health care

Florida's Health Care Deregulation Is a Win for Doctors, Patients, and Free Markets

Florida is on the brink of abolishing its Certificate of Need laws for health care faciltiies. It's about time.

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Hospitals and many other health care centers offering outpatient care in Florida will no longer have to get the state government's permission before expanding or offering new services, if Gov. Ron DeSantis signs a bill that reached his desk this week.

A bill to overhaul the state's Certificate of Need (CON) regulations cleared both chambers of the state legislature during the final week of April, making Florida the latest state to ditch that vestige of a failed 1970s federal effort at controlling health care costs. CON laws were supposed to hold health care costs down by limiting unnecessary capital expenditures, but they often do the opposite—by operating as artificial limitations on the supply of health care services, they tend to inflate costs and reduce access to care.

"It's time we got more cost effective coverage, more freedom and options, and more direct care," state House Speaker Jose Oliva (R–Miami-Dade), who made the CON reforms a top priority for this year's legislative session, says in a statement. "We will make these changes and reap the inevitable reward of the free market—lower costs and higher quality."

The bill passed in Florida would exempt hospitals from CON review starting in July. Specialty hospitals, such as those dedicated to women's health care or pediatric centers, will be free from CON oversight by the state's Agency for Health Care Administration starting in 2021. Nursing homes and hospice facilities will remain subject to Florida's CON laws.

CON laws have not produced better health outcomes in places where they are on the books. A 2016 paper by two researchers at George Mason University's Mercatus Center found that the average 30-day mortality rate for patients with pneumonia, heart failure, and heart attacks in states with CON laws is between 2.5 percent and 5 percent higher (even after demographic factors are taken out of the equation) than in non-CON states.

Residents of states with CON laws end up paying higher prices too. The Federal Trade Commission has urged states to repeal those regulations, arguing that they "are not successful in containing health care costs" and "pose serious anti-competitive risks that usually outweigh their purported economic benefits. Market incumbents can too easily use CON procedures to forestall competitors from entering an incumbent's market."

Indeed, as Reason has previously reported, hospitals can use CON regulations to effectively block nearby hospitals from offering certain services. In one particularly tragic instance, a Virginia hospital with a neonatal intensive care unit successfully lobbied the state Department of Health to veto a CON application from a competing hospital that wanted to build a similar facility for sick babies. Shortly after the second hospital's application was denied—despite widespread support from local officials, health care administrators, doctors, and residents—an infant died there following a premature birth.

Even when the stakes aren't that high, CON laws create weird, anti-competitive outcomes. An eye doctor in Iowa has been waiting for years to see patients at his fully outfitted office, but a nearby hospital has repeatedly blocked his application for a Certificate of Need.

In December, a report from the federal Department of Health and Human Services urged states "to repeal or scale back Certificate of Need laws" as a way of promoting "choice and competition in provider markets."

In Florida, Oliva championed CON reform as part of a larger effort to overhaul the state's health care system. In a session-opening address in March, he called health care costs "a five-alarm fire" and called out "the health care industrial complex" for standing in the way of needed reforms.

Sure enough, hospital lobbyists fought the CON reform bill, then tried to promote an alternative, watered-down version of the legislation. In the end, Oliva's favored proposal won out.

With the stroke of a pen, DeSantis can score a significant—and all too rare—win for freer markets in health care.

NEXT: Massage Parlor Surveillance Videos Can't Be Used in Court, Says Florida Judge

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  1. “””It’s time we got more cost effective coverage, more freedom and options, and more direct care,” state House Speaker Jose Oliva (R–Miami-Dade), who made the CON reforms a top priority for this year’s legislative session, says in a statement. “””

    Damn those republicans that don’t want you to have health care.

  2. Yay, about time.
    My wife just got to tour the new $28 million redesign of one of the local children’s hospital, featuring such goodies as random art and shelves on the walls at 3-5′ off the ground [head-bonking height], and a rooftop garden surrounded by a 5′ glass wall, and a 4′ rock fountain feature up against the wall. She was shaking her head, like, did no one in the design of this project ever see a child?
    I just shook my head, and continued paying on the $1200 [my fault, I should have shopped it around while my kids was hocking up lung pieces] CBC and respiratory panel from the same hospital.

  3. Holy crap! This is big news – somebody finally understands that monopolies don’t increase efficiency by eliminating unnecessary duplication of services, efficiency is driven by competition and a lack of competition eliminates any incentive for efficiency. You want to make healthcare more affordable? Get the government out of the business of making healthcare more affordable. Let those greedy capitalists who’ll do anything for a nickel fight over customers and they’ll figure out real damn quick how to make healthcare more affordable.

  4. These laws were unconstitutional in the first place.

  5. Well that’s a first. A law that’s actually named appropriately.

    1. I also loved that beautiful acronym.

  6. This is what I was talking about yesterday. We Walmart this bitch. Expand the services.

  7. When people tell you that economics is complicated, and the Top Men in government are the right ones to run the economy, just point to this example. Top Men were convinced that by limiting the supply of health care providers, they would bring down prices. This wasn’t in the 1920s either. It was post WW2 when the US was an economic powerhouse, and yet the government was still doing its best to fuck up markets with terrible policies.

    1. “Top Men were convinced that by limiting the supply of health care providers, they would bring down prices.”

      While we can never know what goes on in someone else’s mind, i’m pretty sure these lawmakers didn’t think anything of the sort.

      It was flat out protectionism for their campaign contributors and nothing more.

      1. Yeah and they still do it to this. Sell something to the people with a bunch of lies in the private market and you get sued and/or thrown in jail, do it in office and you get reelected.

  8. Great news for Floridians.

    Question: Anyone have a clue whether this will lower Medicare expenditures in FL?

  9. […] Deregulation: If this bill doesn’t save lives, it will certainly improve them. As I wrote this morning, Florida’s hospitals will no longer have to get the state government’s permission […]

  10. CON laws allow hospitals to force private pay patients to pay higher prices for medical services to make up for patients who don’t pay and/or lower reimbursement rates for Medicare and Medicaid patients.

    The hospitals (and their political supporters) don’t want to allow those private pay patients to escape being soaked by being able to go to some specialty clinics or other providers who would undercut their prices.

  11. […] Deregulation: If this bill doesn’t save lives, it will certainly improve them. As I wrote this morning, Florida’s hospitals will no longer have to get the state government’s permission […]

  12. […] Deregulation: If this bill doesn’t save lives, it will certainly improve them. As I wrote this morning, Florida’s hospitals will no longer have to get the state government’s permission […]

  13. Virginia next, Virginia next!!

  14. The free market will never be able to lower prices until insurance is allowed across state boundaries without any limitations and the AMA is forced to allow more doctors to apply for medical school.

    1. I hope that happens. I don’t know why some industries are blocked from selling across state lines other than they’ve gotten legislation passed to do that so that no one can compete with them in their own area.

  15. Hey, not a Florida man story—which is usually someone from like Ohio or Michigan originally. I’ll take it! Our legislature is often pretty good. They even put a bill through to stop local governments from making gun laws of their own. Suck it St. Pete.

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