Funding for the Veterans Health Administration

Greg Mankiw tries to revive the case of a privatized VHA by citing an extremely unfortunate issue with respect to how the Phoenix VHA rationed services:

Maybe privatization would solve the problem. If veterans had vouchers that they could take to competing healthcare providers, they would likely not have had to wait as long.

Isn’t the real issue better discussed here?

The Department of Veterans Affairs spends more today in inflation adjusted dollars than it did after World War II and the Vietnam War, when millions of troops returned from the battlefield, according to federal budget figures … Two factors more than any others have driven health care costs higher at the Dayton VA Medical Center, officials said. Aging Vietnam veterans who have more health needs as they grow older, and the return home of thousands of veterans from the battlegrounds of Iraq and Afghanistan. "It's the number of veterans returning from the war, but it's also the conditions they are returning with," said Dr. William J. Germann, Dayton VA chief of primary care service and a retired Air Force brigadier general. "There are a number of veterans coming back dysfunctional and as a result may not be able to hold a job."

I have to wonder whether the economic advisors to the President who made that horrifically expensive decision to invade Iraq in 2003 advised this President that William Kristol’s forecast was way off base. As you may recall – Kristol said the cost of invading Iraq would be less than 0.2% of GDP. I also have to wonder why these economic advisors thought we could continue to lower tax rates when any sensible person would have known that the future costs of the Iraq War to the nation would be enormous. While it is true that VHA funding has risen sharply – it has not increased by a sufficient amount to keep pace with its growing demands. Mankiw’s faith in market place solutions to this growing demand would put more of the budgetary costs on the back of the returning soldiers.