There really isn’t much you need to know about how well government healthcare would work in the US. Most of what you do need to know involves a discipline of OR called Queuing Theory. Either the people now attempting serve American War Veterans don’t know much about it, or they are being totally overwhelmed by the scale and magnitude of their demand. Since the VA hires OR mathematicians like much of the rest of the government, they know what is going on. They simply lack the resources to handle their job and basic economic theory can explain why such is the case.
When deciding what we want to buy we look at two things, how badly we need it and how much does it cost. When the desire for an item equals or exceeds the price, we pull the trigger on that deal. At that point, I can haz cheeseburger! Providers (the people who make the cheeseburgers) effectively ration their services by putting a price on them. This limits the number of people who want the cheeseburger badly enough to haz it at price p*. Eventually, everyone who wants a cheeseburger at price p* shows up while people who don’t go away. The provider of cheeseburgers sells d* cheeseburgers at P* price and we get a semi-stable equilibrium.
So what happens when Someone Grand and Noble decides to wield the power of government to decree that we can all haz cheeseburger! There is only one way to this. The Someone Grand and Noble lowers price P* to zero. At that point, anyone who likes cheeseburgers at all will theoretically want one. The provider of said cheeseburgers isn’t making money off the deal and will not be putting in additional grills and registers. We therefore get a hard and painful lesson in Queuing Theory as customers throng to where the free cheeseburgers are.
Now the situation over at the VA has many more layers of moral complication. US combat veterans have paid a high price for VA healthcare. Anyone who thinks otherwise can go line up against a wall somewhere and let me pump a few rounds into their leg with a .22 pistol until they develop a better understanding of why we should care for wounded combat veterans. So we’re going to give veterans healthcare. However meritorious that motive for making P* close to 0, we cannot escape the implications that come with that action.
Part of the trouble that has found Eric Shinseki is that he tried to defy basic economic reality. Like Wiley E. Coyote running off the cliff for a few steps before the plunge, Shinseki believed he could systemically reduce the waiting time for a free good. When he came to the VA in 2010, he claimed he would lower the waiting time to process claims for VA care to 125 days. It was 161 days long at the time which was then considered a problem. As of December of 2012, the wait time reached 273 days. As more veterans came home from Iraq and Afghanistan, they overwhelmed server capacity at the VA.
At this juncture, Shinseki’s smartest move would have been a tearful apology to our heroes coupled with a hard dose of the Dark Enlightenment. He should have told Congress, the Veterans and everyone in America exactly how long waiting times were getting and what he was trying to do about the problem. Three positive things could have then happened.
1) The VA might have gotten more help. More servers equal faster clearance. Once price is set to P*=0, the operation brings in no revenue and depends upon the benevolence of the Someone Grand and Noble who decreed that the service be free. The number of days to process requests for healthcare would then go down.
2) An honest and open accounting for how long claims would take could discourage frivolous requests. The wait time, in and of itself, becomes a non-monetary price P*. The people who were truly and seriously hurt would stay in the queue.
3) People would have known this was a difficulty long before the VA got dragged into the docket by a torqued-off IG. Facility quality would not have declined to the point where Veterans were dying from Legionnaire’s Disease in dirty hospitals.
A fourth thing would also have been accomplished had Shinseki just come clean with us and laid it all out there. People would have seen first-hand just how hard it really is to give free things away by government fiat. They would have understood that two things inexorably occur when the price of an item is set by fiat to free. Demand goes through the roof and quality goes through the floor. The combination of increased wait times and decreased value could be viewed as a non-monetary price p*. At that point we arrive at a sad and tragic truth regarding the human condition. There is no such thing as a free lunch – even if you are a war hero and truly deserve one.