A Longstanding Government Failure That Needs to Go

July 7, 2014 4:26PM

You might be surprised to know that Tennessee still has a WWII-style rationing board. Instead of rationing food and fuel, this board rations healthcare. Currently, the healthcare industry in Tennessee is held captive by the Health Services and Development Agency (HSDA). This unelected central planning board approves most new healthcare infrastructure spending in the state. Certificate of Need programs were created in the 1970s with the encouragement of the federal government. The goal was to bring down healthcare spending through central planning, but like so many things in government, good intentions were overshadowed by unintended consequences. The government was shortsighted in its hope that costs could be brought down through centralization and supply reduction. It was thought that centralizing healthcare would allow providers to get a handle on cost, but it actually restricted supply and increased costs. Instead of bringing down the cost of healthcare, the Certificate of Need program has effectively given large hospitals a regional monopoly. Whenever a healthcare provider wants to make capital improvements, it must file a request with the HSDA. Often, larger and older hospitals try to convince the board to refuse a company’s expand so they can protect their regional market share. One of the more flagrant cases happened in Manchester in 2008, when two hospitals in Coffee County tried to stop a third provider from replacing its hospital. They were not concerned with the well-being of consumers needing better access to care, so much as using the state to hinder their competitor. The hospital eventually received approval, but if the government had not been involved in the process, there would be no outlet for a competing hospital to hinder another. The HSDA is an outdated rationing board that arbitrarily restricts supply and protects certain players in the healthcare industry. As a result, healthcare costs continue to rise, reducing access to quality care for many Tennesseans, the exact opposite of the HSDA’s intended goal. -J.R. Walker Enjoy the Beacon blog? Help us keep it going with a tax-deductible gift.