As the fight on healthcare seems set to reignite, it’s a good time to think a bit about some of the problems with health care and how a free market solution might actually reduce health care costs in the long term. I can hear the more progressive readers right now, wailing and gnashing their teeth, but hold your horses for just a moment. Some of these, even progressive might like.
Certificates of need
In many places, in order for a hospital to expand, there is a requirement for a “certificate of need”. This certificate requires government approval for any new service. In short, it’s a cap on competition. For example, here in Albany, Georgia,Phoebe Putney Memorial Hospital is the only hospital permitted to offer birthing services. HCA Palmyra, a private hospital, has been trying for years to offer these services and have been getting blocked.
Phoebe has a lot of services, and is able to effectively block any health care group that wants to cross it. As a result, Albany has a much higher healthcare cost compared to other cities its size. The reason for this is that the certificate of need prevents competition. Competition drives down prices, which means a lower total cost to health care. Even if you calculate in insurance paying for it, the insurance companies want the lowest price possible. They’ll direct you to where the cost is minimal.
Even President Obama agrees, competition in healthcare is good. I agree. Certificates of Need prevent competition and protect the current providers. This wouldn’t be tolerated in any other industry, so why in healthcare? Get rid of these certificates and let competition drive down costs.
Produce more doctors