After two years of hearings into healthcare competition the Federal Trade Commission and the U.S. Justice Department's antitrust division have suggested abolishing certificate-of-need laws, abandoning institutional subsidies for indigent care, and eliminating health benefits mandates.
The report released today, Improving Health Care: A Dose of Competition, also recommends eliminating other barriers to competition. They start with state certificate of need programs:
Reconsider whether Certificate of Need Programs best serve their citizens’ health-care needs. On balance, the FTC and DOJ believe that such programs are not successful in containing health care costs, and they pose serious anticompetitive risks that usually outweigh their purported economic benefits
New York's program which was the first in the country and may still be the strongest, has become increasingly politicized and of questionable program relevance. It's also out of synch with reimbursement policy. I've got mixed feelings about what we should do. My inclination is toward loosening up, but not abandoning the field entirely.
The federal agencies also point out the inefficiencies of institutional subsidies for care of the indigent and uninsured:
Governments should reexamine the role of subsidies in health-care markets in light of their inefficiencies and the potential to distort competition. Health-care markets have numerous cross subsidies and indirect subsidies. Competitive markets compete away the higher prices and profits needed to sustain such subsidies. Competition cannot provide resources to those who lack them, and it does not work well when providers are expected - 2 - to use higher profits in certain areas to cross-subsidize uncompensated care. In general, it is more efficient to provide subsidies directly to those who should receive them to ensure transparency.
Boy, they got that one right. As a banker once said in response to my explaining that the issues of the uninsured and hospital "bad debt/charity care" are not identical, "Oh, I get it. Hospital subsidies for the indigent are like giving millions to grocery stores in the hopes that they'll give out free groceries to people who are actually poor rather than using a Food Stamp program to determine who is really poor and then allowing them to shop where and for what they choose."
Of course, when the AHA sent out a release on the report, they conveniently emphasized the CON proposal and never mentioned their proposal on indigent care subsidies.
The federal agencies continue to oppose collective bargaining by independent physicians. And with respect to licensure, they also suggest that states should
Consider broadening the membership of state licensing boards, as boards with broader membership could be less likely to limit competition
The Feds also talk about states being in the way of using new information technologies, an issue that I testified on in a NYS Assembly hearing a couple of years ago. This is a big deal. Regulation, such as licensure restrictions, while necessary is clearly getting in the way of productive innovation.
Consider implementing uniform licensing standards to reduce barriers to telemedicine and competition from out-of-state providers.
I suppose given the ideological bent of the Bush Administration, this is to be expected and who knows what leverage the Feds have on states in this area. So all this may come to nothing.