Healthcare as a Public Service: Redesigning U.S. Healthcare with Health and Equity at the Center

Click here to download this article as it appears in the magazine, with accompanying artwork.

This article is from the Winter 2021 issue of the Nonprofit Quarterly, “We Thrive: Health for Justice, Justice for Health.”

What might healthcare look like if the profit motive were removed from the provision of care altogether? If healthcare were designed as a public service, what possibilities would exist for health equity, health system resilience, and reduced costs? The multiple crises of our current healthcare sector, laid bare by COVID-19, should move us to ask deeper questions about how our investments into the healthcare sector should be employed to maximize the health and well-being of our people and economy.

There are, sadly, few bright spots in a system that has allowed more than one in five hundred Americans to die due to COVID-19.1 Many readers may be surprised to learn that one of the few highlights in healthcare performance during the pandemic comes not from the nation’s richest hospital systems or biggest names in medicine but from the poorly understood and often maligned Veterans Health Administration (VHA).

The VHA—the country’s only fully public, integrated healthcare system—has a lot to tell us about how a national healthcare service for the United States might operate, and not just for its performance amid COVID-19. Indeed, combined with other public healthcare institutions, it could prove to be a critical institution to achieving health justice.

While the new is often fetishized, sometimes the most effective and feasible models are not new; they just need dusting off so that we can see them for what they are. Healthcare as a public service is one such model, and the VHA could help jump-start a revival of this model today.

U.S. Healthcare in Crisis

The COVID-19 pandemic has brutally exposed the weaknesses of the nation’s fragmented, inequitable, and extraordinarily expensive healthcare system. In the early days of the pandemic, as revenue from elective procedures cratered, many health systems furloughed staff, cut their hours, or reduced pay, even as demand for emergency care due to COVID-19 exploded. Many hospitals resorted to rationing care, and some shuttered altogether. Increasingly, we are witnessing the collapse of U.S. healthcare, as multiple crises—including lack of rural hospitals, shortages of physicians, and overpriced treatments—collide.²

Hard though it may be to believe, today healthcare consumes almost one fifth of the entire U.S. economy. This is far more than most other advanced economies, even as health outcomes fail to match this extraordinary expenditure.³ Life expectancy in the United States has been declining for years, and existing health inequities have only been exacerbated by the pandemic. To do better requires changing how the nation finances, administers, and allocates healthcare resources.

The VHA’s pandemic experience provides some valuable lessons. When COVID-19 hit, the VHA, rather than contracting, expanded to meet needs. It opened its doors to accept hundreds of nonveteran patients and sent staff to assist in non-VA hospitals and nursing homes. By September 2021, it had provided nearly a million pieces of personal protective equipment to non-VA facilities and sent personnel to more than fifty states and territories to assist local authorities and health systems.⁴

The department moved swiftly to protect its workers and patients, restricting nonessential visitors at facilities, screening returning soldiers, and offering telehealth options nationwide for both medical and mental health services. It also used its novel tele-ICU (intensive care unit) program to help alleviate the pressure on overtaxed ICUs. VA-run nursing homes fared so well that the VA was asked to take over some state-level Veterans Homes from the private, for-profit companies experiencing crises.⁵

In this time of extraordinary challenges for the healthcare sector, what can this tale of two health systems teach us?

Healthcare as a Public Service

The VHA operates like a Beveridge-style health system. Beveridge, for the uninitiated, refers to the British economist William Henry Beveridge, author of the famed Beveridge Report during World War II that set the foundations for what would in the United Kingdom become that nation’s enormously popular National Health System.⁶

In such a system, both the payer and provider are public: Funding for the VHA, for example, is appropriated by Congress; VHA personnel are salaried public employees; and the hospitals, clinics, and equipment used to serve patients are publicly owned. Like the United Kingdom, Spain, New Zealand, Cuba, Hong Kong, and much of Scandinavia employ this model for virtually their entire healthcare sector.⁷ Rather than seeking to maximize profit and allocate resources based on ability to pay, these systems run like public services.

Without the constraints of market imperatives, Beveridge-style systems are free to adopt public-interest missions. For example, the VHA’s principal mission is to care for the nation’s veterans, while one of the missions (called its “Fourth Mission”) of its parent agency, the Veterans Administration (VA), is to improve the nation’s emergency preparedness and serve as a backup to the rest of the healthcare sector during emergencies.

While many of these healthcare systems have suffered times of severe underfunding and privatization attempts, their popularity with both patients and healthcare workers has generally endured over time. Even Brexiteers recognized the potency of the U.K.’s National Health Service (NHS) as a totemic expression of British values when they pledged that leaving the European Union would mean an extra £350 million a week for the NHS—a pledge that was emblazoned on the side of their campaign bus.

