Can government run a health care system?

Robert E. Bauman

OFTEN IGNORED by both sides in the debate over Pres. Clinton's now comatose national health care proposals was one exceedingly relevant, but, to some, highly discomforting fact. The Federal government already owns, finances, and operates the country's largest health care system--the Veterans Health Administration (VHA), the principal agency of the U.S. Department of Veterans Affairs (VA).

Undoubtedly, supporters of the Clinton plan would prefer that Americans not dwell on the VA's unsettling example as predictive of what may lie ahead on the road to compulsory national health care. Those opposed to the President's plan, mostly Congressional conservatives in both parties, long have supported the VA as an expedient exception to their repeated arguments against big spending, big government, and "socialized medicine."

The VA provides a cautionary example of what happens when Washington politicians put the Federal government into the national health care business and then try to micromanage the resulting medical system in a continuing attempt to please well-organized consumer constituents. Before any future consideration of yielding control of one-seventh of the U.S. economy and some of Americans' most personal and private medical decisions to the Federal government, it is essential to examine how well government has managed Federal health care.

The VHA is the biggest health care system, public or private, in the U.S. and one of the largest in the world. With massive annual taxpayer funding, the government operates 171 VA medical centers with 80,000 beds; 362 outpatient and community clinics that receive 23,000,000 patient visits annually; 128 nursing homes with 71,000 patients; and 35 domiciliary facilities that care for 26,000 people each year. There is at least one VA medical center in each of the 48 contiguous states, the District of Columbia, and Puerto Rico.

Few Americans realize how deeply the VA health care system involves the U.S. government in what conservatives used to call "socialized medicine." In total spending and number of employees, the VA is the second largest Cabinet-level Federal department, behind only the Department of Defense (which has its own extensive medical care system). As of July 30, 1993, the VA had 266,274 employees. The majority (243,028) work in the VHA; more than 7,000 are paid salaries in excess of $100,000; and all are exempted by Federal statute from most personal liability for medical malpractice.

The VA budget for Fiscal Year 1994 was $35,900,000,000, up $1,000,000,000 from 1993. In FY 1970, total VA health care outlays were $1,800,000,000; by 1980, they had grown to $6,500,000,000; today, they are $16,000,000,000.

Defenders of the VA point to its significant medical and research accomplishments: one of the best spinal cord injury centers in the nation (at Palo Alto, Calif.); advanced geriatric care; provision of six percent of all national adult AIDS care; treatment and research on post-traumatic stress disorders; studies of the aging process and Alzheimer's disease; rehabilitation of the blind; development of the cardiac pacemaker, CT scan, prosthetics, and improved drug therapy for the mentally ill; and major research on drug addiction, alcoholism, and schizophrenia. In addition, the VA has training affiliations with hundreds of medical, dental, and other schools.

Few defenders of the VA would even consider, much less admit, the possibilities raised by a fundamental question: Should the Federal government be engaged at all in those health care and research activities, or could the private sector do it better?

The eligibility quagmire

The VA administers the largest American health care system, but--and this is very important to keep in mind--that care is available only to those veterans who meet certain eligibility criteria established by Federal laws and regulations. The arcane system of determining eligibility for VA medical treatment and the availability of various types of VA medical services can be highly instructive as an example of how Federal bureaucrats can and do control--and ration--medicine.

The VA eligibility system is a patchwork of many levels of possible medical coverage. In general, eligibility is based on personal characteristics of the individual, such as service-connected injuries, entitling the veteran to access to all VA services as either an inpatient or an outpatient. Eligibility also may result from other conditions or illnesses that may have been incurred during service, but are not combat related (such as cancers said to be caused by use of the Agent Orange defoliant in Vietnam or the strange new maladies claimed to have befallen those who fought in the Persian Gulf War). The eligibility of veterans and, in some cases, their dependents may hinge on the type of health service being requested (inpatient or outpatient, for instance) and its availability at any given time or facility. Most people familiar with veterans' matters agree that there is a dire need for immediate simplification of eligibility rules.

Ninety-seven pages of Title 38, Part 4 of the Code of Federal Regulations and thousands of pages of internal VA departmental medical manuals describe what is, and is not, an officially VA-eligible disease or medical condition. VA medical boards hold thousands of individual hearings (veterans can appeal denials) on the question of eligibility for treatment.

Income status is a major factor; poor veterans are guaranteed what amounts to VA medical welfare. Fifty-two percent of all veterans who receive VA health care do so not because they were wounded in service to their country, but because they once were in the armed services and officially are defined by VA law and regulations as poor.

