insurers that compete to offer them the best deal.
Pegging salary increases to risk means that, when military action increases the risk of service-related illnesses, injuries, and death, military pay would automatically rise to keep pace with the greater risk and the resulting higher insurance premiums. Military personnel would draw on that coverage after they leave the service.
Privatization of the VHA would improve health care for veterans and nonveterans alike. The VHA is the largest integrated health system in the nation. Its financing and delivery system does not exist in most markets. Allowing the VHA to compete for non-veterans would force incumbent health care providers nationwide to improve on dimensions of quality where the VHA is strong and they are weak, like coordinating care, conducting effectiveness research, and offering conveniences like electronic communications, scheduling, and medical records.
Congress should then repair the damage the VA’s financing structure has done to current veterans by transferring ownership of the VHA to them. In 2021, the VA estimated the value of its physical capital and investments at $36 billion. Privatizing the VHA would transfer those resources to veterans—and give the VHA’s clients the choice of a health system run by veterans, for veterans.
The right reforms would deliver less war, fewer dead and disabled veterans, and better veterans’ benefits.
Michael F. Cannon is director of health policy studies at the Cato Institute and author of Recovery: A Guide to Reforming the U.S. Health Sector (Cato Institute, 2023).