By Greg Scandlen
It all began with a concept known as “Roemer’s Law.” If you ask anyone who has studied health economics or health policy in the last 50 years, “What is Roemer’s Law?” each will be able to tell you in an instant: “That means a built bed is a filled bed.”
Milton Roemer, MD, was a researcher and professor, mostly at the University of California-Los Angeles, who spent a lifetime (he died in 2001) advocating for national health systems around the world. He was involved in creating the World Health Organization in 1951 and Saskatchewan’s provincial single-payer system in 1953. His “law” was based on a single study he did in 1959 that found a correlation between the number of hospital beds per person and the rate of hospital days used per person. That’s it. That is the whole basis for “Roemer’s Law.”
“A built bed is a filled bed.” This little bumper sticker slogan has been the foundation of American health policy for 60 years. Hundreds of laws, massive programs, thousands of regulations at the federal, state, and local levels of government, all have been based on this slogan. It is the source of such concepts as “provider-induced demand,” and has resulted in centralized health planning, Certificate of Need regulations, managed care, and everything else currently on the table. Yet this “law” is both verifiably untrue and illogical.
There is a kernel of truth to it. When third-party payers pick up the tab, the usual tension between buyer and seller doesn’t exist. The buyer has no reason to resist excessive prices if someone else pays the bill.
But the believers in Roemer’s Law take that core idea to Alice-In-Wonderland proportions. They argue that, therefore, whenever a health-care provider wants to make more money, it simply has to sell more — more capacity equals more sales without end. So, the only way to reduce this endless consumption is to limit the capacity — place strict controls on the availability of services. But the notion fails for several reasons: