Ardent followers of BASEDPolitics know there was the opportunity of a lifetime in South Carolina this year.
As we reported, momentum and popular opinion were behind an effort to fully repeal the state’s certificate of need (CON) laws. Even the governor spoke out in favor of the movement correctly stating:
“We have seen the CON approval process become weaponized by those seeking to halt competitors’ entry into the marketplace through lawsuits and long drawn-out litigation. This practice has the practical effect of delaying healthcare services in rapidly growing areas of our state, it provides no incentive for capital investment in our rural counties, and it provides no relief to our citizens from rising healthcare costs.”
But despite the momentum (and according to those on the ground, despite having the votes to pass the bill), the legislation died a surprising and quick death last year at the hands of incoming House Speaker Murrell Smith (R ).
Smith, who has been on record for years in support of getting rid of CON laws, and who has even sponsored legislation in the past to that end, killed the bill in a procedural vote at the eleventh hour.
That’s all bad enough. CON laws artificially limit the supply of healthcare in a state. They prop up monopolies, kill innovation, and overall keep the price of healthcare really high while also making it harder to access. There’s literally no excuse for these crony laws on the books.
But what came next really encapsulates the root problem behind these laws. Instead of repealing their CON laws on the books, South Carolina state lawmakers are going in the opposite direction and trying to give one specific, large hospital a carve out exemption to these laws.
They’re doing this through an appropriations bill the state legislature will vote on as a part of a special summer session to pass the state’s annual budget.
Basically, while every other healthcare entity in the state would have to go through a lengthy CON procedural process to relocate or build a new facility, the state wants to allow one hospital an exemption to the rules. In the bill it states, “For the current fiscal year, the relocation of a licensed hospital in the same county in which the hospital is currently located shall be permitted…”
Though not expressly detailed in the bill, this language seems targeted to benefit one specific facility. According to reporting by Reason Magazine, “Though it isn’t immediately obvious from the text of the bill, the hospital that seems likely to benefit from the exemption is Roper St. Francis Healthcare, which announced plans last year to spend $500 million relocating from downtown Charleston to another part of the city. To say that Roper is a Charleston institution is probably an understatement: the hospital has been around for so long that wounded Civil War soldiers were treated there.”
To be clear, St. Francis should not have to explain a relocation to anyone, let alone the government. The hospital should be able to build wherever it can afford and wherever it deems it will be able to serve the greatest number of consumers. The issue is that this facility might receive special favors, while every other provider will have to go through a lengthy and expensive regulatory process just to meet the needs of consumers.
Regulations always hurt consumers and make products more expensive and harder to obtain. But they are especially sinister when applied to the healthcare industry, where real lives are on the line. Furthermore, it seems quite obvious that even the most ardent supporters of CON laws know they are not in place for actual public health and safety reasons (if that were the case they wouldn’t be making exceptions). Instead, these laws are solely meant to protect industry insiders from competition, to make it impossible for upstart, small companies to enter the market, and to keep prices artificially high to benefit those connected to the government.
This isn’t free-market capitalism. It’s corruption and it is a direct attack on the market.
South Carolina should have taken the opportunity to rid this rot from its books when it had the chance. That they did the opposite and are now seeking to force through even more protectionism is the real sign of sickness in this system.
(Disclosure: Hannah Cox is a media consultant for Americans for Prosperity, an organization that works on certificate of need laws reform).