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Deregulation Is the Path to Increasing the Supply of Medical Services

  • Healthcare Access Regulation

Tags Bureaucracy and RegulationFree Markets

Many entrepreneurs and policymakers have embraced the expansion of capacity at hospitals and medical facilities as an answer to the spread of the COVID-19 virus. This effort has been characterized by an overwhelming shift in commercial productivity towards medical equipment (ventilators) and personal protective equipment (PPE). Along the way, however, businesses and medical professionals have endured significant regulatory hurdles.

Surprisingly, governments in some cases have acted to remove these bureaucratic hurdles to allow more expedient action by market actors. For defenders of market freedom this has become an opportunity to expose the relatively unnecessary bureaucracy that has accumulated around the price sector. Our goal now should be to ensure that these bureaucratic hurdles are permanently lifted since this crisis has proven, in some fashion, that these hurdles are counter to the interests of individuals.

Reforms in the United States of America

Despite regulatory reform being a stated goal of the Trump administration, nearly all of the federal administrative state remains intact. The administration's reforms have left many state regulatory bureaucracies untouched.

However, this global health crisis has exposed some of the flaws in this system, which has been built over a century. Despite partisan bickering, it is the creation of numerous federal and state administrations of both parties, past and present.

These regulatory institutions grew over time in both structure and scope. Each new societal issue becomes fertile ground for a new agency or rule. This ever growing bureaucratic presence becomes problematic in times of crisis, as crises require swift action and flexibility.

During times of peace and prosperity, governments “stress test” so-called critical infrastructure to ensure that systems are prepared for different scenarios. As Andreesen Horowitz writes, “Every Western institution was unprepared for the coronavirus pandemic, despite many prior warnings. This monumental failure of institutional effectiveness will reverberate for the rest of the decade, but it’s not too early to ask why, and what we need to do about it.” The United States fortunately acted swiftly to curb travel between China and the United States, but by the time travel was prohibited, the novel coronavirus had already come to the United States via patient zero.

Regardless of how we feel about the speed of governments’ reactions, the fact remains that the complex web of governmental red tape made it incredibly difficult for the private sector to respond on its own.

James Ketler writes that the Food and Drug Administration granted only the Centers for Disease Control and Prevention emergency use authorization and prohibited other labs from using their own tests. The problem? Many of these CDC tests were ineffective. This blunder led to a delay in testing.

Even when testing began, it was revealed that “the amount of kits distributed at the beginning of February was nowhere near enough to confront the hordes of patients requiring testing by the end of the month. Without sufficient ability to diagnose patients over the course of the month, the crisis quietly intensified.” Fortunately, the FDA approved many more private sector tests in mid-March. By then the virus had been spreading for weeks.

In response to the increasing prevalence of the virus, state and federal regulators have gutted some regulations that posed an undue burden to the practice of medicine and to the operations of some businesses. The following are some examples:

● The Centers for Medicare and Medicaid Services in mid-March effectively waived restrictions on telehealth. The White House announced that it would also stop “enforcing numerous elements of HIPAA, the health privacy law that, until now, heavily regulated providers seeking to deliver care remotely,” writes Stat.

● The United States secretary of health and human services paved the way for medical occupational licensing reform by waiving several rules, one of which “allowed compensation by federally funded programs of physicians and other providers only if they ‘hold licenses in the State in which they provide services.’ Now, providers must only ‘have an equivalent license from another State.’”

● The governor of Massachusetts issued a series of executive orders that allow nurses and some medical professionals who are licensed and qualified in other states to be licensed in Massachusetts within one day.

According to the Washington Times, thirteen states have issued temporary suspensions or reforms to their certificate of need (CON) laws. CON laws “require healthcare facilities to receive government approval before establishing or expanding their services,” according to the Mises Wire.

● The governor of Texas waived state laws that prohibited alcohol delivery trucks from delivering grocery store supplies.

● Some states have loosened restrictions on the delivery of alcohol, as alcohol revenue is “responsible for 20 to 30 percent of restaurant sales across the country,” according to Eater.

Reforms in Brazil

Brazil has been addressing the pandemic in some similar ways. For example, it has implemented a provisional act that for thirty days permits medical assistance to be conducted online. Although it is not a permanent decision, this effort provides an opening for advocates of online medical services to demonstrate their effectiveness, especially for those who live far from hospitals or other medical care providers.

Meanwhile, although in 2016 the World Economic Forum’s ranked Brazil among the ten countries that most penalize producers and consumers via tariffs, during this global health crisis the Brazilian government has reduced this burden. It has issued decrees that cut the rates to zero for industrialized products, pharmacy and laboratory items, clinical thermometers, and medical gloves. Needless to say, this reduction in tariff barriers will provide Brazilians with cheaper goods and services, and will be instrumental in saving lives.

The Leviathan Still Haunts

Even as Brazil experiences some success in removing barriers to innovation and access to goods and services, calls for entitlement programs continue to expand. Advocates of a universal basic income and socialized healthcare have been growing in popularity. Elected officials throughout Brazil, including governors and mayors, have authorized the payment of vouchers and nutrition assistance to informal workers, students, the unemployed, and other groups.

As lovers of liberty, we must be vigilant to ensure that the recent gains in economic productivity and growth are not eroded during the crisis. Seemingly beneficial programs implemented during this period cannot become long term. As this virus has percolated, for example, there have been instances of Brazilian state agents confiscating factories and other private property under the guise of “preventing owners from being greedy.” As famed economist Thomas Sowell once said, “I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else’s money.”

Brazilians and Americans alike must utilize this opportunity to learn that complex rules and barriers hinder our efforts to act in times of crisis. The fewer impediments, taxes, and bureaucratic hurdles, the quicker we, as societies, will be able to respond to future crises.


Mitch Nemeth

Mitchell Nemeth is a Risk Management and Compliance professional in Atlanta, Georgia. He holds a Master in the Study of Law from the University of Georgia Law School, and he has a BBA in Finance from the University of Georgia. His work has been featured at the Foundation for Economic Education, RealClearMarkets, Merion West, and Medium.

Rafael Ribeiro

Rafael Ribeiro is a pro-liberty activist and a Fulbright alumnus from Brazil. He holds a Master of International Affairs from the Federal University of Bahia. Mr. Ribeiro also often writes articles related to his home country for the Foundation for Economic Education.

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