March 6, 2016

Rural Virginians Pay Steep Price for failing Policy

Christopher Koopman

Senior Affiliated Scholar

Thomas Stratmann

Senior Research Fellow
Summary

If judged only by their intentions, COPN laws are certainly praiseworthy. Controlling costs, increasing access, and getting care to those in need should be at the center of any debate over healthcare. Judged by their effects, however, COPN laws have failed.

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State policies and programs should be judged based on their results, rather than their intentions, but that is rarely how things work. We often debate what a government is trying to achieve, rather than what effect it’s actually having. This is especially true of health care, and it’s playing out today in Virginia.

The source of controversy is a decades-old health care program known as “certificate-of-public-need” (sometimes referred to as “COPN”). While Virginia has a COPN program for the right reasons, it fails the very people it is supposed to protect — particularly those in rural areas.

COPN requires doctors, nurses, and other providers — who are already fully licensed and qualified to provide care — to secure an expensive certificate to open or expand a practice, purchase certain medical devices, or offer new services.

Essentially, it’s a permission slip to simply broaden the range of health care options available to patients. Virginia is the 11th most restrictive of the 36 states that continue to enforce COPN programs.

Why, then, would Virginia want to keep doctors from providing as many services as possible? The rationale, while dubious, is rather straightforward. The state’s COPN program is intended to control costs and to better distribute care to hard-to-reach areas and to the needy. These are, without a doubt, critical goals.

But the data tell us that COPN is an unequivocal failure. In fact, it may be a large part of the problem.

Our collective research finds no evidence that COPN programs control costs or increase charity care, and that in reality, they appear to be pushing patients to seek care in non-COPN states.

Our latest research contains more alarming news, especially for people living in rural areas. States with COPN programs have 30 percent fewer hospitals, including 30 percent fewer rural hospitals, than those that do not.

In areas without a hospital, ambulatory surgery centers are sometimes the only alternative. But COPN restricts these as well — by about 13 percent in rural areas.

It’s concerning enough to imagine that this may be contributing to fewer options for those seeking care. But it may also mean higher prices. One recent study found that hospital prices in markets with two hospitals are 1.6 percent higher than those in markets with three. Those with three hospitals have 4.8 percent higher prices than those with four or more.

Competition is a big deal — even in health care. It’s about more than a doctor’s right to provide care as he or she sees fit, based on their education, training, and personal experience. It’s also about making sure their patients have as many options for affordable, high-quality health care as possible.

If judged only by their intentions, COPN laws are certainly praiseworthy. Controlling costs, increasing access, and getting care to those in need should be at the center of any debate over healthcare. Judged by their effects, however, COPN laws have failed.