Crony Capitalism

When the Government Creates Mandatory Shortages

Don’t let regulators and their cronies suppress competition.


Governments create problems. Then they complain about them.

"A public health crisis exists," says Kentucky's government, citing a report that found "a shortage of ambulance providers."

Local TV stations report on "people waiting hours for medical transportation."

"Six-year-old Kyler Truesdell fell off his motorcycle," reported Channel 12 news. "The local hospital told (his mother) he should be transported to Cincinnati Children's to check for internal injuries." But there was no ambulance available. Kyler had to wait two hours.

Yet Kyler's cousin, Hannah Howe, runs an ambulance service in Ohio, just a few minutes away. "We would've (taken him) for free," she says in my new video. "But it would've been illegal."

It would be illegal because of something called certificate of need (CON) laws.

Kentucky and three other states require businesses to get a CON certificate before they are allowed to run an ambulance service. Certificates go only to businesses that bureaucrats deem "necessary."

CON laws are supposed to prevent "oversupply" of essential services like, well, ambulances. If there are "too many" ambulance companies, some might cut corners or go out of business. Then patients would suffer, say the bureaucrats.

Of course, Kentucky patients already suffer, waiting.

It raises the question: If there's demand, then who are politicians to say that a business is unnecessary?

Phillip Truesdell, Hannah's father, often takes patients to hospitals in Kentucky, "I drop them off (but) I can't go back and get them!" he told me. "Who gives the big man the right to say, 'You can't work here'?!"


Phillip and Hannah applied for a CON certificate and waited 11 months for a response. Then they learned that their application was being protested by existing ambulance providers.

Of course it was. Businesses don't like competition.

"We go to court, these three ambulance services showed up," recounts Howe.

"They hammered her, treated her like she was a criminal," says Truesdell. "Do you know what you're going to do to this company?!…To this town?!"

"It wasn't anything to do with us being physically able to do it. (They) just came through like the big dog not trying to let anybody else on the porch," says Howe.

Three other ambulance companies also applied for permission to operate in Kentucky. They were rejected, too.

Truesdell and Howe were lucky to find the Pacific Legal Foundation, a law firm that fights for Americans' right to earn a living.

Pacific Legal lawyer Anastasia Boden explains: "Traditionally we allow consumers to decide what's necessary. Existing operators are never going to say more businesses are necessary."

One Kentucky ambulance provider who opposed the new applications sent me a statement that says "saturating a community with more EMS agencies than it can…support (leads) all agencies to become watered down."

Boden replies: "That's just absurd. We now recognize that competition leads to efficient outcomes."

It's not just ambulance companies and people waiting for ambulances who are hurt by CON laws. Thirty-five states demand that businesses such as medical imaging companies, hospitals, and even moving companies get CON certificates before they are allowed to open.

Boden warns: "Once you get these laws on the books, it's very hard to get them off. Monopolies like their monopoly. This started back in the '70s with the federal government."

But the feds, amazingly, wised up and repealed the mandate in 1987, saying things like, "CON laws raise considerable competitive concerns (and) consumers benefit from lower prices when provider markets are more competitive."

Unfortunately, politicians in Kentucky and many other states haven't wised up.

When Virginia tried to abolish its CON law, local hospitals spent $200,000 on ads claiming competition will force hospitals to close. Somehow, hospitals operate just fine in states without CON laws. But the Virginia scare campaign worked. The state still has a CON law.

In health care, and all fields, it's better to see what competition can do rather than letting the government and its cronies decide what to allow.


NEXT: Puppies and Kittens Trump the Constitution

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  1. “They hammered her, treated her like she was a criminal,” says Truesdell. “Do you know what you’re going to do to this company?!…To this town?!”

    Yes I do. I’m going to compete with them and take market share from them. And I’m going to do it by delivering better services to this town.

  2. I know this area and worked EMS near there some time ago.

    Maysville is a small community over the bridge. I totally agree that the CON laws are ridiculous and used to bolster revenue for local services.

    The best option for this patient was transfer to Cincinnati Childrens. Closer and top level 1 trauma hospital.

    Next best would be transfer to Louisville about 2 hours ground where there is a level 1 pediatric trauma center.

    What happened is nobody could get to this community hospital for 2 hours. Why I do not know. This is a total breakdown of EMS in this community.

    The hospital has some responsibility. They need a plan in place. Perhaps they did but it did not work here.

    They cannot be expected to provide specialty care they do not have. They need to connect and have agreements with the city and local EMS, medical transportation services, and regular meetings to review cases and procedures. If they need to fight the government, well it is your patient, go ahead you will win.

    1. I’d say the reason they could not get there is that with the protection of the government, they only staff up to meet average demand.

      Staffing for peak demand means that most of the time you are paying for people and equipment to just sit around idle. It is much cheaper to handle peak demand by making people wait than it is to handle it by having extra trucks and people.

      1. Of course you can only afford to staff for average demand.

        The issue is here seems to be operating across state lines with competing private ambulance services.

      2. You would think, with the technology available now, that we would have more Uber style on demand medical transit. Need a ride but not an EMT? Should be simple. Need a ride and an EMT? We can solve that problem.
        Too much thinking in old modes and territorial mindsets.
        What is the limiting factor, the distance, the vehicle, or the EMT skillset?

  3. We’re always one multinational megacorporation headquartered in California away from post-scarcity.

  4. “Don’t let regulators and their cronies suppress competition.”

    Reason should talk supporting coercive monopolies on the grounds they can be limited !
    By doing so, they support the suppression of competition

  5. We have to be careful here, competition might drive prices down and increase services.

  6. “Six-year-old Kyler Truesdell fell off his motorcycle,” reported Channel 12 news.

    I think I identified part of the problem, although I’m hesitant to declare that 6 year olds should not drive motorcycles.

    1. Thank god for Appalachia.

    2. I mentally edited that to “dirtbike” because I grew up in the boonies, and these news folks evidently don’t understand the concept. But I suppose it’s possible somebody bought their kid a Harley to celebrate his first day of kindergarten, it just seems unlikely.

  7. In a similar light, high prices for essential needs (gouging) during emergencies are horrible since people may actually not over-indulge or hoard and at least some materials may be available to all who really need them. We must have orderly markets at government established or prevailing prices. Otherwise people will shoot each other over a bottle of malt liquor as during Katrina.


    1. Or user the government supplied relief funds for strippers and crab legs?

  8. Sounds like this CON concept is evil.

    On the other hand, when I lived in Houston the tow truck business was unregulated. First driver to arrive at a wreck got the call. Nothing like cruising in morning commute combat traffic, already going 10 over, when 3 or 4 cowboys in converted F250s come screaming through at 30 over.

  9. But seriously, who needs 23 different styles of shoes?

    1. Emelda Marcos?
      Odell Beckham?
      Shirley Temple?

  10. I would not spend time of money trying to overcome a specific wrong. Bureaucrats, or anyone who uses force first, are immoral, impractical. So I say, “Strike at the root of the problem, coercive govt.” Attack this political paradigm. Advocate replacing it with a voluntary govt., one based in reason, rights, and choice.

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  12. “Don’t let regulators and their cronies suppress competition.”

    But doesn’t Reason support coercive monopolies as long as they claim they are limited ?

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