Just 45% of those who receive VA health care do so on the basis of medical conditions that are service-connected, but their care is, for the most part, free of charge to them--paid for by taxpayers. For those veterans, free treatment would have continued uninterrupted under the Clinton Health Security Act.

In October, 1993, the General Accounting Office (GAO) issued "VA Health Care--Restructuring Ambulatory Care System Would Improve Services to Veterans," a report to the chairman of the Subcommittee on Oversight and Investigations of the House Committee on Veterans' Affairs. It raises some interesting questions. For instance, what would the chances for Congressional approval of the Clinton health care plan have been if Americans peered into the future and discovered:

* More than half of the patients with routine medical conditions wait from one to three hours to be seen for a few minutes by an overworked physician struggling with increasing numbers of patients and piles of government forms, regulations, controls, and policy directives?

* One of nine patients identified as suffering "urgent" medical or psychiatric problems is forced to wait up to three hours to see a doctor?

* Because of lengthy waiting lists, patients in need of specialized care, such as cardiac or orthopedic diagnosis, even at the system's best medical facilities, can not be seen by a specialist for 60 to 90 days and wait months more if surgery or other special testing and procedures are required?

Those real-life scenes are neither scare projections by opponents of Clinton's plan nor descriptions of the historically inefficient British or Canadian government-run medical systems. They are the disturbing findings of the GAO study that covered 215 VA facilities, including 158 medical centers and 57 satellite and independent outpatient facilities, operated by the VHA during 1993.

The VA has more than seven decades of experience, is financed with hundres of billions of tax dollars, and has an immense professional medical staff. Yet, patients wait hours and even months for needed health care. From 1983 to 1992, American taxpayers bore the tab for $254,806,804 in damages under the Federal Tort Claims Act because of thousands of medical malpractice claims against VA personnel. (In 1993 alone, 801 new claims were filed and $41,000,000 was paid out for past claims, lawsuits, and settlements.)

The VA is the quintessential government bureaucracy--administratively officious, laden with red tape and meddlesome regulatory minutia destructive of both quality patient care and staff conduct. Three volumes of the U.S. Code (Title 38) and a full volume of the Code of Federal Regulations, plus scores of volumes of Federal personnel, medical, and administrative policy restrictions, govern each VA employee's every move. Thousands of pages are filled with fine print, detailed descriptions of medical conditions, degrees of disability and potential eligibility, even mathematical variations thereof (disabilities are rated from one to 100%)--a maze that is supposed to produce pension benefits and free health care.

Defending malpractice

Small wonder that it requires a phalanx of more than 400 VA attorneys to interpret and reinterpret the arcane substantive and procedural provisions. Along with lawyers from the Civil Division of the U.S. Department of Justice and the U.S. Attorneys' Offices across the nation, VA lawyers also must defend thousands of malpractice claims filed by injured patients or their bereaved survivors who blame the VA for the wrongful death of a veteran. For example, the following is a partial list of events that occurred at VA medical centers at Tampa and Bay Pines, Fla., from 1991 to 1993:

* For more than three months after abdominal surgery, a hospitalized veteran continued to complain of weakness and stomach pain. A VA radiologist misread the X-ray showing the infection-causing laproscopic sponge overlooked by a VA surgeon. The cost to taxpayers was $100,000 in damages.

* A VA orthopedic specialist misdiagnosed a veteran with severe back pain who was unable to stand up and ordered bed rest. The result was permanent paraplegia and a $1,000,000 settlement.

* An elderly, hard-of-hearing, overworked cardiologist ordered no tests for a veteran who insisted that he was suffering acute coronary pain. The doctor believed the vet was a malingerer and thus delayed lifesaving heart surgery for six months.

* For 20 years, physicians at one VA medical center freely provided Valium to a veteran who became addicted to benzodiazapines. While on vacation, he visited a Florida VA medical center, was abruptly removed from Valium, and went into seizures. He survived, but the incident cost taxpayers a $50,000 settlement.

* Two years of hearings and paperwork were required to remove permanently from duty a depressed VA nurse deemed to be a threat to patients.

VA doctors and other medical personnel have created a self-protective old-boy network. That incestuous relationship is illustrated best by the manner in which a Federal statute meant to protect patients from medical incompetents has been applied (or, rather, not applied) at the VA medical center at Bay Pines, Fla. The Medical Professional Review Act, which became effective in 1991, requires any health care provider to report to a national centralized data bank any doctor whose conduct leads to a payment as a result of a medical malpractice claim or legal action by a patient.

