Do Certificate of Need Programs Reduce Costs? Governor Palin Says "No" But Lots of Data Say "Yes"
Republican vice presidential candidate Sarah Palin hasn't done a lot on the health care policy front during her short time as Governor but one thing she has called for is an end to Alaska's Certificate of Need (CON) program requiring preapproval for any new health care facility.
CON programs are about government management of health care capacity and it should be no surprise that a conservative Republican would be against them.
But do they work?
Governor Palin cites a recent paper by the Federal Trade Commission that says they do not.
But Joe Paduda, posting on Managed Care Matters today, says there are more studies than this one authored by the Bush administration that support the use of CON programs:
- "Turns out that the FTC (then and now) may have missed something - a 1998 Duke University study found 'Mature CON programs are associated with a modest (5 percent) long-term reduction in acute care spending per capita, [emphasis added] but not with a significant reduction in total per capita spending."
- "The big three automakers all compared costs in CON v non-CON states, and found that states with substantial CON programs had significantly lower health care costs. In fact, when considering locating plants and facilities, the big three consider CON 'as a positive factor'. Chrysler found that their per-employee health care costs were substantially lower in CON states than in non-CON jurisdictions, with costs as much as 164% lower in CON states. GM found its health care costs were nearly a third less in CON states in a similar analysis."
- "A study published in JAMA found that the quality of outcomes in coronary artery bypass surgery was directly linked to the CON process. Those who had CABG in non-CON states were significantly more likely to die (5.1% chance v 4.4% in CON states) due primarily to the higher volume per facility in CON states. Notably, in states that repealed CON laws, the percentage of patients undergoing CABG in low-volume hospitals tripled."
Related post:
Sarah Palin on Health Care--A Free Market Republican
10 comments:
1. Freedom is more important than cost
2. We could make healthcare costs approach $0 by having a mandated sinlge payer that denies all treatment. So cost is not the sine qua non of the issue.
I am disappointed with the blog today -- this posting is far too partial and "political-party-oriented" to be of value.
Re the "political-party-oriented" comment, I don't see why you think this has no value. It's not pro/anti either party, it is just offering more diverse facts (I hardly consider a peer-reviewed JAMA study to be opinion) for people to consider. Just because he mentions political parties/candidates doesn't mean he/the post is partisan.
The other studies are from reputable sources. Big business (in the form of the auto industry) has a vested interest in reducing their health care costs.
I appreciate hearing/reading all points of view to develop an informed viewpoint.
I think the first Anonymous quote *made* the blog political. As our current Commander-in-Chief notes, "Facts are stubborn things." Just because the facts don't fit with the political party line *you* choose does not mean that the blog has a specific political party it is endorsing. It just means that, based on more than the one probably biased study by the Bush administration, other unbiased studies find just the opposite. I know science, facts, and actual events may not count to some people, but they should.
Problem with government oversight of privately owned facilities is always: who determines "need". Industrial planning never works in the long run in private economies because the market is a significantly more efficient mechanism to make this determination.
One of government's persistent problems in conducting CON type analyses is their adherence to what amounts to static economic paradigms, when the real world is much better modeled using dynamic parameters.
The big three have been pushing for a single payer system for years. The union contracts and their rediculously high level of benefits have been strangling Detroit. With a single payer system, on of the largest union costs go away and the union loses strength, so don't ever think data from US auto interests is objective.
I did a lot of CON work years ago, and had to be educated that politics was more important than merit.
CONs draw politicians with their hands out of for money, how do we fix that?
I recently subscribed to this blog because it provides information and critiques candidates views from both political parties (see McCain/Obama Health Plans).
While the market may make the determination over time, that's a very expensive process. In Tulsa several years ago, Oral Roberts built a huge medical facility, intending to draw patients from all over the world. Tulsa and Oklahoma officials warned that such over capacity would hurt all hospitals. Oral Roberts went ahead and after millions of dollars were spent, the market determined that Tulsa had overcapicity to the detriment of all hospitals in the city. Given the costs of medical equipment today, we need balance between public planning and market determinations. Freedom for all residents to access affordable health care is long overdue in this great country.
Some other commenters have observed that CON processes have been politicized, and may be based on guidelines that are out of date, and that they should therefore be tossed. (The same could be said, I suppose, about almost any government program that regulates a resource that is paid for in whole or in part by the government -- highways, energy, food, drugs . . . .)
Over the past few decades, we have been assured by folks sharing these commenters' views that market forces would do a better job of regulating health care facility development and health care spending generally.
In the words of my favorite animated genie, "Wake up and smell the hummus!"
The current system is broken -- the free market has not been doing too well by the health care economy given the disconnect between consumer and payor, and the various skewed incentives pursued by providers -- so the efforts by CON programs (however politicized and limited they may be) to keep health care spending in check should be refined, not reviled.
harlow...
You are only saying that because there isn't really a free market.
A free market would entail thinks like
-no price fixing by Medicare
-differences in price from doc to doc and from day to day
-transparency in pricing
-consumers with skin in the game
You know, like the stuff that happens in REAL markets.
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