Here is a link to a study from the Mercatus Center at George Mason University (PDF) that objectively shows what most honest people have always instinctively known: that the purpose of certificate-of-need (CON) laws are quite simply to limit the number of providers in the medical marketplace, all to the advantage of those already in business who want protection from potential competitors. One thing that is missing from the article is the fact that in many states, the panels that determine whether a certificate should indeed be granted are composed of the very folks, typically in the big hospital systems, benefiting from the rejection of these applications.

I have referred to the RBRVS (resource based relative value scale) as the “Rosemary’s Baby” of the central planners at Harvard University. This was the “scientific” justification for the idea that central planners could accurately determine pricing in healthcare. The distortions resulting from this disaster have created healthcare shortages and surpluses for which the free market would have had no tolerance, all the while nudging government at all levels to flirt even more aggressively with default.

The central planners have no idea what prices should “be” any more than they know how many hospitals/physicians/MRI units there should “be,” as the article shows. In every other industry, prices and competitors emerge and result from the competitive process, matching the desires of the buyers and the sellers in a process that can only be described as dynamic and magical. Everywhere this process has been allowed in healthcare (Lasik, Cosmetic surgery), prices have trended downwards and quality has soared.

Kudos to the scholars at Mercatus for providing this important addition to the research literature, a study that objectively documents in the most painstaking fashion, the scam of these certificates of need. What an embarrassing chapter in the history of the provision of medical care in this country, that those who claimed the expertise to implement this central planning were actually given the opportunity.

– G. Keith Smith, M.D.