March 18, 2009

Obama's Rookie Mistake on Healthcare

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President Barack Obama made health reform a pillar of his campaign and he has issued some broad guidelines as to how he might proceed. In a surprising moment of specificity, however, President Obama made a statement regarding a specific policy he might like to implement. This policy entails third-party billing for veterans’ healthcare. This is common practice for conditions unrelated to military service, but now President Obama is considering allowing the VA to bill third-party, private insurers for services resulting from injuries received as a result of combat.

The President has done well by the VA, as his budget proposes increasing VA funding by $25 billion over the next several years. There is very little doubt the he sincerely cares for the men and women in the armed forces, but this policy is nothing short of a mistake. The administration claims that allowing third-party billing for combat related injuries can save the VA $530 million per year. This may be so, but the VA offers relatively good health insurance for those who receive combat-related injuries and meet certain income requirements. About 7 million veterans are enrolled in the VA health benefits plan. The VA is allowed to bargain with prescription drug companies and in 2004 12.7% of working age veterans were uninsured whereas nationally about 15% of the entire population was uninsured. Many veterans, especially young veterans, rely on the VA for health coverage.

The unintended consequences of such a policy are numerous. Premiums for these veterans may go up and the policy may create disincentives for business to hire veterans or it might result in lower wages for veterans as a result of increased healthcare costs for businesses. To a lesser extent, there may be a decline in the number of new recruits in the armed forces precisely at the time when new forces are needed. This is an attempt by the Obama administration to institute a cost-sharing mechanism in a program over which the federal government has control. Expenditures on veterans’ medical care is less than half of both Medicare and Medicaid expenditures. The VA has proved to perform better than other government programs and managed care, in terms of health outcomes and reimbursements geared towards performance. Looking towards the VA in order to cut costs is misguided policy, poor public relations and unjust.

In the interest of fairness, President Obama has only suggested this as a possibility and there is strong bipartisan opposition on Capitol Hill. The President does deserve credit for at least starting to address some of the issues facing healthcare in the U.S., although I would like to see his focus directed towards stabilizing the financial system first. However misguided and uninformed this policy is, it does show a willingness to take on tough issues. With that said though, as opposed as some people are to universal health insurance run through the government, there is and should be a tremendous amount of support for our veterans. Currently, taxpayers only pay for VA health insurance covering injuries sustained in or related to combat. Denying this benefit to veterans is unacceptable and it shows the learning curve and rookie mistakes that come with the presidency.