Healthcare is one of the top “budget busters” for most U.S. states. Already over $2.7 trillion and 17.6% of the economy, U.S. healthcare spending is out of control and there is no end in sight.
In New Hampshire, three-term State Representative Marilinda García is taking the lead on changing a healthcare law to increase competition and actually lower costs. In the past eighteen months Representative García sponsored House Bill 1642 and shepherded it through the New Hampshire State House of Representatives, where it passed 198-161 on March 21. This Thursday, April 26 the bill comes up for a hearing on its way to a vote in the New Hampshire State Senate.
The bill makes a change to the “Certificate Of Need” (CON) regulatory framework, which was based on a 1974 federal mandate and was put in place in each state by 1980. The idea was to control costs by ensuring that only needed facilities were built. It may have seemed like a good idea at the time but it not only does it not work, it produces the opposite of the intended results.
Although the CON mandate was repealed by the U.S. Congress in 1987, 25 years later it’s ironic that the in the states that kept it, the CON framework has actually increased healthcare costs by limiting competition. In 2004, the Federal Trade Commission and Justice Department released a joint statement that said “The Agencies believe that CON programs can pose serious competitive concerns that generally outweigh CON programs’ purported economic beneﬁts. Where CON programs are intended to control health care costs, there is considerable evidence that they can actually drive up prices by fostering anti-competitive barriers to entry.”
New Hampshire is among the top three states with the most expensive healthcare in the nation, far above the 15 states that have repealed their CON laws entirely.
If the bill passes, it is expected to increase competition and lower costs by removing a barrier to the development of new specialty healthcare treatment centers. The centers are expected to attract new patients into New Hampshire for care. The projected economic impact of just one such center? The creation of 500 new jobs and an economic stimulus of $500 million dollars in the first five years alone for the New Hampshire economy.
Sounds great, doesn’t it? Increase competition, lower costs, create new jobs, and bring in new revenue. Can anyone oppose this with a straight face? Apparently, yes they can.
The existing providers apparently want to keep new competitors out and don’t seem particularly interested in lowering costs. The powers that be in the New Hampshire healthcare industry, namely the established hospitals and the New Hampshire Hospital Association, are pulling out all the stops to defeat the bill and protect entrenched interests. Representative García is leading the charge to get the bill passed and is providing leadership on long-term, forward-thinking, economic development for New Hampshire.
The stage is set. The underdog Latina lawmaker is taking on the healthcare establishment to do the right thing for her state. The healthcare establishment has marshaled their lobbyists and allies to defeat the bill. But wait, the plot thickens. Republicans are supposed to stand for free markets, increased competition, and lower prices, right? Representative García is a Republican. In the New Hampshire State Senate, 19 of the 24 Senators are Republicans. Should be a no-brainer, right?
Stay tuned. We’ll see on April 26.
Pablo Schneider is president of Corporate Creations International. He is also a public speaker and serves as a contributor to several national publications.
Pablo Schneider is CEO of The Wider Net and a Special Advisor to AP Capital Holdings.