Tyler Cowen's a smart guy with a history of perceptive writings, so its sad to see his reflexive skepticism of the VA rest on such weak grounds. Stung by recent columns, posts, and studies lauding the VA's quality and efficiency, Cowen adopts four points of challenge:
1) The VA used to be middling at best. Its current status, then, is probably just an aberrational period that'll swing back towards mediocrity eventually. Thus, there's little to be learned for national policy purposes here.
2) They bargain down drug prices. The American government, however, cannot do that, because it will cause the supply of drugs to contract.
3) The VA pays doctors less. A national program couldn't do that.
4) The VA can exhibit more quality improvements because it's smaller than the nation as a whole.
Sigh.
In short, points 1 and 4 contradict each other (the quality improvements can be real but predicated on size or merely a temporary fluctuation, but not both) and points 2 and 3 lack evidence and, to a different degree, import, as the VA's quality is not simply its cost-effectiveness, but its satisfaction ratings and standardized medical care. But first, a bit of background: in 1995, the VA went through a systemwide reengineering that created an integrated, performance-oriented structure relying heavily on IT developments, pharmaceutical negotiations, and reengineered treatment and payment protocols. The result was a renewed VA system that now offered better care than any other hospital system, private or public, in the country.
Note the word "reengineering" up there. Cowen's first point is that "the relative efficiency of the now-moment [is] the exception," which is a bit like looking at someone who had a mole removed and declaring, in view of the fact that they carried their birthmark for a lifetime, that the current mole-less moment is the exception, and it holds no implication for future dermatological decisions. The VA went through a conscious restructuring that turned a poor health system into a superb one. That their experience and results lack relevance is one of the more peculiar methods of evaluating public policy I've heard of.
So that's #1. #2 is Cowen's assertion that the VA saves money, much like Canada, France, Germany, and every other industrialized country, by bargaining down drug prices as a system. Cowen thinks this would create a supply disruption if attempted on a national scale. Given the current abilities and regulatory constraints of generic producers, this makes virtually no sense (and please, let's not joke about Pharma's R&D budget, which is a fraction of their advertising and administrative costs). While it's possible that a national health care system wouldn't bargain to quite the VA's lows, the idea that the pharmaceutical industry would simply shut down rather than going a dollar below their current profits is a tad insane. And that doesn't even get into debates over the utility of a public system that does much foundational research and then sells it at low cost to a private system that enjoys monopoly powers. There are a numver of ways to restructure drug development and distribution in this country, many of which would be better than the current system, none of which are likely to happen. Big Pharma would be just fine under a universal system, for better or for worse.
As for #3, we could and should pay doctors less, particularly given the artificial supply constraints imposed by the current credentialing process. The easiest, and smartest, way to do this would be vastly expanding the role of Nurse Practitioners. And again, while we may not get to the VA's lows because of political realities, a midway point would still be better than the current pricing regime.
And #4, to close, is belied by the experiences of most every country that actually does have a national system. I hate to be a broken record, but it remains true that the gap between the current system's price and efficiency and the VA's is so massive that simply traveling part of the way there would be massively beneficial. And I'm surprised that good folks like Cowen are looking for reasons why we shouldn't do that, rather than ways that we can.
