Will West Virginia repeal its ‘Permission to Compete’ laws?

In 1974 Congress National Health Planning and Resource Development Act, a Certificate of Need (CON) committee to determine whether a state’s residents need a new hospital or health care facility, or whether beds or equipment need to be added to an existing hospital or health care facility. Grants were given to states to create . They believed that restricting the supply of medical services would somehow reduce demand for medical services and, in turn, suppress medical spending.

The West Virginia House of Representatives will soon vote for repeal Unique CON Law. Twelve states have already repealed their CON laws. 35 states Additionally, the District of Columbia still has health care providers, and three states still require at least some provider categories to obtain state licensing to compete with existing providers. Masu.

Existing healthcare providers have significant influence on CON committees. They fiercely resist attempts to abolish them, arguing that they are only acting in the public interest. Imagine if a state’s Certificate of Necessity Board had to approve a new restaurant or grocery store. How many new and innovative restaurants and supermarkets never see the light of day?

Lawmakers should have realized that most health care services are paid for by private or government-run third-party payers. This protects most patients from the true price of medical services, which are covered by third-party payers. Consumers — Patients with less exposed skin have no incentive to pursue cost-effectiveness. If price signals do not work, demand will continue despite limited supply. Shortages will inevitably occur while the prices paid by third-party payers will rise much faster than they would otherwise have occurred. This is the basics of economics.

When health care consumers have little protection from price impacts, the only way to reduce health spending is to reduce the availability and access of health care. Former communist countries learned this the hard way when they experimented with central planning.

Congress finally understood this in 1988. abolished Federal CON Grant Program. Unfortunately, many established medical institutions, especially hospitals, fought state legislatures that sought to eliminate the certificate of need requirement and return to a market economy. This is understandable. The certification process effectively gives exclusive privileges to existing hospitals and facilities. Established providers typically testify against New providers may become competitors when applying for certificates.

Hospital administrators typically argue that CON laws generate enough revenue to provide 24-hour emergency services and free care. Doctors and other health care workers also provide free care and other services. However, the state’s professional bodies have not yet created requirements for certificates of need before allowing additional doctors, nurses, psychologists, physical therapists, etc. to open clinics in the state. Not claimed. If they did that, the public would naturally ridicule them.

A 2016 paper by researchers at the Mercatus Center at George Mason University concluded The existence of the CON program was “associated with 30 percent fewer hospitals per 100,000 residents statewide” and “30 percent fewer rural hospitals per 100,000 residents,” it said. I am. In 2020, the study A study by the same agency found that states with CON laws spend more on Medicare and Medicaid per patient in rural areas. Per-patient readmission rates, ambulance utilization rates, and emergency department utilization rates are also higher in rural areas in states with CON laws.

During the COVID-19 pandemic, CON laws have left many states unprepared for a sudden surge in demand for critical care and other medical services, leaving them overwhelmed with bureaucratic red tape. I realized that I was tied up. 20 states Paused CON Act and four other states issued Certificates of Emergency Need (bypassing the certificate application process, which typically takes months), because CON Act prevents health systems from quickly responding to sudden changes. It is a tacit admission that there is.

West Virginia Proposal Abolition of CON Certificates that meet the requirements for hospice care services will remain in place. That’s a shame. comparison Comparing states with and without some CON laws, we find that in states with CON laws, nursing homes account for a larger portion of hospice spending than alternatives such as home health care.

Some scholars refer to CON laws as “.Competitor’s veto right” I call these “permission to compete” laws. Whatever you call them, these laws infringe on patient autonomy by giving government commissions and their cronies the power to decide what kinds of health care services West Virginians receive and how much. are doing. Lawmakers in this Congress can help correct that violation.

Jeffrey A. Singer, MD, practices general surgery in Phoenix, Arizona, and is a senior fellow at the Cato Institute.