Health Care Cartels Limit Americans' Options
The most pernicious aspect of CON programs is that they remove the ability of consumers to dictate which medical services are available, turning that power over to regulators and medical providers. That's foolish. Building a 21st century health care system will take experimentation. The last thing states should do is stand in the way of medical entrepreneurs.
Every year, 50,000 Americans die from preventable colon cancer. Because of the invasive and uncomfortable nature of the dreaded colonoscopy, it's no surprise only 50% of at-risk individuals actually get screened. Fortunately, advances in medical imaging technology now make screening more comfortable and less expensive.
President Obama himself chose a "virtual colonoscopy" during his first comprehensive exam as commander in chief, but it isn't as widely available as it should be. Misguided certificate-of-need (CON) laws in 36 states restrict access to the procedure recommended by the American College of Radiology.
Initially, the laws were touted as a way to cut health care costs and encourage charity care through centralized planning. In reality, they benefit providers while restricting consumers.
Consider physician Mark Baumel, who wanted to open several medical centers in Virginia to offer virtual colonoscopies.
During the procedure, a CT scanner forms a three-dimensional image of the colon. Because the non-invasive procedure requires no sedation, there's no need for a day off of work for the 80% of patients who test negative. Patients with an abnormality can have their polyps removed on the same day.
Baumel's approach, now used in Delaware, makes screening cheaper, safer and more convenient. But in many states, he cannot offer his approach without battling the CON cartel.
Certificate-of-need laws are essentially a "certificate of monopoly" for established health care businesses. They prohibit new services or, in some states, even new medical equipment without approval. In a lengthy process, medical providers must prove that their proposed medical services are needed. Worse, existing health care facilities are invited to oppose competitors' applications, protecting established businesses from competition.
Defenders of these laws claim they reduce health care costs by avoiding duplication of medical equipment and services, or that they increase charity care.
The reality is that the laws "result in fewer beds and hospitals operating in the typical" metropolitan area, according to the Journal of Health Care Finance. A new study from George Mason University's Mercatus Center finds that the laws restrict access to health care while slowing the adoption of new technology. A review of the economic literature in the study shows that CON laws are likely to result in higher costs and provide no extra services for the indigent.
Ultimately, the most pernicious aspect of CON programs is that they remove the ability of consumers to dictate which medical services are available, turning that power over to regulators and medical providers. That's foolish.
Building a 21st century health care system will take experimentation. The last thing states should do is stand in the way of medical entrepreneurs.