Posted on 01/31/2014 1:18:00 PM PST by MichCapCon
Imagine a state law that required supermarkets to get permission from the government to install a new freezer case or build a new store. Before they could proceed, managers would have to go hat-in-hand to a board consisting of political appointees, some of whom may even have ties to the store’s competitors.
No reasonable person would regard this as a recipe for more competition, lower prices and higher quality. Indeed, the very idea sounds crazy. Yet that is the very regulatory regime imposed on all hospital and clinic expansions and technology acquisitions in Michigan.
Welcome to the perverse world of health care "Certificate of Need" laws. If it sounds crazy for food markets, it's no less so for health care, as a growing body of evidence shows. The latest comes from research analyst Jordan Bruneau writing for The Freeman.
Using 2009 data from the Kaiser Family Foundation, Bruneau compares per capita health care expenditures in states imposing the Certificate of Need (CON) mandate and states that do not. The costs are 11 percent higher on average in the CON states, $7,230 per capita compared to $6,526. To the extent Michigan reflects that average, this means every man, woman and child in this state is paying an extra $704 annually thanks to government rationing.
This may be a rather simple methodology, but the result matches what more rigorous studies have also shown: CON costs consumers (and the third-party payers through which most health care spending is funneled).
President Obama’s health care law is justifiably getting blamed for disrupting the lives of millions by wreaking havoc in the insurance marketplace, but state policymakers deserve plenty of blame themselves for dysfunctions in the status quo system.
CON is just one of many ways states including Michigan have artificially jacked up health care costs. Before legislators here make more noise about Obamacare disruptions, they should start cleaning up the mess this state has made with health care regulations that serve special interests at the expense of consumers.
I was reading about a case on the Volokh Conspiracy website where yes, if you wish to establish a moving company in the State of Tennessee (?), you need to get permission from your competitors, through the State.
I’m so glad to see this discussed! I’ve always been appalled by the “Certificate of Need” and have criticized it and alerted people about it till I’m blue in the face but it falls on deaf ears.
Denninger has been writing about this for well over a year. It’s yet another facet of the same kind of Antitrust exemption granted to big pharma companies who pay off politicians to grant monopolies nationally and even locally. (And I’m not ragging on big pharma, per se, but I *am* ragging on the black-letter-illegal-for-everyone-else monopoly exemptions they are routinely granted for most aspects of their business)
Institutionalized corruption. This is how it is in Communist and some other authoritarian countries. The system is set up to produce payoffs and bribes and will influence the overall system mightily as it successfully rakes off a larger and larger percentage of economic production. It is a wonderful system for the corrupt bureaucrat class.
Certificate of Need is applied to all kinds of things. An area hospital was blocked from having an MRI in the 1990’s. The state’s excuse was their would be “excess utilization” by the hospital in a scheme to make money from insurers and the state. In the end the hospital shared with several other hospitals an MRI that was housed in the trailer of a 18-wheeler which made the rounds between those hospitals.
So what’s an MRI manufacturer to do? If the cost of developing and producing the machine can not be spread over many units then each unit must bear more of that cost. Artificial scarcity jacks-up prices, to say nothing of the adverse impact on care.
Certificates of need allow the government to control the supply of medical care available, and all the corruption and inefficiency that goes alone with that.
Part of the Transformation of America is the conversion from Free Market to a Mercantilet Economy. That cements an oligarchy into place
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