Certificate of Need Healthcares Hidden Cost

leadoff batter good morning everyone

everybody had your coffee and awake and

we’re dead we’re New Castle County New

Castle County has essentially a

near-monopoly of the North County but

Christiana Care has a near monopoly and

health delivery in this county Kent

County has Bay Health Bay health as a

near-monopoly

according to Fitch who rates these

things over 80% market share in Kent

County BB in Sussex County has probably

is you know 50% market share but there

is competition with Bay health and

Nanticoke who really reasonably recently

merged with Peninsula health

so what’s going on so today’s topic is

how would you like to cut 248 million

dollars from the healthcare costs in the

state of Delaware well we’ll get to that

in a minute how this all happened is

that in 1974 the federal government

forced that as they said if you want

Medicare and Medicaid money states you

have to install this certificate of need

law certificate made law very simply

says any healthcare system any

healthcare activity a provider has to

come to the state each individuals

we’ll have this law they have to come to

state to get specific approval to do so

and in doing that they have to they have

to prove that there’s a need for their

service well by 1977

all 50 states had installed a

certificate of need law now that the

rationale behind the government was that

or by the federal government was pretty

upside-down they said if you restrict

supply make better use of the excess

capacity that they had in hospital rooms

and so forth you will lower cost and you

will have more access to health care as

it turned out the opposite happened the

the scope this covers everything I mean

what you don’t realize anything you want

to do in health care anything you name

it you look at the slide you can see all

the things that are covered in health

care requires you to go that this

extensive application lots of backup to

prove that this is needed well what

happens over time but the same thing

that happens with occupational licensing

is that people tend to look after

themselves and not want any competition

I’m just like try to get try to be a

doctor in this thing try and be a lawyer

you got to go be an apprentice for six

months at a law firm even though you had

a great law to create a great practice

in Illinois or Pennsylvania or something

so that’s what happens over time well

when you restrict supply in the face of

increasing demand what happens prices go

up not down okay and what one of the

things that the federal government and a

lot of states really have this problem

Delaware does to a certain extent is

rural health care that’s called health

access facilities for sparsely populated

area so it was another goal that didn’t

happen

so 1987 may ago but my fault the federal

government says we’ve looked at this

results for 10 years and guess what it

didn’t work

we don’t have lower prices we have

higher priced and we don’t have better

health access where we need it so we

recommend that you have open competition

to achieve the goals of lower prices

more health care facilities and services

for everybody so in the next few years

15 states got rid of their certificate

of need laws this restrictive laws 35

states including Delaware still happen

it’s 30 some odd years later so what

happens economists like this when you’ve

got a binary situation 15 states have

competition 35 states have this

restrictive law it’s really fun to make

a comparison of what happened with these

vs. states so from in the 20 2000 and

2020 there were a number of different

studies nonpartisan so the federal

government see we have here that the the

Department of Justice the Antitrust

Division had a study and claimed

outright said this is anti-competitive

get rid of these laws nobody gave the

American Medical Association they went

ahead and that’s the doctors down not

the hospitals and doctors they’re

against these certificate of need laws

furthermore we have other we have a John

Locke foundation other think tanks and

so forth have done studies every single

study concluded the same thing they’re

anti-competitive every strict supply

these are bad laws and they should get

rid of 34 37 years have gone by 35

states still happen so this is one that

the

the biggest study could call it a baby

the Mercatus Institute which is part of

George Mason University they did a

massive study covering every state doing

the study justice I were talking

comparing all of the health statistics

so what they and they published a study

in nineteen in 2017 just a couple of

years ago and they found that in the in

the competitive 15 states health care

prices went down compared to the

certificate of need states the most

important bishop variation was Health

Access which is more facilities and

rural health and so forth

it was significantly improved in the 15

competitive States compared to the 35

states like Delaware that haven’t done

every other health care indicated in

that they looked at there was when you

have an operation you have a readmission

if the operation didn’t go well it runs

about 18 down national average about 18

percent which is shocking when you think

about it but it was lower in the

competitive states compared to the non

competitive states that’s important as a

quality issue so forth so on every

single measure of Health Statistics you

were better off in the competitive

States compared to the non-competitive

station the and that’s the other port of

one of the babies a charitable care was

the same you know in child care provided

by the health systems was the same in a

competitive and non-competitive station

so it’s pretty simple what you have to

do you have to call your representative

your senator write to them email and

saying this law has got to go

as it turns out in Delaware number the

certain laws have sunset provisions

meaning every five years a committee

made up of some senators some

representatives look at a law they

review it decide whether it should be

sunset it or gone or they keep it this

is up for sunset this year in fact the

first meeting of that committee is March

11th so you got to move to action now to

do this now I know the Ted people Ted

people like a big idea something that

can go national environment okay so you

want to pick her idea the federal

government this administration next one

doesn’t matter can reverse what they did

in 1974 they can say to the states if

you want any Medicare or Medicaid

dollars you have to get rid of this law

you got 90 days to do it cost nothing

it’s just rip up alone just beat them

every governor can just veto so I have

to do everybody’s a winner in this

situation everybody taxpayers from so

forth so when we’re in the numbers as

you see here with the three percent

savings which was of the national health

care bill which is roughly three point

four trillion dollars for the 60% of the

country that still has these laws you

see your savings up there 68 billion

dollars a year or six hundred and times

that tends ten over ten years if you

would think who says 6% which recent

studies in certainly comments by the

Health and Human Services is closer to

six percent higher cost just say forget

about better outcomes and all the rest

of it you end up with one point two

trillion dollars worth of savings over

ten years and all you had to do is rip

up a piece of paper we saw somebody rip

up a piece of paper the other day or

several pieces

anyway that’s what we’re talking about

in this car law it’s an action call

right now and thank you very much for

you time

[Applause]