At Bay Pines, the peer review committee of physicians uniformly exonerated their medical colleagues regardless of the charges against them. Even the missing-sponge case mentioned earlier was not deemed malpractice and thus was not reported to the national data bank. Similar no-fault findings were adopted in all other malpractice cases during the time I represented the hospital, even when legal liability was established by VA lawyers and cash settlements were paid to mistreated patients. I was told by lawyers in the VA General Counsel's Office in Washington that the same "see no evil" data bank nonreporting was rife throughout the VA medical system.

Consider the actions of the long-time medical chief of staff at one of the nation's largest (and most trouble-prone) VA medical centers. Contrary to Federal and state law, he constantly pushes his personal policy dictating that all incoming patients be designated DNR (do not resuscitate). Simply put, that means that hospital staff are expected to avoid declaring a medical emergency, but if they must, they should not use any extraordinary means to save the patient. The chief doctor views his lethal expedient as a means of rationing scarce hospital beds and reducing budgetary costs at his VA facility.

As evidenced by the GAO report, one of the major problems with the VA system is growing demand for free medical services. Veterans with service-connected disabilities or conditions, and those at the poverty level, are eligible for free VA medical treatment. Others can receive free health care on an "as available" basis, depending on the case load of the facility (which contributes to the long waiting lines). The fewer than 3,000,000 veterans who were treated by the VA in 1992 made more than 23,000,000 individual visits to VA facilities.

Such highly inefficient multiple patient visits occur because the VA generally does not permit patient telephone consultations with medical personnel; usually does not allow refills of prescriptions without a personal appearance by the veteran; and, at most facilities, does not make scheduled appointments for general triage and treatment. That means "first come, first serve," with a glut of veterans showing up early each morning, then sitting in jammed waiting rooms for hours until they can be seen by physicians. Even before the first aspirin is administered, it usually takes VA staff an hour or longer just to complete the paperwork determining if the prospective patient is eligible to receive VA health benefits. "Be prepared to spend the day there," retired U.S. Army Maj. Elmer S. Erickson told a Miami Herald reporter at a Florida VA clinic. "You will eventually see a doctor."

Another reason for increased patient demand at VA facilities is the distortion of "service connection." The concept has become a political football, its elastic definition snatched away from medical experts by the politicians. A combat-wounded soldier or sailor suffers a definable medical injury that establishes his or her VA eligibility. However, what happens when the U.S. government sprays Agent Orange all over Vietnam and, 30 years later, thousands of veterans claim to be suffering various ailments as a result?

The medically debatable outcome was that Secretary of Veterans Affairs Jesse Brown ruled on Sept. 27, 1993, after years of VA studies costing millions of dollars, that certain types of respiratory cancers suffered by veterans--cancers equally attributable to smog or excessive tobacco use--are to be presumed by law to be based on exposure to Agent Orange. That makes any Vietnam War veteran with those respiratory conditions eligible for a disability pension and free health care. The five-year cost: $350,000,000 and climbing. Pres. Clinton praised Brown's decision, saying it was "a continuation of the costs of war."

A similarly costly VA scenario is developing with the "Gulf War Syndrome," a mysterious malady said to be afflicting thousands of veterans of the Persian Gulf War. Under pressure from the news media, veterans' groups, and their friends in Congress, the VA has designated a special medical task force to investigate eligibility of the new disease.

There is a far more telling indictment of the massive VA health system. With an estimated 26,700,000 veterans, most of whom are eligible from some degree of VA medical care, fewer than 10% seek VA assistance. The other 90% apparently prefer to go elsewhere when ill. Even many of the VA-eligible poor veterans choose private-sector Medicaid-paid health care providers. Those who can afford their own private physicians invariably avoid the hassle of the VA medical system.

During the first year of the Clinton Administration, the internal circles of the VA, especially top administrative and medical personnel, experienced a deep-seated, widespread anxiety. That malaise was prompted only partially by the change in the White House, although many second-level VA officials, theoretically nonpartisan, had come to power under the regimes of Presidents Reagan and Bush.

Nerves became even more frayed when the Clintons made clear that they were serious about national health care reform. VA bureaucrats wondered where the VA would fit into that brave new world and worried that it might disappear altogether, eaten up by a greater, even more bureaucratic national health system.