There are likewise valid criticisms of the VHA. It has certainly not always been managed in the best interest of its patients or staff.⁸ Persisting geographic variations in the availability and accessibility of some of its services disadvantage some groups of veterans over others.⁹ Chronic underfunding coupled with increasing demands by Congress and the executive branch have contributed to critical staffing shortages and unmet goals to modernize its infrastructure.¹⁰ But despite these challenges, the VHA has delivered impressive improvements in recent decades and—most important—health outcomes consistently equal to or better than those in the private sector.¹¹

The public nature of the VHA does not, by default, make it the perfect health system. But because it is free of the imperatives of profit seeking, the VHA can create space for other imperatives—for example, centering patients’ needs, training and retaining a highly skilled and effective healthcare workforce, and advancing the science of medicine. Also, as a single integrated system, the VHA can manage its shared assets across multiple sites and move both staff and supplies from one geographic location to another more easily than private-sector competitors. This ability to steward resources for the collective good is particularly useful in times of emergency or unexpected strain—such as a supply chain failure—on the healthcare sector.

Public Healthcare, American-Style

Building a Beveridge-style health system for all based on the VHA—a kind of “VA for all”—would transform the economics of U.S. healthcare by removing extractive profit seeking from health insurance, the provision of care, and the procurement of medical supplies. It would also drastically reduce political capture by the healthcare industry, thus removing one of the key obstacles to such long-sought reforms as Medicare for All and enabling the government to negotiate drug prices with pharmaceutical companies.

How could a “VA for all”–style system benefit payers, providers, and patients alike?

First, scaling the VHA would increase the efficiency of healthcare spending through strictly evidence-based care, reduced duplication in testing and procedures, and far lower prescription prices. Moreover, the VHA model relies on a foundation of comprehensive primary and preventative care services. These “first dollar” investments reduce demand for more costly care later. For example, a 2018 study of dual-eligible veterans showed that veterans who relied on the VA for their healthcare saw fewer emergency department visits and hospitalizations than those using private-sector care.¹²

Together, these features would make establishing universal health insurance coverage—a key goal of Medicare for All—less costly. Although the VHA serves patients who are, on average, older and sicker than the overall population, it achieves better results at a lower average per-patient cost than Medicare.

A VA Commission on Care study found that if 60 percent of VHA patients were to start seeking care in the private sector, costs to the VA for their care would quadruple.¹³ Rather than privatizing veterans’ care, the real cost savings for the country lies in bringing more patients under the care of the VHA, particularly as the overall patient population in the United States is on average younger and healthier than the average current VHA patient.¹⁴

Second, patients would experience better and more equitable outcomes from the kinds of integrated services provided by the VHA. The VHA’s “whole health” model starts with primary care teams that include a physician, a nurse serving as the care manager, a clinical associate, and an administrative clerk. Based on the individual needs of each veteran, and in consultation with them, other providers such as mental health professionals, pharmacists, and social workers may be added to that team to ensure all aspects of the patients’ health and well-being are understood, addressed, and monitored. This type of coordinated and individualized care is unavailable to most patients in the private sector, despite the importance of care coordination in reducing misdiagnoses and improving patient safety and outcomes.¹⁵

Multiple studies show this is working in practice. A 2018 Dartmouth College study compared performance between VHA hospitals and private hospitals across the country and found that in fourteen out of fifteen metrics, the VHA care fared “significantly better” than private hospitals.¹⁶ A 2010 systematic review of all studies from 1990 to 2009 comparing the quality of medical and other nonsurgical care in VA and non-VA settings found that studies “almost always demonstrated that the VA performed better than non-VA comparison groups” (emphasis added).¹⁷

Lastly, workers would benefit from a fully public healthcare system like a VA for All. The public sector has long done a better job of employing women and people of color than the private sector.

Already, the VHA’s workforce is salaried and almost entirely unionized. For nonclinical staff, VHA jobs offer more stability and better benefits than many private sector healthcare administration jobs, which tend to be based on at-will contracts. And clinical staff can focus on patient care, since they do not have to build a practice, recruit patients, or bill multiple insurers. Research and training opportunities abound for staff inside the VHA. Because the institution plays such a large role in training the U.S. healthcare workforce, it has explicit career ladders; and, as it engages in significant amounts of in-house research, clinical staff can also easily engage in ongoing research and both further their own careers and their scientific field.

