The Corrupt Healthcare Law You’ve Probably Never Heard Of

You’d be hard-pressed to find someone under the belief that the American healthcare system is operating functionally. No matter what one’s political persuasion, we can all agree the prices are too high, the system is difficult to maneuver, and there’s little transparency or accountability.

Unfortunately, these problems are blamed on capitalism more often than not—which is frustrating as true economists would argue we have not had a free market in the healthcare sector since the early 1900s.

Capitalism, put plainly, is the transfer of goods and services between private owners without government interference.

The ways the government restricts and restrains the healthcare industry are too numerous for one article, but among the most egregious are the presence of regulations known as Certificate of Need (CON) laws. These laws first hit the scene in the 1960s and spread like the viral disease that they are.

Essentially, they demand that healthcare providers prove the “need” for new facilities, equipment, or even beds before they are allowed to add them. Those providers usually must go before some type of governmental board to argue their case, where their competitors also get to appear and argue against them. Oftentimes, the government blocks such expansions.

You don’t have to be an economics scholar to see why this is problematic. CON laws artificially restrict the supply of healthcare options on the market. And basic laws of supply and demand dictate that when demand increases and supply stays the same (or even shrinks), costs go up.

 

And that actually is the intention of these laws. Oftentimes, laws are put into place with the best of intentions but create harm because of the inherent flaws of central planning. But other times, laws are put into place with the objective of protecting the interests of a few, well-connected people to the detriment of the rest of society.

This is what we call cronyism, and it is what motivated the passage of these laws.

Within a decade (under President Nixon), Congress passed the Health Planning Resources Development Act of 1974, which required states to implement approval processes for new healthcare facilities. And by 1982, every state but Louisiana had a regulatory process resembling the federal CON law structure.

The federal law mandating CON laws was eventually repealed in 1987, but the damage was done. To date, these laws still scatter the books across the majority of states in the US. And the damage is clear.

Research from the Mercatus Center shows, “that states using CON laws to regulate healthcare have fewer hospitals, dialysis clinics, and surgical centers. And on top of all of that, even more studies show CON laws lead to lower quality of care, higher risks of complications after surgery, and even higher mortality rates for some conditions.” Gross.

Unfortunately, attempts to reduce or repeal these laws at the state level are always met with strident opposition by the large hospitals and insurance companies that benefit from them. And since these entities often pad the pocketbooks of lawmakers, opponents of these laws have an uphill battle. But it is not one that is insurmountable.

Here’s the good news. Numerous states are currently looking at challenges to their laws, and South Carolina is among them with a bill that would fully repeal the state’s CON law scam. This should be an easy sell to all lawmakers post-pandemic, where government restrictions on healthcare got people killed more times than we can count.

There is no excuse for anyone to continue to shill for these laws, and if they do, they never get to call themselves capitalists again.

We need to inject our healthcare system with actual free-market policies, and that starts with clawing back the government’s grip on the market. Demand it.

Disclaimer: Hannah is a fellow with Americans for Prosperity, an organization which works on healthcare deregulation as one of its main priorities. 

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Hannah Cox
Hannah Coxhttp://based-politics.com
Hannah Cox is a libertarian-conservative writer and co-founder of BASEDPolitics. She's also the host of the BASEDPolitics podcast and an experienced political activist.

7 COMMENTS

  1. Politicians are basically imbeciles. Their “thought processes,” to the extent they have them, are simplistic. To them, every “problem” has a single cause, every “solution” has a single effect that directly “solves” the “problem” with no secondary effects or unintended consequences. In the real world, things are never that simple.

    The bigger the government, the more damage their idiocy causes.

  2. Great article! Thanks!

    This is the unintentional consequence of the CON laws, and unfortunately the current interpretation of this law, has now morphed into where it is intentionally killing people. Consider that when a person is sick or elderly, they are more venerable than when they are not sick, both in their capability to reason or protect themselves. Based on this, I believe that in the end of the article, where you write, “… where government restrictions on healthcare got people killed …”, the English word that correctly labels the act of killing by government via governmental policy is democide.

  3. Wow! I previously had no knowledge of CON laws or the history behind them. Thank you so much for bringing this to public attention. I am currently preparing a survey of ALL laws, even the obscure ones, on the books in my state. America is in trouble and the best practice is to start by cleaning up your own backyard. I would like to see federal and state government funds out of our healthcare facilities. Given the recent/current COVID-19 fear-porn scam and the draconian, tyrannical mandates, I believe if CON laws were repealed a large body of the US population would welcome and choose hospitals, clinics and doctors that refuse government funds and offer reasonable or even sliding-scale cash pay options. I know of one or two local doctor’s office that do well with this model–shhhhhh! Of course, another ginormous obstacle to overcome–repealing whatever law or program that mandates Medicare payroll taxes and ensuring those who have paid in their entire lives are compensated. With all the ridiculous talk lately about paying reparations to various groups, should we not FIRST pay reparations to ALL American citizens who have paid into Medicare? America and Americans First, right?! I’m curious, do private insurance companies benefit in any way from these CON laws?

  4. A classic example of the disaster that is CON laws are Cat scams and MRI. IN the late 60s and early 70s the Cat Scan was developed by EMI an English company that made a fortune as the Beatles record company. Using the new technology of computers they developed a “slicing” imager tht was extraordinarily revealing of the internals of the body. Using basically the same “slicing” programming but using powerful magnets instea of xrays the MRI was born. But states severely regulated hospitals being allowed to acquire them. For a very long time they were basically unavilable (the government’s actual intent) to the great detriment of patients many of whom probably died as a result. Originally no one could get them. Then private companies and doctor’s private practices (often nerursurgeons who desperately wanted the scans or radiologists who realized they could catch both ends of the cost: the scan itself and their reading of the scan) realizing the regulators didn’t regulate them like the hospitals, bought and opened their own imaging centers charging very high fees. So you can’t keep good capitalism down and the service became more widely available but at a very high cost, a typical result of government regulation and meddling. Two of the commonest results of government activity: people die and things cost much more. Like the chines bioweapon “pandemic”

  5. The title “The corrupt healtcare law you’ve probably never heard of” is correct.
    I had not heard of. Your points are on target. Thank you

  6. RE: Charles’ observation of MRI regulations, I guess that explains why, in 2019, at a hospital built in the 2010s, my MSI took place in a “mobile” building off to the side. I thought at the time they were renting add’l machines temporarily, but now I suspect the hospital intentionally did this to get around the onerous restrictions. They probably have to play accounting games, too, which just drives up cost for no good purpose.

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