The Virginia Government And Crony Capitalism Seem To Be Responsible For This Baby's Death
Reason magazine is so great at highlighting the abuse of government power to stop competition, and this piece by Eric Boehm tells the story of a baby who maybe could have been saved (in the wake of the mother's placental abruption), had the hospital not been prevented by the government from upgrading its neonatal facilities:
That infant, who died in February 2012, died not only because of medical complications but because the hospital where it had the misfortune to be born did not have the equipment necessary to give it a better chance at survival. The institution was not equipped to handle the difficult birth because the government of Virginia had refused to let it have high-tech neonatal care facilities, declaring that they were not necessary.This baby died, at least in part, because bureaucrats in Richmond--acting in accordance with the wishes of LewisGale's chief competitor and against the wishes of doctors, hospital administrators, public officials, and the people of Salem, Virginia--let it happen.
Like many states, Virginia has a Certificate of Public Need (COPN) law requiring hospitals and other medical providers to get special permission from the state government before they are allowed to offer new services, like the specialty nursery that may have saved that child's life in 2012. These COPN licensing processes are supposed to balance the interests of hospitals with the needs of the public, but in reality they are fraught with politics and allow special interests to effectively veto unwanted competition.
In July 2010, two years before the baby died, administrators from LewisGale Medical Center submitted an application to the state Department of Health seeking permission to build a small specialty care nursery service. It was denied. The state's refusal ensured that, sooner or later, some child would face an ugly fate.
A Reason investigation relying on public records requests, legal documents obtained from sources who worked on LewisGale's COPN applications, and interviews with experts in the COPN process reveals how Virginia's hospital licensing laws are driving up prices, lowering the quality of care, and putting lives at risk.
Here's how these Certificate of Public Need situations work out:
Darpana Sheth, an attorney with the Arlington, Virginia-based Institute for Justice, a libertarian law firm, says CON laws should be called "Certificates of Monopoly.""It's not about increasing access to health care," she says. "It's a government permission slip to compete that favors established businesses."
Hospitals that want to build a NICU--or open a new surgical center, purchase new medical imaging equipment, or make any substantial capital investment in their facility--are already subject to licensing and inspections by the state. The CON process has nothing to do with protecting patients' health or safety and everything to do with preventing unwanted competition, Sheth says. The underlying idea is that central planners can better sort out patients' needs than the hospitals serving those patients.
The Institute for Justice has challenged CON laws in several states. The firm has also been involved in a legal challenge to a COPN ruling that prevented a doctor from opening a new, non-invasive colonoscopy clinic in Virginia because the state decided there were already enough medical imaging devices being used by other providers.
Thirty-six states now employ some form of CON regulations for health care, according to the National Conference of State Legislatures, thanks to a twisted history that involves hospital lobbyists, the influence of the federal government, and inertia in state capitals.
In the early part of the 20th century, CON laws were still used mostly used to regulate the transportation industry. That changed in 1964, when New York passed a law requiring a government permit before new hospitals or nursing homes could be built. A 2009 study by Pamela Smith and Dana Forgione, originally published in the Journal of Health Care Finance, recounts how four other states (California, Connecticut, Maryland, and Rhode Island) followed suit by the end of the '60s, as hospital executives began to recognize the value of getting governments to erect barriers to future competition.
Starting in 1969, the American Hospital Association began lobbying for a federal CON law. It never got the law it wanted, but three years later, within a series of amendments to the Social Security Act, Congress included a mandate that states review all capital expenditures for hospitals and medical facilities costing more than $100,000 or for any changes to existing services.
In 1974, Congress doubled down by tying federal Medicaid funding to the mandate, so states that did not comply risked losing their federal subsidies. The arm-twisting worked. By the end of the 1970s, every state except Louisiana had passed some form of CON requirement, giving state officials the final say on whether new hospitals could be built or offer new medical services.
In theory, this was supposed to reduce costs. Proponents argued that too much investment in health care in one place would mean higher prices for customers. Giving states control over hospitals' capital investments was supposed to prevent overinvestment and keep hospitals from having to charge higher prices to make up for unnecessary outlays.
But the mandate did not reduce costs. Instead, as a 1982 Congressional Budget Office (CBO) study found, it increased them.
It's easy to pass these things when all you see is that delicious lobbyist's lunch and no dead babies on the table.
I have asked this before with no apparent answer: what right to technology does anyone have?
Congress decided a couple of years ago that people who could not afford medical care have a right to demand money from me for it - but, as has been pointed out multiple times, a policy is not care.
Radwaste at January 26, 2017 7:08 AM
This is just further proof of just how distorted the health care and related markets are.
Mostly by the government, sometimes for "our own good", and sometimes because they're paying back a crony for support.
