JLF’s Health Care Policy Analyst Jordan Roberts writes for Carolina Journal’s Daily Journal:
When you keep the supply of a service artificially low, incumbent providers aren’t subject to competition and gain more market power than they otherwise would. The natural consequence is less access and higher prices. Regulating health-care facilities with CON laws makes the patient worse off by putting the choice of health care in the hands of the government rather than the private market.
Consider an example using an industry other than health care. Let’s say you’re interested in opening a sporting goods store. You do market research, and you find an area in which you believe you could set up a successful business. You raise capital, come up with a business plan, and are ready to start building a facility. Now you learn you must obtain permission from the state government to open your store. Through a lengthy and expensive application process, you notify the state planning board of your business plans and what you intend to sell. The planning board reviews your application to determine whether there’s enough “need” for a sporting goods in the area.
During the application process, existing sporting goods stores in the area — your potential competitors — have the opportunity to comment on your application and tell the planning board whether they would like to have a competitor in the area. After this process, which can take several months and cost thousands of dollars, the planning board could accept or deny your application based solely on their calculations for the need of additional sporting goods to be sold in the area.
Would this sort of government intrusion into private enterprise be considered reasonable for any other industry? For potential new providers of health care in North Carolina, this is the reality.
It’s not just the John Locke Foundation who’s an advocate for the state repeal of CON laws. Earlier this year, a conglomerate of health policy scholars from left- and right-leaning organizations came up with a list of policy proposals they believe would lower health care costs. The report recommended states repeal their CON laws. The Federal Trade Commission and Department of Justice are also advocates for repeal due to the laws inherent anti-competitive nature.
This year, North Carolina lawmakers have an opportunity to repeal CON laws and put the interests of patients back in the hands of the private market. Let’s hope that 2019 is the year that North Carolina finally repeals its CON laws.
Read more here.