Title: CONTEMPORARY PLANNING ISSUES: The Federal Trade Commission & Certificate of Need Regulation
Author:
Section/SPIG: Community Health Planning and Policy Development
Issue Date:
In July 2004, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued a joint report titled Improving Health Care: A Dose of Competition. Described as advisory in nature, ostensibly, it offers recommendations on how to “improve the balance between competition and regulation in health care.” The authors say they want “to inform consumers, businesses, [and] policy-makers on a range of issues affecting the cost, quality, and accessibility of health care.” Except for more effective enforcement of antitrust laws, which falls within the scope of the agencies’ responsibilities, the report seeks to effect change by influencing the views and conduct of others, particularly national and state policy-makers.
Eliminating certificate of need (CON) regulation is only one of several problematic arguments and recommendations presented. It is the only recommendation that has gained much public attention, but the issue is given only cursory, dismissive consideration in the report. The overall thrust of the report is to encourage movement to a “consumer driven” health care system that relies on market forces to determine costs (prices), access, and quality. CON regulation and planning is seen as an obvious obstacle to this goal, but the report also cautions against:
· Over-reliance on health insurance;
· The system-distorting effects of Medicare and other “administered pricing” schemes;
· Economic cross-subsidies within the system;
· Government-imposed service mandates;
· Attempting to control prescription drug prices;
· Permitting collective bargains by physicians, and generally; and
· Any other action or process contemplated, in the pursuit of other (perhaps larger) social goals and interests that might limit competition or the full application of market forces.
Criticism of CON regulation in Improving Health Care is not surprising. Given the FTC raison d’etre of promoting free markets and unfettered competition, and its longstanding opposition to CON programs, little else could be expected. Nevertheless, the unsupported conclusion that CON programs “pose anticompetitive risks” and “risk entrenching oligopolists and eroding consumer welfare” is little more than doctrinaire posturing. Similarly, the recommendation that States with CON programs “reconsider whether these programs best serve their citizens’ health care needs” is gratuitous. State legislatures do this regularly, often annually.
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The information you have just read is the first page overview of the 15-page critique prepared by the American Health Planning Association after careful contemplation of the FTC/DOJ report last year. The outline below is the Table of Contents for the entire paper:
I Overview
II Context & History
III Nature of the FTC Critique
IV Allusive Arguments
V Related Opinions and Findings
VI Supportable Report Findings and Recommendations
VII Problematic Report Findings and Recommendations
VIII Arguments Against FTC Assertions and Assumptions
IX Arguments in Favor of Planning and CON Regulation
X Conclusions
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In order to obtain a copy of the entire paper, go to <http://www.ahpanet.org/conissues.html> and select the “FTC/DOJ Critique by AHPA”. The final words of the report capture the ideology of CHPPD and many other planners and policy developers (emphasis added):
“The stated FTC goals of market efficiency, consumer control and informed stakeholders have been integral to community-based health planning for more than 40 years. The community has always been, and remains, an integral part of the planning, development and regulatory processes. The principal difference between FTC beliefs and assumptions, and those favoring planning and targeted regulation is how best to manage the tension between public and private interests, and between short-term and long-term perspectives and incentives. AHPA has always believed in the importance of community-oriented health care services and systems, and encourages ongoing reassessment of health planning and CON regulation to ensure they remain responsive to technological change, evolving health care practices, and community values and needs. The Association will continue to support these principles and practices.”