The Veterans Administration Hospitals - serving those who have served better and at less cost than for-profit medicine

Projected increases in health care costs are the biggest problem area in long-run predictions of future deficits. It's common knowledge - at least one would hope - that the US has the least efficient and cost-effective health care insurance and delivery system among peer nations.  Although a variety of systems abroad deliver far better results without reverting to "socialized medicine" - England is the prime example of a fully socialized system - we might look to one fully publicly-run example on our own shores that's working very, very well if we want a window into the option of government-provided health care.

The real first flag-raising on Iwo Jima

The Veterans Administration Hospitals are a nationwide network of - literally - fully socialized medicine in the United States. And they are consistently rated the best service centers our health care system has to offer. They spend significantly less money per patient and are rated higher than private hospitals by objective measures in numerous studies.

As a reminder of our ongoing commitment to veterans of our armed forces, for Memorial Day I'm offering a  2007 commentary by Ezra Klein on the VHA:

Over the last decade or two, the VHA system has become a worldwide leader in both the adoption and the invention of health-information technology, and it has leveraged its innovations into quantifiable gains in quality of care. As Harvard's Kennedy School noted when awarding the VHA its prestigious Innovations in American Government prize:

[The] VHA's complete adoption of electronic health records and performance measures have resulted in high-quality, low-cost health care with high patient satisfaction. A recent RAND study found that VHA outperforms all other sectors of American health care across the spectrum of 294 measures of quality in disease prevention and treatment. For six straight years, VHA has led private-sector health care in the independent American Customer Satisfaction Index.

Indeed, the VHA's lead in care quality isn't disputed. A New England Journal of Medicine study from 2003 compared the VHA with fee-for-service Medicare on 11 measures of quality. The VHA came out "significantly better" on every single one. The Annals of Internal Medicine pitted the VHA against an array of managed-care systems to see which offered the best treatment for diabetics. The VHA triumphed in all seven of the tested metrics. The National Committee for Quality Assurance, meanwhile, ranks health plans on 17 different care metrics, from hypertension treatment to adherence to evidence-based treatments. As Phillip Longman, the author of Best Care Anywhere, a book chronicling the VHA's remarkable transformation, explains: "Winning NCQA's seal of approval is the gold standard in the health-care industry. And who do you suppose is the highest ranking health care system? Johns Hopkins? Mayo Clinic? Massachusetts General? Nope. In every single category, the veterans health care system outperforms the highest-rated non-VHA hospitals."

What makes this such an explosive story is that the VHA is a truly socialized medical system. The unquestioned leader in American health care is a government agency that employs 198,000 federal workers from five different unions, and nonetheless maintains short wait times and high consumer satisfaction. Eighty-three percent of VHA hospital patients say they are satisfied with their care, 69 percent report being seen within 20 minutes of scheduled appointments, and 93 percent see a specialist within 30 days.
Critics will say that the VHA is not significantly cheaper than other American health care, but that's misleading. In fact, the VHA is also proving far better than the private sector at controlling costs. As Longman explains, "Veterans enrolled in [the VHA] are, as a group, older, sicker, poorer, and more prone to mental illness, homelessness, and substance abuse than the population as a whole. Half of all VHA enrollees are over age 65. More than a third smoke. One in five veterans has diabetes, compared with one in 14 U.S. residents in general." Yet the VHA's spending per patient in 2004 was $540 less than the national average, and the average American is healthier and younger (the nation includes children; the VHA doesn't).

The VHA's advantages come in part from its development of the health-information software VistA, which was created at taxpayer expense and is now distributed for free to any health systems that wish to use it. It's a remarkably adaptive program that helps in virtually every element of care delivery, greatly aiding efforts to analyze symptoms and patient reactions in order to improve diagnoses and treatments, reduce mistaken interventions, and eliminate all sorts of care redundancies.

The VHA also benefits from the relative freedoms of being a public, socialized system. It's a sad reality that in the American medical system, doctors make money treating the sick, not keeping patients well. Thus, we encourage intervention-based, rather than prevention-based, medicine. It's telling, for instance, that hospital emergency rooms, where we handle traumas, are legally required to treat the poor, but general practitioners, who can manage conditions and catch illnesses early and cheaply, can turn away the destitute.
Moreover, patients are transient, so early investments in their long-term health will offer financial rewards to other providers. And which HMO wants to be known as the one that's really good at treating diabetes? Signing up a bunch of diabetes patients is no way to turn a profit.

As Longman details, the VHA suffers from none of these problems. Its patients are patients for life, so investing early and often in their long-term health is cost-effective; the system was set up to deal with the sick, so the emphasis is on learning how to best manage diseases rather than avoid the diseased; and the doctors are salaried, so they have no incentives to either over- or undertreat patients. Moreover, the VHA is not only empowered to bargain down drug costs; it also uses formularies (lists of covered drugs), and so is actually empowered to walk away from a pharmaceutical company that won't meet its offer.

The results have been clear. "Between 1999 and 2003," writes Longman, "the number of patients enrolled in the VHA system increased by 70 percent, yet funding (not adjusted for inflation) increased by only 41 percent. So the VHA has not only become the health-care industry's best quality performer, it has done so while spending less and less on each patient." Pretty good for socialized medicine.