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Have Certificate of Need Laws Hampered the Coronavirus Response?

by Richard A Reagan

With the coronavirus pandemic causing mass amounts of hysteria among politicians around the world, it’s time to start digging deeper into why those politicians are freaking out. The current trend of lockdowns and social distancing is intended not to stop the virus from spreading but to “flatten the curve,” i.e. to slow the spread of the virus so that hospital systems don’t get overwhelmed. But why are hospital systems overwhelmed?

One of the commonly expressed fears is that hospitals will run out of beds and ventilators for patients, and that the virus spreading too quickly will cause such an exponential rise in the number of patients that many who otherwise would have been able to be saved will end up dying because of a lack of supplies. Aren’t hospitals prepared for that?

Unfortunately, the US healthcare system has a number of things working against it, hence the fear that hospitals will run out of beds and ventilators. The system is not a free market system due to massive government intervention in healthcare at all stages of the system. And because of that, hospitals are not prepared for major crises.

In the US, the largest single healthcare customer is the US government, through its Medicare and Medicaid programs. Then come state governments and large insurance providers. And then, in a tiny minority of instances, come private citizens paying for medical care without insurance. The entire medical system is geared towards its customers, i.e. the government and insurance providers. You the patient are not the customer because you’re not paying the bills. That’s strike one.

Because the healthcare system is geared toward extracting the most money it can out of the government and insurance providers, it does the bare minimum that it needs to in order to cover healthcare needs and the needs of doctors, nurses, and healthcare workers. Hospital systems today aren’t entrepreneurial in the sense that they’re looking to innovate and compete for new individual clients. They’re mostly interested in getting as much government money as they can with as little effort. If that means not having enough masks, gloves, and ventilators on hand, so be it, they’re willing to take that risk, and hope for a government bailout in the event of a crisis. That’s strike two.

Then there’s the fact that due to medical licensing, most states have “certificate of need” laws. That means that in order for a hospital to add more beds, offer new services, etc., it has to apply to its state medical board for approval to offer those services. In many cases the state medical board may say that because a hospital 30 miles away already has X number of beds, or already offers MRI or CT scans, the hospital applying for new beds or services is denied. Essentially this is centralized planning of our medical system, no different than centralized planning under the Soviet Union. That’s strike three.

We can see that the US healthcare system isn’t built to actually heal patients or cure diseases, it’s meant to siphon taxpayer dollars into the pockets of hospital systems and administrators. And that’s why the system isn’t prepared to deal with the coronavirus, or indeed with any pandemic. Until these underlying structural issues are done away with, Americans relying on hospitals for healthcare will continue to be poorly served, and those trusting in the healthcare system to treat their coronavirus infections are gambling with their lives.

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