“For decades America’s health care debate has pitted Left against Right, federal against state, public against private. All sides, however, have shared a similar, inhibiting mindset—an excessive aversion to risk and deference to medical insiders—instead of stressing the ideal goal of better health care for more people at lower cost on a continuous basis.
A new study published by the Mercatus Center at George Mason University shows how this “Fortress”-like mentality has limited innovation in health care, constraining medical advances and raising costs. Shifting to a “Frontier” approach—one that tolerates risk and opens the field to other participants and disciplines—would bring to health care the kinds of creativity seen in many other fields, such as information technology.
The study illustrates these ideas in part through a set of unconventional characters, including a Hollywood actress who figured out how to stop Nazis from jamming American torpedo controls, a small-town doctor who pioneered stem-cell therapy, an injured carpenter and a puppet-maker who saw $40,000 prosthetic hands and produced a workable alternative that costs less than $50, a dying rodeo enthusiast who successfully battled the Food and Drug Administration (FDA), and—on the other side of the coin—a well-meaning educator who helped destroy African-American medical education.” - Fortress and Frontier in American Health Care, Robert Grabayes, George Mason University
Link to the summary:
http://mercatus.org/sites/default/files/Graboyes-Fortress-Frontier-summary_0.pdf
Link to the entire paper:
http://mercatus.org/sites/default/files/Graboyes-Fortress-Frontier_0.pdf
DO CERTIFICATE-OF-NEED LAWS INCREASE INDIGENT CARE?
by Thomas Stratmann and Jacob W. Russ
Abstract
Many states have certificate-of-need regulations, which prohibit hospitals, nursing homes, and ambulatory surgical centers from entering new markets or making changes to the existing capacity of medical facilities without first gaining approval from certificate-of-need regulators. These regulations purport to limit the supply of medical services and to induce regulated institutions to use the resulting economic profits to cross-subsidize indigent care. We document that these regulations do limit supply. However, we do not find strong evidence of higher levels of indigent-care provision in states that have certificate-of-need regulations as opposed to those that do not.
Discussion and Conclusion
This paper analyzes the connection between CON laws and cross-subsidization in the health care industry. We consider CON laws as a mechanism for financing a subsidy to the medically indigent.
The theory of cross-subsidization requires that CON programs do two things: First, they must act as an entry barrier to reduce the competitiveness of regulated medical sectors and increase the profitability of existing providers. Accomplishing that, these regulations must also force firms to provide the cross-subsidy. CON laws must provide incentives for the regulated to
use their profits to provide more indigent services than they otherwise would.
We investigated indigent care with state-level hospital data and put together the most comprehensive CON-regulation database to date. We do not find any evidence of an increase in indigent care. Our coefficients are small in magnitude, not statistically different from zero, and the direction of the effect changes across specifications. Our evidence is consistent with previous studies in showing that CON programs are effective at restricting the supply of regulated medical services. It appears, however, that CON programs do not induce cross-subsidization. Since we lack measures of hospital profitability, our data do not allow us to make conclusions about whether this is because supply restrictions have not increased hospital profits, or because indigent care provision is not sufficiently enforced by the states that have these provisions.
Link to the entire paper appears below:
http://mercatus.org/sites/default/files/Stratmann-Certificate-of-Need.pdf
