7-14-15 – Repeal Certificate of Need Laws Now

by Rob Roper

A recent article in the Times Argus by Dr. Peter Gunther (7/14/15) tells the story of a group of local physicians who have applied for a Certificate of Need that would allow them to open an independent, outpatient surgery center in Colchester. According to the article, such facilities charge, on average, 45-60 percent less than hospitals.

So what is a Certificate of Need, and what does it do? If a group of licensed doctors wants to set up a surgery center, or a clinic, or whatever, why can’t they just hang out a shingle? If there’s a need, patients will come. (And, gee, do you think there’s a need in Vermont for significantly lower cost healthcare options?). If there’s not, the facility will go out of business. Bad news for the investors, but no cost to the taxpayers and no harm to the patients.

Basically, a Certificate of Need (CoN) is a bureaucratically controlled “permission slip” used to protect politically connected monopolies, foster cronyism, and drive up costs. They do not benefit the public.

Currently, 36 states have CoN laws in place and Vermont’s are the most onerous, regulating thirty services, devices, and procedures (yes, once again, we’re number one!), more that double the national average of fourteen. (Certificate of Needs Laws: Implications for Virginia, Mercatus Center, Feb. 2015)

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This is a big reason why our healthcare costs in Vermont are unaffordable. If you want to lower the cost of anything, the goal should be to increase supply. CoN laws are in place for only one reason – to restrict supply. They should be repealed by the legislature, a serious healthcare reform move that would cost taxpayers NOTHING to implement, and would certainly save money over the long term.

– Rob Roper is president of the Ethan Allen Institute.

{ 4 comments… read them below or add one }

Bob Zeliff July 15, 2015 at 8:25 am

What is not said here about and independent out patient surgery is how they demand payment. Typically if you have money, cash, credit card, excellent insurance(often not all is accepted) you can get care done. No money…no care.

if you do not meet these criteria…you must go to a hospital…who accepts all…paying customers and those who can not. This makes Hospital costs much higher…

So as you can see most of the alleged cost saving by these independent care centers are due to cherry picking paying patients vs giving health care to all.

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Rob July 15, 2015 at 11:40 am

A couple of points… If you read the study linked to in the post, you will see that CoN laws have not increased the amount of charity care provided, they just raise costs and decrease the availability of services, such as imaging technology, hospital beds, etc.

But, even if the CoN laws and hospitals worked as Bob describes above, how is it rational or moral to use the hospital system as a money laundering operation so politicians can avoid accountability for what is essentially a massive tax on people getting medical treatment? If such a tax needs to be levied, it should be transparent and on the population as a whole — not just on people seeking care. Medical facilities should compete in an open market to provide the highest quality service at the lowest cost. Then, if some people genuinely can’t afford the care they need, the state should provide aid through the general fund.

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Izzidora Simons July 15, 2015 at 3:26 pm

CoN laws have another purpose, not just to restrict supply, but to insure people are not ripped off in the market place. I’m not sure where the money laundering comes in. EAI’s John McClaughry recently advocated for the ending of the state’s Attorney Generals Office, because he said that we don’t need an attorney looking out for consumers at tax payer expense. I’m not so sure EAI and Mr. Roper would have a problem with private health provider companies and insurance companies restricting any thing to make more money.

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Rob July 15, 2015 at 4:17 pm

Izzidora, how exactly do CoN laws insure people are not ripped off? Quite the opposite, I think, because there is no accountability for how hospitals spend the money on charity care. How much are they overcharging one patient, and how is that overcharge being spent on other patients? We have no clue. How much does a hospital charge for an appendectomy? Or an Advil? Ask and try to get a clear answer? You won’t get one. The potential for fraud and abuse is rampant. Whereas, if hospitals charged everybody the same rate, competing with other providers to bring costs down, and government provided tax-funded subsidy for those who cannot afford care, we would have a much clearer idea of what is being spent and how, and it would be a lot more fair to all.

As for “ending” the Attorney General’s office, I think you are confused. John McClaughry did recently agree with a bill proposed by Sen. Dick Sears (D-Benningtion, Chair Senate Judiciary) to make the Attorney General position one appointed by the Governor, but that would hardly “end” the position. And your accusation of not wanting an attorney looking out for consumers at taxpayer’s expense is pure fantasy.

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