Why not? That’s exactly what the state of North Carolina does — and did today — when it comes to new or expanded health care facilities. It’s the ultimate rejection of the marketplace, and this is poor public policy. If a hospital wants to offer more services in order to compete for patients, that’s good for consumers of health care. The business should be free to implement its business plan as its board sees fit. As the Locke Foundation’s Vice President for Research, Dr. Roy Cordato, explains in his Policy Report about the need to repeal the state’s control mechanism, called the Certificate of Need process:
Certificate of Need laws in North Carolina and other states should be repealed. State governments should not be aiding and abetting monopolies or their formation, or acting as a cartel enforcement mechanism for established health care interests. This is especially true in health care markets, where competition, which is widely recognized by economists as the most effective tool for driving costs down, is sorely needed. It is competition that provides the incentive to discover new technologies and new efficiencies for delivering these technologies to patients. The idea that in the area of health care services, free market competition can’t work as a means of cost control, is not grounded in either economic theory or empirical evidence.