Toward a VA for All

Currently, around nine hundred hospitals across every state outside the VA system are on the verge of shutting down due to financial losses.¹⁸ Even before the pandemic, the United States had fewer hospital beds per one thousand residents than many other high-income countries.¹⁹ If cash-strapped hospitals have no incentive to stay open, where do the patients seek care? Where do the jobs go? And how is the broader local and regional economy expected to recover? Some will undoubtedly be purchased by large health systems, consolidating their economic and political power. But many will close—leaving critical gaps in access to care.

We could empower the VHA to acquire and administer many of these hospitals. These acquisitions would not only ensure that communities can access affordable, high-quality healthcare but also help to preserve local community economies.

The VHA could also be tasked to work with Federally Qualified Health Centers (FQHCs), which provide comprehensive primary care to low-income and medically underserved populations and receive support from across the political spectrum. Both could be scaled in a public–public partnership to achieve access to quality primary, secondary, and tertiary healthcare services for all, regardless of income or geography.

Like VHA patients, the FQHC patients experience more chronic health conditions than the overall U.S. population. Yet the health outcomes of FQHCs rival those of the private sector.²⁰ Numerous studies suggest that FQHCs are associated with lower total per-patient costs to Medicare and Medicaid, as well as economic benefits to the local communities in which they operate, through job creation and purchasing.²¹ Moreover, primary care is associated with more equitable health outcomes than specialty care.²² Thus, expanding the network of FQHCs and linking them to other public healthcare infrastructure like that provided by the VHA could both advance health equity goals and contribute to overall health system savings.

Additionally, FQHCs offer a model for democratized governance of healthcare services and responsiveness to local community needs due to their “consumer board” structure. By federal mandate, 51 percent of each board must come from the patient population served by the health center in terms of demographics, and “of the nonpatient health center board members, no more than one-half may derive more than 10% of their annual income from the health care industry.”²³

Transformation, Not Reformation

As the healthcare “system” of the world’s wealthiest country is teetering, if not close to collapse, the pressing need for transformative solutions is obvious. Scaling publicly owned healthcare to serve all would be just that—a way to take healthcare from a source of private profit, mass suffering, and financial ruin, and make it a public good.

Leveraging healthcare investments to actually improve the health and well-being of our people, our communities, and our economy is eminently possible. The models for how to do it already exist. Building on the successes of the VHA and FQHCs offers a path to delivering better healthcare at lower cost, with greater stability for our healthcare workforce.

***

As patients and healthcare workers know, sometimes the body can heal itself—but only if nutrients it takes in are feeding the body’s essential organs rather than a cancer or pernicious bacteria. Sometimes a tumor must be excised—and tissue must be irradiated—to stop a malignant growth. But with the proper support and care, a body can transform itself, develop new habits and abilities, and return to a state of health and well-being.

Likewise, the U.S. healthcare system needs major surgery before it can heal. The malignancy of profit seeking must be cut out, so that life-giving resources may flow where they are most needed. Only then can the dream of healthcare as a human right be truly realized.

