On the blog last week I did a small series on “healthcare freedom.” I detailed policy reforms that were recommended by a federal report to states for the purpose of increasing choice, freedom, and competition in their state healthcare markets. In the first installment of the series, I discussed the federal government’s recommendations for “Certificate-of-Need” (CON) laws.
A new report by Modern Healthcare said that the Trump Administration could “leverage waivers” for state CON law repeals. This is a significant report and there is a lot to unpack here.
First, let’s start with “waivers” and what they mean. A few weeks ago, I wrote about “section 1332 waivers” for the John Locke website. In short, this is a section of the Affordable Care Act (ACA), also known as Obamacare, that allows for states to submit applications for waivers that, if approved by the Department of Health and Human Services, would allow states to waive some sections of the ACA in order to create a new structure for their individual insurance markets. Recently, the Trump administration offered new guidance for plans they would accept and approve as a waiver for states to restructure their insurance markets in compliance with section 1332 of the ACA.
Next, lets put this in context of the new recommendations from the federal report on state healthcare reforms. As I said in my blog last week about CON, and what the John Locke Foundation has long been a proponent of, the Trump Administration recommended that states take a serious look at what CON laws are doing to the supply of healthcare and the competition between providers in their states. Many states still regulate a long list of services and facilities with state CON laws and this is widely regarded as a major factor which increases healthcare costs.
So why is it a big deal that the Trump Administration is leveraging waivers, that they are promoting, with states repealing their CON laws? Initially, CON laws were implemented in the states because of federal pressure. Now, it may be federal pressure that finally takes meaningful steps in getting them removed at the state level.
While this may raise some questions of federal coercion, in the fact the federal government is using its power to force states to take action, this may result in a major push at the state level to remove CON laws that have many negative effects. It should be noted that the federal government is not taking anything away from the states if they are not compliant in removing their CON laws. The waivers that the administration is proposing to leverage are optional. The federal government is using its leveraging power to shift the decision making for healthcare supply from a central, narrow process to a more market-driven, decentralized process.