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We all know that a private health-care system is best, and a government-run health-care system inevitably provides poor service in decrepit facilities with long waits. Just look at the Veteran's Adminstration hospitals.

In an amazing article in the Washington Monthly, Phillip Longman does just that, and finds the highest-quality health-care system in the nation. The story of how the changes of the last decade happened, and why there are structural disincentives for private HMOs to follow its example, is fascinating, and very, very important.

An answer came in 2003, when the prestigious New England Journal of Medicine published a study that compared veterans health facilities on 11 measures of quality with fee-for-service Medicare. On all 11 measures, the quality of care in veterans facilities proved to be “significantly better.”

Here's another curious fact. The Annals of Internal Medicine recently published a study that compared veterans health facilities with commercial managed-care systems in their treatment of diabetes patients. In seven out of seven measures of quality, the VA provided better care. It gets stranger. Pushed by large employers who are eager to know what they are buying when they purchase health care for their employees, an outfit called the National Committee for Quality Assurance today ranks health-care plans on 17 different performance measures. These include how well the plans manage high blood pressure or how precisely they adhere to standard protocols of evidence-based medicine such as prescribing beta blockers for patients recovering from a heart attack. Winning NCQA's seal of approval is the gold standard in the health-care industry. And who do you suppose this year's winner is: Johns Hopkins? Mayo Clinic? Massachusetts General? Nope. In every single category, the VHA system outperforms the highest rated non-VHA hospitals.

Key to the transformation of the system is investment in a well-designed, comprehensive information system that provides better bed-side care, prevents errors, and improves diagnoses. It's the sort of thing I've often dreamt of, while watching doctors and nurses struggling with antiquated paper record systems. But why haven't other health-care systems started using this?

It appears that the current organization of the private health-care industry actually works against investments in quality. Because patients move from group to group as their jobs and insurance coverage change, quality improvements that take years to pay off, like keeping a diabetic patient from developing complications later in life, will most likely benefit a competitor, not the ones making the investment. There is no business case for quality. Because better health care results in fewer hospital admissions and doctor visits, revenue drops - best practices won't pay the bills. These are just two of the problems. The article discusses others. These dynamics may mean the administration's hinted changes would make quality worse, not better.

While the President is speechifying about freedom, and assaulting Social Security, American healthcare is a train-wreck in progress. It's time to get going on some new thinking about what to do. This article is a breath of fresh air.