Listening to Hillary Clinton put her big-government ideology before the needs of veterans (see below video) brings to mind an email exchange I had recently with a correspondent who had questions about privatizing Medicare, Medicaid, and the Veterans Health Administration.
The video is an interview with Libertarian presidential and vice presidential candidates Gary Johnson and Bill Weld into which MSNBC interjected a telephone interview with Democratic candidate Hillary Clinton. Clinton protests (starting at 4:20) that Congress should not privatize the VHA, while Bill Weld, a former two-term Republican governor of Massachusetts, gives one of the best explanations I’ve seen of why it should (10:00).
The email exchange follows the video.
Here’s what my correspondent wrote:
I have been discussing VA reform with a friend. She brought up as counter argument that Kansas (where she lives) “privatized” their Medicare and Medicaid program and made “everything worse.”
Not living in Kansas and being unfamiliar with their reforms of these programs left me without a response. (Other than, “Says you, liberty is always better!”) For all I know they came up with some weird public/private collaboration that really did make things worse. If so I’d like to show why that is not “privatization.”
Could you possibly direct me to any resources where I can get more information on this issue? I am especially interested in a critique of whatever they did from a free market vs. government perspective.
Here was my response:
Privatization means the government transfers ownership of a physical or financial asset from the government to private actors. The government could privatize the Veterans Health Administration by selling VHA hospitals. But it cannot privatize Medicare. There’s just nothing to transfer.
Your friend probably means that Medicare or Medicaid is contracting with private health insurance companies to provide the program’s “guaranteed” benefits. That is not privatization. Medicare and Medicaid have traditionally operated by writing checks to private doctors and hospitals. When these programs contract with private insurance companies (e.g., through the Medicare Advantage program), the government is simply writing checks to private insurance companies rather than private doctors and hospitals. There is nothing more private about the former than the latter. In both cases, the government is paying the piper and calling the tune.
When these programs contract with private insurance companies, the effects are usually mixed. There can improvement on some dimensions of cost and/or quality, but there is usually simultaneous backsliding on others.
I should have added that, contra Clinton, Congress should privatize the entire Department of Veterans Affairs, including all the VHA’s physical capital. My colleague Chris Preble and I explained how and why in the New York Times.
The Johnson-Weld campaign might look at that proposal as well as my “Large HSAs” proposal (Weld also mentioned HSAs), which some members of Congress have introduced as legislation.
