In the private sector, bonuses are paid to people who can offer customers the best products and services at the lowest price. That’s how a firm like Apple or Amazon makes a profit. By pleasing customers. But government-run firms make money a different way – by killing customers.

Stephen Moore explains in Investors Business Daily.

Excerpt:

The Veterans Affairs Department health care scandal has deepened in recent days, with new revelations of incompetent management and misplaced spending priorities, including millions of dollars paid out in bonuses at the very hospitals where services were the worst.

[…]Freedom of Information Act requests by Illinois-based watchdog group Open the Books reveal that the VA spent millions on bonuses during the last three years at Hines.

Worse, in 2013, only about one-in-four of Hines’ 4,230 employees were those providing the actual primary care: doctors (309) or nurses (about 800), Open the Books found.

Five veterans died waiting for care at Hines.

As far back as 1999, the VA had found systemic quality-of-care problems at Hines with little done to correct them. A VA study concluded that “Hines has the most inefficient physical plant for inpatient care and the most significant compliance issues with patient privacy.”

In 2005, a VA study rated Chicago the worst regional office in the country. Now the man in charge at Hines, Murawsky, has been elevated to oversight of the entire VA system.

Democrats have been trying to say that the problem is that they were not able to spend even more money, because the national debt at 17.5 trillion is not high enough.

Moore notes that the problem is misspending:

The revelations of bonuses suggest that misspending may be the biggest problem.

The VA’s own budget numbers indicate a more-than doubling of the agency’s expenditures to $57 billion from $28 billion since 2003. The patient load is up only about one-third over the decade.

So the VA has more money than ever per patient, even after adjusting for inflation.

As far as mismanagement, the problem of “performance” bonuses at the VA appears to have been systemic. An Open the Books investigation has found:

• One in five employees at the Phoenix VA received bonuses in 2013, with some receiving extra pay of $5,000 or more. The total bonus payouts were $337,885.
• As many as 40 veterans may have died awaiting care at this hospital system and about 1,300 waited more than six months for care.
• In 2013, Phoenix VA Director Sharon Helman received the No. 1 bonus out of 3,170 employees (at Phoenix): $9,345. The number of avoidable deaths was higher than at nearly any other hospital.
• In Chicago, $1 billion in salaries were supplemented with $4 million in bonuses over a three-year period.
• At the seven most troubled VA facilities, almost $9 million in bonuses were paid out to 13,000 employees.

This might remind you of the National Health Service’s “Liverpool Care Pathway” program, in which doctors were awarded bonuses for freeing up hospital beds by transferring patients to terminal care.

Paul Krugman approves

Supporters of more government-run health care like Paul Krugman had previously praised the VA system as “huge policy success story, which offers important lessons for future health reform.”

Ben Shapiro has a full quote from Krugman:

Paul Krugman in 2011 wrote of the VA’s “huge success story”:

Multiple surveys have found the VHA providing better care than most Americans receive, even as the agency has held cost increases well below those facing Medicare and private insurers…the VHA is an integrated system, which provides health care as well as paying for it. So it’s free from the perverse incentives created when doctors and hospitals profit from expensive tests and procedures, whether or not those procedures actually make medical sense.

Krugman added, “Yes, this is ‘socialized medicine’…But it works, and suggests what it will take to solve the troubles of US health care more broadly.”

This is what people on the left wanted. The VA system is even WORSE than single-payer. At least in a single-payer system, only the payment is government-run. But the VA system is completely government-run. And the outcomes we are seeing in the system is exactly what you would expect when the people running the system are paid regardless of whether the customer is served. Or whether the customer even lives! At least in the private sector system, you have to serve the customer to make money – otherwise they will take their money to a competitor. Not so in the VA system, and that’s the problem. They don’t have to make a profit to survive, so they don’t care about winning business from customers in a competitive market.