The Crisis at the Veterans Health Administration and a Shortage of Doctors

In response to a call for privatization from Greg Mankiw, I noted this excellent discussion:

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."

Richard Oppel and Abby Goodnough discuss what they call a doctor’s shortage:

At the heart of the falsified data in Phoenix, and possibly many other veterans hospitals, is an acute shortage of doctors, particularly primary care ones, to handle a patient population swelled both by aging veterans from the Vietnam War and younger ones who served in Iraq and Afghanistan, according to congressional officials, Veterans Affairs doctors and medical industry experts. The department says it is trying to fill 400 vacancies to add to its roster of primary care doctors, which last year numbered 5,100. “The doctors are good but they are overworked, and they feel inadequate in the face of the inordinate demands made on them,” said Senator Richard Blumenthal, Democrat of Connecticut and a member of the Senate Veterans Affairs Committee. “The exploding workload is suffocating them.” ... Most experts agree that soaring demand for veterans’ care has outpaced the availability of doctors in many locations, and that high turnover is a major problem. In the past three years, primary-care appointments have leapt 50 percent while the department’s staff of primary care doctors has grown by only 9 percent, according to department statistics. Those primary care doctors are supposed to be responsible for about 1,200 patients each, but many now treat upward of 2,000, said J. David Cox Sr., national president of the American Federation of Government Employees

Would outsourcing some of the responsibility to the private sector alleviate the problem and if so how? The price system could attract more doctor supply but only at additional cost with the key question whether this cost would be borne by taxpayers or by patients. If we are to avoid asking our veterans to pay the additional cost, Congress must be willing to pony up the additional funds. Oppel and Goodnough continue:

Supporters of the department also note that hospitals everywhere are struggling to find primary care doctors. But some experts say the department has additional hurdles, including lower pay scales. Primary care doctors and internists at veterans centers generally earn from about $98,000 to $195,000, compared with private-sector primary care physicians whose total median compensation was $221,000 in 2012, according to the Medical Group Management Association, a trade group.

So are we doomed to paying the doctors gild higher compensation? Dean Baker apparently does not think so:

Doctors in the United States make on average more than twice what their counterparts in other wealthy countries earn, which means that many would likely be willing to work in the United States for a period of time, given the opportunity ... given the evidence of a shortage of doctors in the United States, and the huge gap in pay between the U.S. and other countries, this would seem an obvious case for benefits from increased immigration. It is remarkable that this is not front and center on the national agenda.

To be fair to Greg Mankiw, he has always made the same argument.