Today’s Friday interview is my Carolina Journal Radio interview with JLF Vice President for Research Roy Cordato about North Carolina’s dinosaur of a law known as “certificate of need.” This law, which has been repealed by many states, puts the state in charge of deciding who can and can’t build or expand medical facilities and/or purchase new medical equipment. I encourage you to read the full Q&A, but here’s a sample:
Martinez: Why does the state of North Carolina have any interest beyond just general interest, like all of us would have, as to what medical facilities are available and operating in the state?
Cordato: Well, they claim that unless they do that, people will apparently purchase all kinds of unnecessary equipment, build all kinds of unnecessary hospital space, and drive costs up. But, of course, when you think about it, it’s really silly. We don’t do that in any other industry. Imagine if in your local community, a new Chinese restaurant wanted to open up, but before they [could] do it, they had to go to the state government, and the state government had to come in and count how many Chinese restaurants there were in the area to see if there was a “need” for an additional Chinese restaurant in the area.
And not only that, they’d have to see the menu — even the services provided, even within a facility, are under scrutiny — and is it a buffet restaurant or is it an order-from-the-menu restaurant? And then, if the government says, “Oh, OK, well, we need another Chinese restaurant in this town,” then you can get permission from the state to open it.
Well, first of all, what’s that going to do? It restricts competition. It should be the consumers that decide whether a new Chinese restaurant or a new MRI machine is needed, not the state. And of course, with the politics, the interest is always to protect the entrenched interests — the existing Chinese restaurants — from competition. I mean, wouldn’t we all love to be in an industry where every time a competitor wanted to compete with us, they had to go to the government and get permission to do that and someone had to come in and decide whether their service was needed or not? Well, of course, the whole idea of competition is antithesis to that. It’s really a total central planning model, and it governs our health care services in this state.
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