“The court correctly rejected the government’s argument that Dr. Singh needed to apply for a CON before bringing this case,” said IJ Attorney Renée Flaherty, who argued the motion. “No one should have to go through an unconstitutional process in order to challenge it. We look forward to showing that North Carolina’s CON law unconstitutionally favors existing businesses at the expense of Dr. Singh and other medical providers.”
In July 2018, IJ and Dr. Singh, a Winston-Salem surgeon, and his business, Forsyth Imaging Center, sued the Department of Health and Human Services, alleging that North Carolina’s CON law is unconstitutional because it bans medical providers from offering services patients need solely to protect existing providers from competition. In order to receive a CON, providers must persuade state officials that new services are “needed” through a cumbersome process that resembles full-blown litigation and allows existing businesses, like established hospitals, to oppose their applications. Even after a CON is granted, existing providers can appeal the decision. Dr. Singh should not have to go through such a burdensome process just to provide affordable services that patients need.
There is fundamental confusion on the source of our right to free speech. The right to free speech codified in the 1st Amendment is not a grant of the right of free speech; it is a prohibition against government interfering with an inherent right of Americans:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press.
The Healthcare industry, or medical-industrial complex, wears the armor of Government-sponsored protectionism; chinked together by pieces of the tax code, The McCarren-Ferguson Act, Certificate of Need laws, Medicare billing regulations, HIPAA, HITECH, and the ACA.
You would be hard pressed to find a more entrenched, impenetrable cartel.
Counter-intuitively, the less trusting of government we become, the more likely we are to call for more regulation by that same government. “When individuals distrust others, they prefer government officials to regulate and control, even when they know that these officials themselves cannot be trusted,” observed Philippe Aghion, Yann Algan, Pierre Cahuc, and Andrei Shleifer in the aforementioned Quarterly Journal of Economics article.
Their paper drew on the World Values Survey, which has collected data from 50 countries for decades. One example they cite involves relative levels of regulation on starting new businesses. “High-trusting countries such as Nordic and Anglo-Saxon countries impose very few controls on opening a business,” they write, “whereas low-trusting countries, typically Mediterranean, Latin-American, and African countries, impose heavy regulations.” A similar pattern occurs when it comes to setting wages. Residents of low-trust Russia, Slovenia, East Germany, and Bulgaria “exhibit[ed] the strongest support for government control of wages. Approximately 92% of Russians and 82% of East Germans favor wage control. Respondents in Mediterranean countries also strongly favor wage control by the state: 78% of the Spaniards and 60% of the French agree” that the government should control wages. Meanwhile, “in Anglo-Saxon and Nordic countries, less than half the population agree.…Similar patterns obtain for the support of government control of prices.”
But why do people in low-trust countries turn for protection to governments they know are at best incompetent and at worst corrupt? I talked about this dynamic with one of the paper’s co-authors, Andrei Shleifer, who grew up in the old Soviet Union, moved to the United States as a teenager in the mid-1970s, and now teaches economics at Harvard.
When people perceive that their world is out of control and unpredictable, Shleifer says, they want order to be restored—the faster the better. “They want regulation. They want a dictator who will bring back order.” Often, he adds, the rules and restrictions create a negative feedback loop. In response to loss of trust, governments set up new regulations that make it harder to start businesses. Those policies tend to lead to fewer businesses and less employment, which in turn leads to slower economic growth, which leads to calls for more redistribution and yet more regulation.
Weak or nonexistent economic growth is the deep background for the loss of trust throughout society, according to the George Mason University economist Alex Tabarrok. Like Shleifer, Tabarrok is an immigrant, in his case from Canada. Up through the early ’70s, he explains, annual economic growth averaged about 3 percent a year in the United States. Since then, it has become both more volatile and weaker overall. For most of the 21st century, it has averaged around 2 percent. “When everyone is getting wealthier and the economy is humming along and things are improving, it’s easier to trust other people,” Tabarrok says. “If the economic pie is relatively fixed, you distrust other people more because you know the only way someone can get ahead is by screwing you and vice versa.”
