By Alex Stein
Over at the CATO blog, Roger Pilon discusses the unfolding VA fiasco that involves hospitals covering up their failures to provide acutely needed services to veterans and doctors working in a slowdown mode (as illustrated by an eight-person cardiology department that “sees as many patients in a week as a single private practice cardiologist sees in two days”). He describes this fiasco as a paradigmatic example of government failure and proposes a remedy: the government should steer away from actually providing medical care; instead, it should give veterans vouchers towards purchasing medical services on the competitive private market.
This proposal does not take into account the economies of scale and scope that the government can realize from centralizing the purchase of medical work, facilities and equipment, and from self-insuring against medical malpractice instead of buying expensive liability coverage. These economies dramatically reduce the cost of medical care and increase its affordability. Our market for medical care sets prices that many people, including veterans, cannot afford. The voucher system cannot bring those prices down. Making this system work without shortchanging veterans would therefore cost the taxpayers a fortune. Read More