Sen. Edward Kennedy said that “regulators all too often encourage or approve unreasonable high prices, inadequate service, and anticompetitive behavior. The cost of this regulation is always passed on to the consumer. And that cost is astronomical.”
The regulatory bill passed by the House to reform health-oversight is really a restructuring of the certificate of need process. The reform’s purpose had laudable goals: improving better communications, increasing consumer awareness of health care costs, more oversight over hospital expenditures and publishing annual report cards on performance standards and quality. However, it will not control spending or improve current deficiencies in health-care regulations as promoted by advocates and the Free Press.
Years ago, the federal government required every state to have a certificate of need (CON) program. The intent of the process was to maintain and enhance the quality of care and to control health care costs in local communities.
With this federal mandate in place, advocates expected positive results. But, state bureaucracies increased and expensive time consuming processes were developed. Lawrence Brown, writing in the Journal of Health Politics, Policy and Law said, “one cannot find a single article that asserts that CON laws succeed in lowering health care costs.”
President Reagan recommended phasing out the CON program and signed a law in 1986 repealing it. Currently, 14 states no longer have CON programs. In 1998, 240 bills were introduced in the remaining states to severely limit or abolish the program.
If the federal government abandoned the program as a failure, why would any state want to keep it? Studies have shown that states that dropped the CON process have had no ill effects. In fact, per capital health care spending dropped and quality and availability of service rose.
Why would a state not want the benefits of the free market in the field of health care? Market theory holds that competition increases efficiency and improves quality of service to the consumer, and results in lower costs.
In Vermont, many believe limiting the ability of health care facilities to expand is necessary to prevent costly oversupply of services. But by limiting this supply, the regulators preserve a monopoly, limit consumer choice and increase the ability of health care providers to raise prices and build costly facilities like the Renaissance project without any fear of bankruptcy.
Fletcher Allen used the CON law to prevent rivals like HealthSouth from establishing a lower-cost out-patient surgical clinic in Chittenden County. This tactic of preserving their monopoly leads to more market power and market power leads to market failure. Fletcher Allen is the only health care show in town.
Vermont currently requires a CON for non-hospital services including out patient mental health programs, ambulatory surgery, residential treatment programs, etc. Again, there is no evidence that state review of these programs increases quality or reduces costs. Currently, no physician, chiropractor, etc. must submit to CON reviews to offer services. Why force health providers to do so?
It clearly seems past time for the certificate of need to be abolished in Vermont. The CON has unmistakably failed in the Fletcher Allen calamity. The CON does not benefit the consumer with lower health costs, increased quality or enhanced availability of services. Rural states like Idaho, North & South Dakota, Utah and Wyoming repealed their CON programs and so should Vermont.
Senator Kennedy has a point about regulators. We should try to alter behavior through motivation rather than with a meaningless whip.
Thank you for your calls and notes. I can be reached at 658-3975 (home), 1-800-322-5616 or 228-2228 (State House) and via e-mail.
Rep. Frank Mazur
South Burlington