Michigan Sets an Unlikely Example for States to Deregulate Health Care

Generally, in looking for examples of sound free-market policies, one’s first instinct would probably not be Michigan Governor Gretchen Whitmer. Yes, the same governor who just last week imposed perhaps the most draconian state-wide quarantine order yet, literally telling Michiganders that they are not even allowed to walk across the street to visit their neighbors except for specifically outlined reasons.

Yet, on the particular subject of health care regulations, Governor Whitmer’s removal of red tape (albeit temporarily) that was preventing medical professionals from moving swiftly to combat the severe outbreak in the state has been commendable.

Among the regulations that have been suspended or worked around in the past month via 2020 executive orders 13, 30, and 39:

• Hospitals and clinics can acquire needed medical equipment and expand services while avoiding “certificate of need” requirements.
• State limitations of numbers of beds and mobile health care facilities can be waived.
• Physicians’ assistants, registered nurses, and licensed practical nurses, can attend to patients without regard for the limitations of scope-of-practice laws.
• Medical licenses from other states are being recognized automatically by Michigan so that out-of-state medical professionals who wish to lend their services can do so.
• Hospitals are empowered to more easily employ volunteers to provide necessary non-medical services.
• Ambulance services can more easily operate with shifting medical personnel levels without state inspection requirements.

In addition, Governor Whitmer petitioned the federal government for a waiver that would allow far wider deployment of telemedicine services to attend to Medicaid patients, and to reduce scope-of-practice limitations for Medicaid reimbursement as well.

As noted by the Mackinac Center for Public Policy, a renowned Michigan free-market think tank, many of these suspensions of regulations read like a list of their policy recommendations. If only they were not temporary.

It should stand to reason that if suspending these regulations was necessary for health care providers to respond to this emergency, then they were probably not helping to begin with. Indeed, certificate-of-need and scope-of-practice laws in particular are two of the state-level regulations that most stand in the way of competition in the medical industry, both reducing the available supply of beds and facilities and reducing the flexibility of health care professionals to maximize their usage.

Certificate-of-Need laws, which exist in 38 states, force any hospital, clinic, or private practice office to get permission before investing in expanding their facilities or acquiring large medical devices and equipment. The boards that evaluate whether these investments are “needed” generally include existing health care providers, meaning that industry incumbents have an effective veto over their competition. In a recent report, Christina Sandefur has highlighted a multitude of instances where this sort of “competitor’s veto” has been used to blatantly shield local and regional health care providers from competition.

Scope-of-Practice laws exist to some extent in nearly every state, and outline limits on what duties each type of medical professional can perform without the direct supervision of a doctor. With the supply of licensed full physicians being finite, this places a strong limit on the number of available hours of care for patients, even for routine screenings, tests, and consultations that licensed nurses and physicians’ assistants are fully trained to do. Thus, scope-of-practice contributes strongly to waiting times for patients in high-demand areas and effectively raises the cost of health care by involving physicians’ costly services in many areas where their direct involvement is not needed.

Even before the COVID-19 outbreak, the Trump administration had urged states to consider reducing certificate-of-need and scope-of-practice laws, among other barriers to competition in health care. Florida, led by Governor Ron DeSantis, has been the most recent state to act by repealing most of its certificate of need laws in 2019.

This coronavirus outbreak has revealed many areas of inflexibility and inadequate access to services that have been present for years, in large part thanks to layers of anti-competitive regulations that benefit entrenched interests at our expense. Thus, suspending these regulations for the duration of the current emergency is helpful, but Michigan and other states need to learn from this and finish the job by repealing them entirely. Certificate-of-need and scope-of-practice restrictions would be an excellent place to start.