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The sneaky law making nursing homes wildly expensive

As of 2023, 53 million people (more than 1 in 5) were caring for a parent, a spouse, or another relative, and of those, 37.1 million were providing unpaid eldercare. As baby boomers approach retirement (and a stunning number of them have made zero financial preparations to do so), it’s likely that a significant number of Generation X, millennials, and even Generation Z will soon join their ranks. 

Taking care of an elderly loved one is a tremendous task. Let’s remember roughly 50% of families have two people working in a home, and they’re already struggling to manage rearing children, housework, activities, and bills. Speaking of bills, more than 1 in 4 have less than $1,000 in savings. In short, they’re strapped for time and cash, and that’s before you add caring for parents into the mix. 

Previous generations have turned to nursing homes to assist with this labor. But increasingly, these facilities are simply out of reach for the average family. According to financial counselor Dave Ramsey’s camp, a semi-private nursing home stay in 2024 is $8,641 per month. For a private room, that number shoots up to $9,872. 

It’s important to know that there’s a government-created and -backed monopoly that has been at play for decades leading to these prices. In a normal free market, suppliers would recognize demand and rush to build more facilities, thus driving down the prices. 

That isn’t happening due to something called certificate of need laws. These laws were put in place in the 1970s with the explicit intention of keeping healthcare prices artificially high. They do this by restricting the number of healthcare and related services in a given area.

Basically, to open new healthcare facilities or even add beds or new equipment to existing ones, providers have to go before a government-appointed board and argue why the area “needs” it. Their competitors, usually the large hospital associations or dominant facilities in a given area, which donate lots of money to the politicians who appoint the members of the governing board, get to show up and argue why new facilities are not needed. You can guess who wins. 

Thus, supply stays limited, costs stay high, and the entrenched companies in a given area make out like a bandit while taxpayers get screwed. 

There’s been a huge movement to repeal these laws in recent years, and many states have seen lawmakers chipping away at them bit by bit. But it’s an uphill battle, given the lobbying dollars and political power those benefiting from the certificate of need regime wield. And the dirty little secret is that even when lawmakers do manage to repeal these laws, laws protecting long-term care facilities have always been quietly left on the books. 

Take Wyoming, for example. It was ahead of the curve and repealed most of its certificate of need laws in the ’90s. But as usual, long-term facilities continued to be protected. This year, some true capitalists in the state legislature pushed a bill to get rid of the remaining certificate of need law, which would have made Wyoming the first in the nation to repeal certificate of need in full.

The bill passed the Wyoming House 58-4 on a bipartisan vote. It then went to the Senate Health Committee, where three Republicans out of five voted it down. One of them slinked off into retirement after taking the vote. The other two were state Sens. Dan Dockstader and Lynn Hutchings. So much for capitalism and limited government. 

So now Wyoming is stuck with this law like the rest of the country. It requires a facility reach of 85% or more capacity plus have a 30-mile radius before any new competitors can open up. For the record, no one facility in the entire state meets that requirement, meaning the monopoly is safe and sound. No new facilities can be built in the state. 

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

Not only does this allow these monopolies to raise their rates sky-high, but it also means they have no incentive to improve their facilities or even provide adequate care. True monopolies are a nasty business, and they only last when the government is backing them up. Ironically enough, you’ll never hear the Federal Trade Commission or any Democrats who wax poetic about “monopolies” bring this scam up. 

The United States is supposed to be a capitalist country. We’re increasingly not because of corrupt laws such as certificate of need requirements. Those who fail to look beneath the surface will incorrectly blame “greedy corporations” or capitalism itself for these economic woes instead of the true culprit: the government and its cronies.

Hannah Cox (@HannahDCox) is the president and co-founder of BASEDPolitics and a fellow for the White Coat Waste Project.

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