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]