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Privatization Rot


By Suzanne Gordon VHPI Senior Policy Analyst

Anyone who thinks the privatization of the Veterans Health Administration (VHA) will work out well for veterans should read the latest article in the New York Times on the privatization of military housing.

In the 1990’s the military launched what is known as the Military Housing Privatization Initiative, which off-loaded the job of building and maintaining base housing for military families to private sector contractors. For the past three decades this initiative seems to have gone from bad to worse.

Private contractors are given 50-year leases on land on military bases to build new housing. They either bought or took over existing housing stock. Service members turn over “their entire tax- free housing allowances” to the contractors for the privilege of living in this base housing. This program was supposed to fix the problems that had long plagued the military as it tried to fulfill its responsibility to provide and maintain decent housing for service members.

The problem is when you bring in a middleman who gets lots of money to provide what the government was supposed to do itself, you create all sorts of incentives for fraud and abuse.

Which is, as the story details, exactly what has happened with this initiative. Houses are plagued by mold. Military families and their kids live in buildings swathed in lead paint. Raw sewage leaks into houses that are poorly constructed and maintained. And when people complain to the contractors? Nothing happens. Or contractors try to intimidate them. Then when they complain to the military, nothing happens.

The program even has built-in incentives that discourage remedial action. As the article explains, “The contractor has strong incentives not to hold units vacant for lengthy repairs or innovations. It can collect revenue from occupied units only and cannot raise rents to recoup the cost of fixing them.”

This is how it works with the private sector. If you can’t make a profit, there is no incentive to correct problems. If you can’t recoup an investment and make more money, then you won’t invest in maintaining infrastructure.

Finally, Congress and the military are trying to address decades worth of complaints. To thank service members for their sacrifices they are doing what? Ending the program? Severely sanctioning contractors? Exercising strict oversight? No, no, and no.

Congress is instead including provisions of the military spending bill. “It directs each service to hire independent tenant advocates who can help resolve disputes; it requires the housing contractors to provide prospective tenants, before they move in, with information on any mold, lead contamination or rodent problems in the unit going back three years; and it calls for the creation of an electronic system for tenants to report problems and track repairs.”

It remains a mystery how telling families about mold, lead paint and rodent problems will miraculously fix them or how hiring tenant advocates and reporting and tracking problems will make them go away.

But this is how it goes with privatization initiatives. You take taxpayer dollars and give them to the contractors without insisting on strict quality and accountability measures. Things go wrong and rather than ending the program or initiating serious remedies that include the imposition of severe financial sanctions, ineffective band-aids are put over gaping wounds.

These are lessons we must take to heart when we consider what so many believe will be the solution to any and all problems with the VHA. Giving veteran or military health care to the private sector will create the health care equivalent of out of control mold, lead paint, and rodent infestations – i.e long wait times, poor quality of care, as well as deaths and injuries due to lack of sufficient knowledge of military-related healthcare problems.

When patients complain about all of this, Congress will hold hearings and the same kind of band-aids will be applied. And former service members will continue to suffer. Anyone who is truly committed to high-quality healthcare knows the value of prevention and the importance of population health. To deliver high-quality healthcare to veterans it is critical to maintain the integrity of the veterans’ health care system and to do this we must prevent the kind of privatization that has wreaked havoc on our public schools, and now as we learn, on active duty service members and their families.

Only by maintaining and strengthening the VHA and using the private sector judiciously when appropriate can we do more than simply say ‘thank you for your service.’

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