After the recent surges of patients needing critical care, if you asked any New Yorker, "Would it be beneficial to have more physicians and more hospitals available to treat patients?" the answer would be a resounding yes.

In the age of COVID-19, there are three legislative acts that have greatly reduced the ability of the health care system to scale and react to a pandemic. Combined, they have set the table for the virus to inflict maximum damage on the health care industry's ability to treat and care for patients.

The first of these was the Balanced Budget Act of 1997. The Act was celebrated as an excellent piece of legislation, but the law had an unintended consequence. Inside this excellent piece of legislation was a clause that capped the number of residency spots for physicians. By capping the number, the government artificially limited the number of physicians who can enter the medical field. Today, the U.S. faces a significant physician shortage in all disciplines.

The second obstacle was created with the passage of the Affordable Care Act (ACA) in 2010. House Minority Leader Nancy Pelosi famously said of the ACA, "We have to pass the bill so that you can find out what is in it." What was in the ACA was a clause that made it illegalfor physicians and other clinical professionals to own hospitals. Why? Policymakers, mostly lawyers and political scientists with no health care experience, decided that physicians made too much money, were less than honest, and that they were sending referrals to their closest physician buddies instead of being professionals and doing what was in the best interest of patients. While we can acknowledge that there are bad actors, they are a small part of the medical profession.

Instead, policymakers handed over ownership of hospitals to commercial insurance companies and private equity firms. Does anyone living in the United States believe that insurance companies and private equity are better stewards of the health care system and patient care? Chances are slim.

The third boat anchor was the advent of certificate of need (CON) laws. In 1964, New York was the first state to pass a CON law — these laws now restrict hospital construction in 35 states.They were initially created to prevent an unlimited and unnecessary number of medical facilities, including hospitals, from being constructed in a given area. The rationale was that more hospitals would lead to higher prices of medical treatments. What CON laws actually do is eliminate competition. Hospital and insurance executives, along with hospital-employed physicians, fill the seats of committees that write CON laws in most states. Their predictable behavior is to protect their own interest and they have no incentive to allow more hospitals or medical facilities in a given market.

It's Economics 101: increased supply would lead to greater competition, which in turn would drive down prices. Then the American Hospital Association and the insurance industry heavily lobby to get these laws passed or reaffirmed in their respective states. Those big, deep wallets are the reason CON laws still exist, not because they are protecting the public's interest.

Instant Insights /

The ramifications of health care legislation in the age of coronavirus

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