Long Forgotten Government Regulations Are Preventing Our Healthcare Industry From Responding Quickly To The Pandemic

What Does “Flattening the Curve” Actually Mean?

The biggest problem facing the U.S. from a healthcare policy standpoint is not the mortality rate of the virus alone, rather, the sheer scope of the virus threatens to overburden our healthcare system. This is where the term “flatten the curve” comes in. “Flattening the Curve” is a very specific reference to the means of tracking the spread of a virus, in our case, a pandemic. On a graph tracking the spread of a virus, the curve would spike if the virus spread rapidly within a given population. However, through means of intervention (such as social distancing), the spread of a virus can be contained; therefore, the curve would “flatten” due to the slowing of its spread. In the case of the COVID-19 pandemic, the state-wide lockdowns and social-distancing are the necessary measures to slow the spread of the virus, thus “flattening” COVID-19’s curve. 

However, the rally to “flatten the curve” isn’t merely an effort to reduce the spread of COVID-19. It’s also a nation-wide effort to ration our medical resources. If there is a large spike in COVID-19 cases at once, then our national healthcare system simply won’t have the resources to treat every patient. However, if we “flatten the curve” through slowing the spread of the virus with measures like social distancing, then we can hope for a manageable flow of cases to come through our healthcare system, rather than overburdening it all at once. It would also buy medical researchers more time to find a cure for COVID-19. 

What are Certificate-of-Need Laws?

However, the question still remains: why does the U.S. have a lack of medical resources to face this pandemic head-on in the first place? The answer is complex, but in short, Government regulation restricting the development and expansion of medical practices has reduced our healthcare industry’s potential to treat an influx of patients efficiently and properly, which is acutely felt in our current pandemic. 

The healthcare industry is one of the most tightly regulated industries in the United States, and understandably so. You wouldn’t want your doctor to be some random Tom, Dick, or Harry with only 30 hours of medical training, and you would want to make sure that the prescription you’re paying for is actually going to work. 

However, the modern wave of Government regulation over the healthcare industry operates on a false assumption: namely, that there are limited resources within the medical field that need to be regulated and distributed properly. This might sound intuitive, however, this assumption actually limits the healthcare industry’s potential to grow and adapt to the growing needs of the times. Rather than giving the healthcare industry the freedom to expand, purchase new equipment, and purchase more hospital beds whenever necessity and opportunity present themselves, the Government instead implements an artificial ceiling of available resources and regulates the distribution of those resources—regardless of the individual opportunity and necessity within individual healthcare markets. Such government regulation is stagnating—and even harmful—to our healthcare. 

Certificate-of-Need laws require medical practitioners to request government permission before they can expand their practice, offer new services, or purchase new equipment.

The chief example of such government regulation is Certificate-of-Need (CON) laws. CON laws were originally introduced by Congress in 1964 and were quickly adopted by every state, except Louisiana. These laws require medical practitioners to request government permission—a Certificate of Need—before they can expand their practice, offer new services, or purchase new equipment. In short, medical practitioners have to prove to the government that there is a tangible and demonstrable “need” before they can do anything to expand or develop their practice. 

Why did Congress introduce these laws? Congress’s motivation was to encourage healthcare providers to limit over-investment in purchasing/expanding medical facilities and redirect that money to provide more services to the poor. This comes from the belief that competition within an unregulated market would incentivize healthcare providers to over-invest in new equipment, driving up healthcare costs. Through regulating the rate of expansion within individual medical practices, Congress hoped that the de-incentivization to expand would redirect costs to provide basic services to the poor. 

CON Laws Don’t Work and Have Stagnated the Healthcare Industry

However, facts, time, and research have proven such regulation has not only limited, but even stagnated the healthcare industry. CON regulations have not only failed to drive down costs for subsidized services for the poor, but moreover, they have significantly stunted the expansion of medical assets, equipment, and research. According to research conducted by the Mercatus Center at George Mason University, states that are regulated by CON have on average 131 fewer available hospital beds per 100,000 people. This is significant given the fact that the national average number of hospital beds is 362 beds per 100,000 people. This means that CON laws limit the states’ capacity to treat patients based on the number of available hospital beds alone by more than 33%! 

In CON law states, hospitals average 10-50+ fewer MRI and CT scans than states without this regulation, requiring some patients to travel out of state for treatment. 

It’s no wonder why 14 States have revoked their CON laws, however, that leaves a whopping 36 States whose healthcare industries are still stagnated by CON regulation. These numbers don’t even touch on the limitation of available MRI and CT scans, particularly in states such as Arkansas, Florida, Georgia, Kentucky, Michigan, Missouri, New Hampshire, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia. In these states, hospitals average 10-50+ fewer MRI and CT scans than states without this regulation. This means that patients often have to travel great lengths, even out of state, to receive such treatment. The limited resources to provide such treatments has only driven prices up, instead of down. 

CON Laws Pose a Potential Threat to Patients Receiving Proper Treatment during the Coronavirus Pandemic

What does this mean for us during the Coronavirus pandemic? The great push to flatten the curve through radical solutions such as state-wide lockdowns are largely due to the fact that the U.S. doesn’t have the proper resources to treat everyone diagnosed with COVID-19, which is largely due to the government regulations restricting the growth and development of medical practices. 

The New York Times recently reported the statistics from a Harvard study which predicts that, in over 40% of U.S. markets, hospitals will have insufficient resources to treat COVID-19 patients. This statistic assumes that 40% of U.S. adults will be infected with the virus, a “moderate” assumption, according to the Harvard researchers. In the same study, half a dozen of interviewed hospital executives said that they can expand their capacity by 20-70%, but this assumes that they will get the governmental clearance to do so. The fact that hospitals have to wait to expand to meet the current needs of COVID-19 patients is demonstrative of the limiting—and even harmful—effect of Government regulation on the healthcare industry. Flattening the curve in an effort to limit large spikes of patients needing immediate medical attention is a helpful effort, but it detracts from the central problem within the relationship between the government and the U.S. healthcare system. 

The fact that hospitals have to wait to expand to meet the current needs of COVID-19 patients is demonstrative of the limiting—and even harmful—effect of Government regulation on the healthcare industry.

It is noteworthy that an outbreak of a global pandemic inevitably would put major stress on any country’s healthcare industry, and efforts to flatten the curve through solutions such as state-wide lockdowns would be considered regardless of our healthcare capacities—even if we had a bed to treat every individual patient. However, the Coronavirus pandemic has shed light on how government regulation has stagnated the growth of the healthcare industry as a whole—regardless of whether we are battling a national pandemic or not. This overall stagnation is now felt even more profoundly as the U.S.—one of the most developed nations in the world—may potentially not have enough resources to treat its infected citizens.

Closing Thoughts

It is important to note that this article is not a case against all regulation in the healthcare industry. Out of all the industries within the U.S., healthcare is arguably and understandably the most regulated industry. In many cases, governmental regulation strengthens our healthcare and  protects American citizens. However, Government regulation is unethical when it purposefully restricts the ability of healthcare practitioners to grow their practice, to provide more care for their patients, and to research and develop life-saving medical solutions for the sake of their own economic agenda. 

Time has shown that governmental regulation of the healthcare industry has had the opposite of its intended effect: less treatment has been made available to the poor, prices have risen, and, most crucially, the capacity to provide life-saving treatment for patients has been limited. Hopefully, through seeing the stagnating effects of governmental regulation during the COVID-19 pandemic, policy makers will consider more empowering and less limiting options for healthcare providers in the future, which would continue to strengthen our healthcare industry and provide the best treatment for American patients as possible.