Health Care Winners and Losers
During a recent 24-hour period, the state of North Carolina, invoking the infinite wisdom of politicians and bureaucrats, announced plans to subsidize investments of several favored biotech and pharmaceutical firms while at the same time denying the right of a Wilmington clinic to pursue its investment plans.
Gov. Pat McCrory and outgoing Commerce Secretary Sharon Decker announced that the state would be giving away over $640,000 in taxpayer money through the One North Carolina (slush) Fund to 13 research and technology-related health care businesses.
It should be noted that in order to qualify for these state funds, the 13 businesses collectively needed to show they already had received millions of dollars in federal corporate welfare. These companies are particularly good at sucking up to politicians and latching on to the taxpayers’ udder.
Almost simultaneously, using its near dictatorial powers under certificate-of-need laws, the state also announced that it is denying the right of Wilmington Health to add two new operating rooms. Wilmington Health is a private health care provider that describes itself as a “multispecialty clinic with primary care providers integrated into the system.”
Certificate-of-need laws micromanage the expansion of nearly all health care facilities, including the building of hospitals, purchasing new technologies, adding new patient beds and operating rooms, and numerous other health care investments in the state of North Carolina. State-government central planning boards decide whether or not CON-covered investments can be made based on a complicated formula that allegedly determines whether the investment in question is “needed” by the community.
The decision to go ahead with any covered investment is taken out of the hands of health care entrepreneurs and consumers, i.e., the health care marketplace, and placed in the hands of bureaucrats in Raleigh. It represents a level of power over local health care investment decisions that President Obama, through his Affordable Care Act, only can dream of having.
These two decisions demonstrate that the state of North Carolina is dedicated fully to the central planning of health care investment decisions. From the kinds of technologies that are researched and developed to basic health care consumers’ needs, such as how many operating rooms there should be in a clinic, the state has decided that it knows better than the free market which businesses should be the winners and which should be the losers — the marketplace be damned.
Of course, this is nothing new. The assumption by politicians and bureaucrats of picking winners and losers has been a part of the political culture in Raleigh for many decades. And, for certain, there is no economic justification for substituting the decisions of politicians and their appointees for those of entrepreneurs and investors in the private sector who are putting their own capital at risk.
The only outcome can be slower economic growth and fewer and lower-quality services for consumers. In health care, where free markets are needed the most, this is a tragedy.
Many of us held some hope that, under the leadership of a new regime touting a belief in free markets and the value of private entrepreneurship, this might change. Unfortunately, this is a disease that infects politicians regardless of party. Nobel Laureate Friedrich Hayek called this the “pretense of knowledge.”
Politicians and central planners fool themselves into thinking that they can make better investment decisions than market participants by pretending to have information about consumer needs and investment possibilities that they cannot have. The unfortunate thing is that, particularly in the area of health care, our market overseers in Raleigh are not just playing with other people’s money; they’re playing with other people’s lives.
Dr. Roy Cordato is vice president for research and resident scholar at the John Locke Foundation.