They need not have worried. Together with their allies in the organized veterans' groups, the VA staff provided the talent of no fewer than 33 of its members for Hillary Clinton's secret health task force, which hammered out the statutory structure for the proposed new system. By the time the Clinton plan actually was reduced to 1,342 pages of proposed legislation in November, 1993, the VA had ensured itself a significant role in health care "reform." The VA's massive structure was not to be dismantled, as insiders had feared.

The Clinton proposal projected an expanded VA system treating not only more veterans, but their spouses and dependents as well. Although required to offer a benefits package to all veterans through newly created local health care alliances, the VA would continue to provide free health care to those with service-connected disabilities and to indigent veterans. In addition, Secretary Brown would be given wide powers to draw up rules governing expanded VA benefits for veterans and their families. If the Clinton plan ever should become law, the VA also will be permitted to receive payments for its services from Medicare, Medicaid, and private insurers.

Caring for veterans' dependents would force VA facilities to provide types of medical services, including pediatrics and obstetrics, that they generally do not offer now. Some argue that such new services could be "contracted out" by the VA to private health care providers, but that raises a logical question: Why can't all of the VA be contracted out to the private sector?

A soothing prescription for the VA's future

In spite of the verbal smoke screen of "competition" raised by Brown and White House health consultant Ira Magaziner, the Clinton plan would have allowed the VA to continue as a Federally funded, Cabinetlevel department, essentially independent of, but associated with, the President's new health scheme. Magaziner soothed participants in a VA senior management conference on Nov. 2, 1993, assuring them that the President's plan would provide the opportunity for the VA "to compete for the tens of millions of veterans VA does not now serve who would be able to bring their employer and individual contributions to the veterans' system rather than bring them to some other health plan."

To entice the 90% of America's nearly 27,000,000 veterans who presently do not do so to utilize the VA for health care, Magaziner envisioned the VA's offering them a full range of medical services comparable to those offered by private-sector health care providers. In other words, the VA would "compete" as one of many possible places for consumers to spend their health care dollars and also would continue to receive Federal funding for its traditional veterans' health programs. Moreover, the VA would be paid by insurance companies for those who chose VA over private-sector health care hospitals or health maintenance organizations.

Magaziner did not explain why millions of veterans would be willing to pay for VA services they already have refused, even though those services are free of charge. Nor did he explain how a system that can not serve 2,600,000 veterans adequately now suddenly would obtain the capacity to treat 26,000,000 veterans and their dependents. Magaziner even held out hope that Congress could reduce annual VA appropriations, replacing taxpayer funding with private insurance payments on behalf of satisfied customers.

That misplaced idealism was shared by the President, who had projected $1,000,000,000 in savings from increased VA efficiency as part of a total $91,000,000,000 in savings (later pared down to $58,000,000,000) under his proposed national health plan. The President's estimates were blown out of the water in January, 1994, by the Congressional Budget Office's official estimates for the Clinton plan. They showed zero savings and an increase of more than $74,000,000,000 in the Federal deficit over the next five years, and an increase of $126,000,000,000 by 2004.

As if to underscore the hypocrisy of it all, within days of the Magaziner-VA session, Sen. Jay Rockefeller (D.-W.Va.), chairman of the Committee on Veterans' Affairs, announced that the President had agreed to establish a special capital improvements fund to renovate ailing VA hospitals with a $1,000,000,000 first installment in FY 1995, $600,000,000 in 1996, and then $1,700,000,000 in 1997. That is in addition to the $1,000,000,000 VA operating fund increase Clinton approved for FY 1994. Rockefeller stated: "We can and must bring spending under control, but we can't offer veterans the health care they deserve while simultaneously cutting the VA budget to the bone."

When the President's budget for FY 1995 was sent to Congress in January, 1994, the total VA budget was upped by another $1,300,000,000 to the highest figure ever--$39,200,000,000. Of that sum, $16,100,000,000 (an increase of $500,000,000 over 1993) would have gone for VA health care for a projected patient case load of 2,800,000, up only 27,000 from 1993. Brown predicted those numbers would permit the VA to build one new medical center, five new nursing homes, and one new outpatient clinic. So much for Clinton's projected $1,000,000,000 in VA savings.

The existing VA system could have been the precursor of America's future national health care system. On Nov. 3, 1993, in remarks denouncing the American insurance industry's opposition to parts of his health care plan, Clinton said, "There's a lot of money in the health care system that doesn't have a rip to do with health care; ... [it's] over-complicated, burdensome, bureaucratic." The President might have been describing the U.S. Department of Veterans Affairs.

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