The basic problem is that the Veterans Health Administration (VHA) is a fully socialized, state-run health system without market prices to guide resource allocation or create incentives for innovation.
Congress can improve health care and other veterans benefits with a handful of reforms that includes what former Soviet-bloc nations did with their state-owned industries.
First, let active-duty military personnel purchase private insurance that would provide life, disability, and health coverage once they leave active duty. Let them buy this coverage at actuarially fair premiums in a competitive marketplace.
Second, give active-duty personnel enough money to buy that coverage by boosting military pay. In effect, that boost would pre-fund veterans benefits that Congress currently funds on a pay-as-you-go basis.
Third, have that additional pay automatically rise and fall with those “veterans benefits” insurance premiums. More about this feature below.
Fourth, use the VA’s existing budget to give current veterans annual, risk-adjusted subsidies that they can use to purchase private veterans-benefits coverage in those markets.
Fifth, turn the VHA into a shareholder-owned, private corporation — and give those shares away to current veterans.
With this handful of reforms, private ownership, consumer choice, and competition would deliver better benefits to veterans. Veterans would literally gain ownership of the VHA and its $36 billion in assets.
Perhaps the best part is that these reforms could reduce the number of dead and disabled veterans by forcing policy-makers to confront the full cost of putting U.S. troops at risk.
Congress does not fund veterans-benefits obligations until they come due. That’s significant. Veterans benefits are the most expensive fiscal cost of any conflict. Five decades after the last helicopter left Saigon, spending on Vietnam-era benefits hit $33 billion last year and continues to climb. Congress was still paying Civil War–era veterans benefits in 2020.
Official estimates suggest that Congress would have had to set aside an additional $1 trillion just to cover the new veterans-benefit obligations it incurred in 2022.
Pay-as-you-go funding of veterans benefits enables policy-makers to put U.S. troops at risk even when the costs exceed the benefits. When the president and Congress decide whether to invade Iraq, or whether to keep troops in Afghanistan for an 18th or 19th year, they get to ignore the cost of the benefits that help military families deal with the resulting physical and emotional damage. Veterans’ benefits are the tail that wags the foreign-policy dog.
Pre-funding and privatizing veterans benefits would force policy-makers to confront justify those costs. Since premiums, military pay, and government spending would rise automatically when policy-makers put U.S. troops in harm’s way, policy-makers would have to justify the full cost of every decision to do so. Having to face the full costs of these decisions could rally more members to the cause of restraint.
Donald Trump and J. D. Vance want to reshape the U.S. role in the world.
Trump approved the withdrawal of 12,000 U.S. troops from Germany. He has resisted calls to send U.S. troops to Ukraine — such as the 20,000 additional troops President Joe Biden deployed to Europe in response to the conflict. As senator, Vance supported legislation to withdraw U.S. troops from Syria and to “end endless wars” by repealing the law Congress enacted after September 11, 2001, that authorizes them.
Reforming veterans benefits could turn these aspirations into victories by forcing Congress to confront the full cost of excessive military engagements.
