Tuesday, September 2, 2008

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 Notably, in states that repealed CON laws, the percentage of patients undergoing CABG in low-volume hospitals tripled."
You can see Joe's entire post here.

Related post:
Sarah Palin on Health Care--A Free Market Republican
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