Notes

1. Dan Keating, Akilah Johnson, and Monica Ulmanu, “The pandemic marks another grim milestone: 1 in 500 Americans have died of covid-19,” Washington Post, September 15, 2021, washingtonpost.com/health/interactive/2021/1-in-500-covid-deaths/. (This statistic, sadly, is already out of date.)
2. Vishal Khetpal, “Just Say It: The Health Care System Has Collapsed,” Slate, September 7, 2021, com/technology/2021 /09/healthcare-system-collapse-icu-ration-beds.html.
3. Roosa Tikkanen and Melinda K. Abrams, “U.S. Health Care from a Global Perspective, 2019: Higher Spending, Worse Outcomes?,” The Commonwealth Fund, January 30, 2020, commonwealthfund.org/publications/issue-briefs/2020/jan/us-health-care-global-perspective-2019.
4. Veterans Health Administration, “VA Fourth Mission Summary,” accessed October 5, 2021, va.gov/health/coronavirus/statesupport.asp.
5. “An Inside Look at the VA’s COVID-19 Response,” Veterans Healthcare Policy Institute Blog, January 12, 2021, veterans policy.org/va-covid-19-response.
6. See UK Parliament, “1942 Beveridge Report,” parliament.uk/about/living-heritage/transformingsociety/livinglearning/coll-9-health1/coll-9-health/, accessed October 5, 2021; and Matthew Smith, “The NHS is the British institution that Brits are second-most proud of—after the fire brigade,” YouGov, July 4, 2018, yougov.co.uk/topics/politics/articles-reports/2018/07/04/nhs-british-institution-brits-are-second-most-prou.
7. No national healthcare sector in the world is currently 100 percent Beveridge-style, in that some private providers or supplementary insurance coverage is allowed alongside the comprehensive coverage and treatment offered through the public sector. The Cuban healthcare system comes very close to being 100 percent public, however, with only a handful of private practitioners remaining on the island. In most Beveridge-style systems, there are some limited private options available, but they do not tend to account for a large portion of total healthcare use.
8. German Lopez, “The VA scandal of 2014, explained,” Vox, May 13, 2015, vox.com/2014/9/26/18080592/va-scandal-explained; Charles Ornstein, “Agent Orange Act Was Supposed to Help Vietnam Veterans—But Many Still Don’t Qualify,” ProPublica, July 17, 2015, www.propublica.org/article/agent-orange-act-was-supposed-to-help-vietnam-veterans-but-many-still-dont-; and “‘The Administration is Setting Us Up to Fail,’ says VA Workers Union,” AFGE, February 20, 2019, www.afge.org/publication/the-administration-is-setting-us-up-to-fail-says-va-workers-union/.
9. Lei-Nikki Bowser and Donna L. Washington, Access to Care Among Rural Veterans (Washington, DC: Office of Health Equity, Veterans Health Administration, S. Department of Veterans Affairs, March 10, 2020); and Karli Kondo et al., “Health Disparities in Veterans: A Map of the Evidence,” Medical Care 55, no. S2 (September 2017): S9–S15.
10. “‘The Administration is Setting Us Up to Fail’”; and Meagan Day, “The Assault on Veterans’ Health Care: An Interview with Suzanne Gordon,” Jacobin, June 11, 2018, com/2018/06/veterans-administration-health-care-privatization.
11. William B. Weeks and Alan N. West, “Veterans Health Administration Hospitals Outperform Non–Veterans Health Administration Hospitals in Most Health Care Markets,” Annals of Internal Medicine 170, no. 6 (March 19, 2019): 426–28; Rebecca Anhang Price et al., “Comparing Quality of Care in Veterans Affairs and Non-Veterans Affairs Settings,” Journal of General Internal Medicine 33, no. 10 (October 2018); and Amal N. Trivedi et al., “Systematic Review: Comparison of the Quality of Medical Care in Veterans Affairs and Non-Veterans Affairs Settings,” Medical Care 49, no. 1 (January 2011): 76–88.
12. Ashok Reddy et , “Association between Continuity and Team-Based Care and Health Care Utilization: An Observational Study of Medicare-Eligible Veterans in VA Patient Aligned Care Team,” Health Services Research 53, no. S3 (December 2018): 5201–18.
13. Suzanne Gordon, Wounds of War: How the VA Delivers Health, Healing, and Hope to the Nation’s Veterans (Ithaca, NY: Cornell University Press, 2018), 383.
14. The VHA patient population is older and sicker than the overall U.S. population. In general, being older and sicker makes one more costly to care So, the math suggests that if the VHA is already caring for an “expensive” patient population, and doing it at relatively low cost compared to the private sector (its being more efficient and effective with its investments), bringing more patients into the system would be cost-saving on average. Thus, if more of the U.S. population gets its healthcare from the VHA, total health expenditure for the country should decrease.
15. Agency for Healthcare Research and Quality, “Care Coordination,” ahrq.gov/ncepcr/care/coordination.html, accessed October 5, 2021.
16. Weeks and West, “Veterans Health Administration Hospitals Outperform Non–Veterans Health Administration Hospitals in Most Health Care ”
17. Trivedi et , “Systematic Review.”
18. Ayla Ellison, “State-by-State breakdown of 897 hospitals at risk of closing,” Becker’s Hospital CFO Report, January 22, 2021, beckershospitalreview.com/finance/state-by-state-breakdown-of-897-hospitals-at-risk-of-closing.html.
19. Peterson-KFF Health System Tracker, “Hospital Resources,” accessed October 5, 2021, www.healthsystemtracker.org/indicator/quality/hospital-resources.
20. Elayne J. Heisler, Federal Health Centers: An Overview, Congressional Research Service (7-5700/R43937), May 19, 2017.
21. “Health Centers Provide Cost Effective Care,” National Association of Community Health Centers, Fact Sheet #0815, July 2015, nachc.org/wp-content/uploads/2015/06/Cost-Effectiveness_FS_2015.pdf.
22. Barbara Starfield, Leiyu Shi, and James Macinko, “Contribution of Primary Care to Health Systems and Health,” Milbank Quarterly 83, 3 (September 2005): 457–502.
23. Health Resources and Services Administration, Health Center Program Compliance Manual, “Chapter 20: Board Composition,” hrsa.gov/programrequirements/compliancemanual/chapter-20.html, accessed October 5, 2021.