I R A Darth Aggie at January 26, 2017 8:15 AM
The term should be Crony Socialism or Crony Government. Crony Capitalism is a slur promoted by socialists, as is the word Capitalism, a slur created by Marx to oppose freedom of ownership and trade, and to support government control. Supposedly, capitalists care about machines to the exclusion of people.
When government takes bribes, it blames businessmen, not the officials sworn to serve the public honestly. When it grants favors, it says that capitalists are at fault. If there is any government failure, then it is supposedly the market which failed. If there are any unsatisfied wants in the country, then it is the remaining capitalist part which has failed to join hands to produce the utopian future just over the horizon.
Government is almost entirely a socialist institution. It is a socialist failure when government policies fail. The legal system of courts supporting individual contract is an exception.
It is naive to think that government is spending on projects with a positive return to make all of our lives better. That is a cover story. Any good works are at a minimum. I say naive because what government actually does is amazingly inefficient, and much of the time is obviously useless.
The nature of the state:
http://cafehayek.com/2012/05/some-links-174.html
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[edited] There is a notion that the state is a legitimate agency deserving respect; that despite its flaws, it generally promotes or tries to promote the welfare of its citizens. This is increasingly difficult to understand, much less to accept.
The late Mancur Olson had a far more realistic view: The state is a Stationary Bandit. Ordinary people might have to tolerate this, but they should understand that dealing with the state is dealing with organized thuggery. Obey the state because it can unleash its guns and prisons on you. But, please don't pretend that the state's commands are issued with your best interests in mind.
=== ===
Andrew Garland at January 26, 2017 8:37 AM
A while back, I read a defense of the Canadian healthcare system in which the author claimed the Canadian system was more efficient than the US system at the time (pre-ACA) because the MRI machines did not sit idle, like US machines often did. Left unsaid by the author was the fact that the near-constant activity of the Canadian MRIs was due to a shortage of the machines vs. patient need. This is why Canadians who could afford to come to the "less-efficient" US system to use the idle US MRIs did so by the thousands.
Karl Marx decried the same lack of efficiency in automobile manufacturing. Why have several manufacturers producing almost identical sedans and scrapping the unsold units when one manufacturer would be so much more "efficient" and without the wasted units?
Just ask the average East German how that worked out. The Trabant was the only automobile manufacturer in East Germany and produced just one model of car, a two-stroke engined sedan that belched more smoke than an Iraqi oil fire. The Trabant factories were so "efficient" that the waiting time to get a new Trabant was 15 years. Used Trabant were often sold at a higher price than new ones since you could drive them home on the day of purchase. The safety equipment that came standard on Western cars was non-existent on Trabants. No competition meant no incentive to improve the existing models. When the Berlin Wall came down and Germany was reunited, Trabants were abandoned by the side of the road in the hundreds of thousands as East Germans flocked to West German dealers to purchase Opels, Volkswagens, and other models.
Beware when a government official talks of "efficiency."
Conan the Grammarian at January 26, 2017 9:49 AM
Conan,
I am reminded of the the Soviet joke, adjusted for healthcare. In Canada, you wait for the MRI. In the US, the MRI waits for you.
Andrew Garland at January 26, 2017 10:04 AM
It's worth reviewing how we got here... CON's are in part a knee-jerk reaction to the wave of hospital bankruptcies that occurred in the 1970s. This was commonly blamed on hospitals that spent a lot of money to over-expand into seldom-used services. This sometimes created situations where the state had to bail out hospitals in order to maintain basic services in some areas.
In practice, it was more the opposite; a lot of hospitals had fallen behind not only in technology but also in basic standards of care and cleanliness, and consumers avoided such when they had a choice. But the Left succeeded in demonizing both for-profit hospitals and advanced medical technology and treatments, and convinced a lot of people that limiting competition was more "efficient". (In some areas, they took more drastic measures, setting up government-run hospitals that kept charges artificially low until they had put all of the competitors in their area out of business.)
It's tempting for people to think that limiting competition is more "efficient". When people tell me that, I like to use this example: Picture a grocery or department store that has a rule that every checkout should have at least eight customers waiting in line at all times. If lines are shorter than that, they take cashiers off duty until lines reach the minimum length. Is the checkout operating "efficiently"? By the standard that says it is most efficient when checkers are always busy, then yes, it is. Now the next question is: do you want to shop there, or do you want to shop at the "inefficient" store down the street where there are checkers waiting for customers?
Cousin Dave at January 26, 2017 12:33 PM
Another old Soviet joke:
He was late for work - 2 years gulag for not supporting glorious factory production.
He was early for work. 2 years gulag for attempt to take glory for others' production.
He was on time. 5 years gulag for possessing foreign watch.
Canvasback at January 26, 2017 12:51 PM
Find a politician who voted the upgrade down, kill their child or grandchild, inform them why. Repeat as necessary until politicians stop putting their pockets ahead of the citizens
lujlp at January 26, 2017 1:51 PM
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