Breaking the VA Monopoly and Why Forcing Shinseki to Resign Won’t Be Enough to Fix the VA

No market incentive to be efficient

With the recent news out of Phoenix the Department of Veterans Affairs is under intense scrutiny again. This follows reports within the past year of malfeasance and/or incompetence coming out of the VA Office of Public Health and the Atlanta VA Medical Center.  Unfortunately, I would argue that the fact that the VA is failing the veterans they serve extends beyond what appears to be a culture of malfeasance but rather a genetic defect within the DNA of the Department of Veterans Affairs.  That genetic defect is that the Department of Veterans Affairs is a monopoly, controlling the entire market for administering veterans’ benefits and healthcare with no competitor to incentivize them to be more efficient or risk losing market share.  Like other forms of government entities that provide public goods the VA lacks a competitor under the premise that the private sector has no market incentive to provide public goods and thus said goods must be provided by the public or non-profit sector. However, in the early 1970s Fred Smith and FedEx challenge the notion of public goods being provided by the private sector.  Furthermore, the market forces placed upon the United States Postal Services by FedEx resulted in substantial efficiency gains such as Priority and Express Mail that otherwise might not have existed in the absence of a competitor to the USPS.  To that point, I posit that the lack of a FedEx-like competitor to the Department of Veterans Affairs has created little to no economic incentive (and apparently no moral incentive) to provide cost effective/efficient services as well as optimal care to our nation’s veterans. 

To further illustrate, if there was a market based competitor to the VA how many veterans would continue to wait over a year for their disability claims to be processed if they could opt to utilize the services of a competitor to the Veterans Benefits Administration even if there was a fee for said claims and processing services? If the private sector can provide innovative market based solutions to things like processing and submitting income tax refunds for a substantial portion of the country’s working population (likely much greater than those on the VA disability claim waitlist) does it stand to reason that veterans would be willing to pay for services using a similar model when it comes to disability claims?  Based on my conversations with fellow Iraq and Afghanistan Veterans I would lean towards a resounding yes.   Further, if a veteran knew that they could cut their appointment waiting times by 50% or more for seeing a primary care provider, mental health providers and specialty clinics by using a private sector provider network and insurance policy in lieu of opting out of VA health care coverage how many would be willing to pay a premium for that service?  Many retired veterans already exercise this option by choosing to utilize Tricare Humana rather than the Veterans Healthcare Administration Benefits they are also entitled to. As someone who has received care from the private sector, I would understand why veterans might decide to pursue such an option given they have the means to do so. 

Why forcing Shinseki to resignation won’t address the real issues

                It is my belief that Secretary Shinseki is merely a symptom and not the root cause of the VA's woes.  Based on my experience both as a patient of the VA and working in the VA system I would argue that the VA employee unions are a major portion of the root cause. Let's say Shinseki does know how to fix the problem. It's very hard to implement effective solutions when you constantly get union push back. Because of this fact, I would argue that to an extent, Secretary Shinseki was set up for failure largely because he lacked the means to reform the VA by not having the adequate authority to hold employees and leadership accountable due to union bargaining agreements which make it very difficult to fire or demote substandard employees after they have completed their probationary period (typically 1 year). Thus, if Shinseki is forced to resign but nothing is done about the VA employee union then it might be fair to say veterans’ advocacy groups will have missed the forest for the trees and perhaps having accomplished nothing more than a symbolic gesture. To that end, there was a recent article entitled “12 People Who Could Replace Eric Shinseki At The VA”. While it was certainly an interesting list with high profile individuals the question I would pose is how many of those listed would be willing to challenge the VA employee union for greater accountability of substandard employees if push came to shove?

Secondly, it has been my observation that to a great extent, the culture within the VA has become so perverse that employee union stakeholder interests consistently win out over the veteran stakeholder interests who are receiving care and are the reason for the VA's existence as well as funding in the first place. Furthermore, several of the VA whistleblowers of these scandals have been Iraq and Afghanistan veterans, many of whom were greatly retaliated against by their peers and leadership. What does that say about the hundreds of thousands of VA employees who may have chosen to look the other way in recent years? Thus, I posit that such inaction on the part of the VA employees speaks to a systemic issue that has become part of the culture within the VA.  With more stories of VA malfeasance coming out of Austin, Fort Collins and San Antonio I would argue this is perhaps only the beginning of the reports we are likely to hear in the coming weeks and months not unlike when the truth came out about Jerry Sandusky and the Penn State cover-up.

Conclusion and Potential Solutions

Ultimately, I would argue that the VA is greatly in need of a FedEx like competitor for many of its functions ranging from benefits to healthcare to incentivize greater efficiency, innovation and return on taxpayer dollars. Further, regardless of if Shinseki or someone else is the VA Secretary going forward, that person needs to have adequate authority over firing or demoting substandard employees which is the goal of the proposed bill HR 4031. Further, this person must have the courage to challenge the employee union if the culture within the VA is to change for the better by putting veteran stakeholder interests first.  Only then might the VA be worthy of the moniker “Best Care Anywhere”.  To not do so would a serious breach of our nation’s social contract with its veterans and allow the VA to become a sinkhole of taxpayer dollars with “doctored “outcomes touted by bureaucrats with fingers crossed behind their backs.

The Roger Hedgecock Show "Fixing the VA's Broken System"