Then there’s the populist rhetoric, coming from politicians as different as Donald Trump and Bernie Sanders, that accuses American leaders of selling out their own citizens while furthering the interests of the European Union, Russia, China, and other foreign powers. The idea that “the system is rigged” is far more widely represented in retail politics than it was a few decades ago. That’s both a cause and an effect of the loss of confidence in government. Shleifer stresses that while things in the aggregate are getting better—for virtually everyone in the United States, the standard of living keeps ticking up—the situation is “more volatile.” You don’t get a job until later in life, he says, and when you do, it seems less secure than the one that your parents or grandparents had.
Shleifer points to the economic expansion that has been underway since 2009. “This economy has bounced back tremendously from the Great Recession and much faster than Japan or Europe,” he says. Yet there’s still a widespread perception among many people that getting and keeping a job are beyond their control. That palpable lack of agency orients people to push for government intervention.
As Dan Mitchell mentions in his post, much of the dysfunction we witness in healthcare are simply symptoms of the distortions that arise when we rely on a third-party payer system, with heavy government involvement, and all its perverse incentives which distort decision making for all participants. And so often the proposed “fixes” are aimed at mitigating symptoms caused by the third-party effect, rather than peeling back the layers to get to the root cause. Is it any wonder things aren’t improving despite billions and billions of subsidies, massive intervention, regulations and various forms of scrutiny!
This “third-party payer” system basically means market forces are absent. Consumers have very little reason to focus on cost, after all, if taxpayers or insurance companies are picking up the tab for nearly 90 percent of expenses.
As a result, we get ever-higher prices.
But we also get a lot of featherbedding and inefficiency because providers want to take advantage of this system.
The number of physicians in the United States grew 150 percent between 1975 and 2010, roughly in keeping with population growth, while the number of healthcare administrators increased 3,200 percent for the same time period.
People in wealthier nations, on average, live longer and better lives than residents of poorer nations. …government policy makers should consider the adverse effects on health and mortality of economic policies that impose costs on the productive sector of the economy. It then puts forth the sensible hypothesis about the economy-wide implications of onerous red tape. Lutter and Morrall (1994) attribute to Aaron Wildavsky, see for example Wildavsky (1980), the general proposition that government programs tend to reduce economic growth, thereby interfering with the primary mechanism by which human health has improved over time. According to Lutter and Morrall, the first to apply this principle quantitatively was Keeney (1990), who calculated that an additional death occurs for roughly each $3.14 million to $7.25 million of income lost (1980 dollars). OMB on several occasions has brought health-health analysis to bear both in its review of OSHA regulations related to worker safety, and in examining regulations of other agencies, such as EPA and FDA. For example, using a finding that $7.5 million of costs induces one additional statistical death, OMB argued that although OSHA’s proposed permissible exposure limits for a large number of workplace air contaminants would offer the benefit of preventing 8 to 13 deaths per year, the regulatory costs of $163 million per year would indirectly cause some 22 deaths annually.
The Institute of Energy Research also explored the issue.
…in practice we all make decisions that increase the risk of death, and in that sense, we trade off our own longevity for other goals. In this context, economists can estimate the implied value of a human life, judged by the choices of the individuals themselves. One surprising implication of this approach is that costly government regulations not only reduce Americans’ standard of living, but they also indirectly lead to more deaths.
And here’s the key takeaway.
…there is a well-established causal connection between wealth and health. Costly federal regulations make Americans poorer and thus indirectly lead to more deaths, because poorer people are less able to take advantage of private methods of prolonging their lives. If regulations are particularly inefficient, this indirect effect might overwhelm the direct benefit of the regulation, meaning that it not only makes Americans poorer, but actually kills them on net.
The AEI-Brookings report also looks at some of the existing research.
Dozens of articles in economics and public health journals substantiate the claim that richer people live longer.10 Simple correlations of annual death rates and income suggest that a community whose income rises by about $10 million can expect about one fewer death.
By the way, allow me to interject by pointing out some specific examples of regulations that are on the books and are causing needless deaths.
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