Coronavirus puts absurdity of inflexible government regulations in sharp relief
Thirty-five states have Certificate of Need laws that limit important health care services
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Phillip Truesdell is ready, willing, and able to help with the current pandemic. Together with his family, Phillip operates an ambulance company in Aberdeen, Ohio. With seven trucks, he’s well-positioned to take people to the hospital or medical appointments not only in his home state but also a mile away in Kentucky.
But the Truesdells are legally barred from helping their neighbors in Kentucky due to that state’s Certificate of Need (CON) law. CON laws force would-be medical providers to attend a hearing akin to civil litigation and prove to the government that a new business is “necessary” before opening their doors.
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Worse, the existing providers can show up and testify that a new business is unnecessary, simply because they don’t want to compete. Kentucky has already told Phillip that they don’t want his help. He applied last year, but after several ambulance providers protested, the state rejected his application.
The problem isn’t just Kentucky, and it’s not just related to ambulances.
Thirty-five states have Certificate of Need laws that limit important health care services like adding new hospital beds, purchasing new medical equipment, and opening new facilities. With cases of coronavirus doubling every three days, there is no way the medical industry can respond fast enough in the face of these types of restrictions.
Certificate of Need laws are absurd, and it shouldn’t have taken a pandemic to make it obvious.
Kentucky’s Division of Certificate of Need claims that “The Kentucky certificate of need process prevents the proliferation of health care facilities, health services and major medical equipment that increase the cost of quality health care in the commonwealth.” The academic literature does not support that claim.
Researchers have found that CON laws increase the total cost of healthcare and costs for each visit. But worse than higher costs, CON laws fail to provide an adequate supply of healthcare resources, and the quality of healthcare suffers in those states.
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That’s because the purported “benefits” to consumers are really just a handout to the existing businesses: CON laws “prevent the proliferation of health care facilities” by giving incumbents a say over new competition. The obvious result is a startling lack of important health care services in states with these regulations.
CON laws are absurd, and it shouldn’t have taken a pandemic to make it obvious. Allowing ingenuity and creativity to flourish through the freedom to earn an honest living benefits the consumer. When a disaster happens — whether a pandemic, a hurricane, or a massive car accident — entrepreneurs can respond more rapidly when restrictive regulations don’t stand in the way. In times of crisis, speed is essential.
As the Director of the WHO’s Health Emergencies Program, Dr. Mike Ryan, said when speaking about COVID-19, “Be fast, have no regrets. You must be the first mover.” CONs get that backward by requiring people to go through a long, drawn-out, expensive process mostly controlled by incumbents before starting up and providing help.
Fortunately, the pandemic has caused states to acknowledge the problem. Recognizing that there are not nearly enough hospital beds, ambulances, and medical equipment, states like Connecticut and New York have proposed suspending their Certificate of Need program. Massachusetts is granting reciprocity for occupational licenses for medical professionals from other states ⸺ implicitly recognizing that such laws usually stand as an arbitrary barrier to entry.
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Medicare is temporarily expanding its reimbursement rules for doctors who practice telehealth. And the Food and Drug Administration is granting quicker approval for coronavirus tests, allowing companies to innovate more quickly.
The fact that these inflexible regulations can easily be discarded in times of crisis demonstrates the absurdity of those policies in the first place. If throwing out the regulations leads to good outcomes now, they should stay off the books later.
Phillip is seeking to get Kentucky’s CON program invalidated through a lawsuit filed in Federal court. Represented by Pacific Legal Foundation, he’s arguing that regulations that burden the ability of entrepreneurs to respond quickly to new problems aren’t just bad policy, they’re unconstitutional. Laws shouldn’t exist to protect incumbent businesses, they should exist to protect the right of people to face hardships, like COVID-19, in dynamic and innovative ways.
Hopefully lawmakers, and the courts, will allow the Phillip Truesdells in this country to provide a helping hand, while the rest of us focus on washing our own.
Anastasia Boden and Angela C. Erickson work for Pacific Legal Foundation, which litigates to enforce the Constitution’s guarantee of individual liberty.