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Delaware can make health care better- why won’t we?

In Sussex County, one of Delaware’s most rural, and fastest-growing, areas, there are only three hospitals in more than 1,000 square miles. In August 2019, plans to bring an emergency medical center for the Georgetown area were squashed when the Delaware Health Resources Board, Delaware’s Certificate-of-Need (CON) entity, denied Beebe Healthcare’s application to expand.

It was one of the most recent casualties of Delaware’s outdated, harmful CON laws, which require health care providers to prove to the state that there’s a need for new facilities, devices and technologies before they can expand or upgrade.

The result is a health care a market where competition is unfairly limited and select health providers are able to get a stranglehold on competition. It’s the people of Delaware who ultimately suffer, faced with inflated prices and limited options for care.

In 1974, the federal government passed the National Health Planning and Resource Development Act, mandating that states have CON laws for health care in order to receive Medicare and Medicaid funding. Because the laws did not reduce costs or improve access as intended, in 1986 the federal CON laws mandate was repealed. The Federal Trade Commission (FTC) and Department of Justice (DOJ) Anti-Trust Division have pushed for the repeal of CON laws in the remaining 35 states – including Delaware – that maintain them.

In Delaware, CON laws create a barrier to entry into the market, inhibit expansion, and, as we’ve seen recently in Sussex County, fail to provide adequate health care services in some areas.

Delawareans have suffered the consequences of CON laws. At $9,509 per capita, Delaware has the sixth highest state government spending for health care, but also has some of the highest rates in the nation of obesity, cancer, diabetes, low birth weight, infant mortality and death before the age of 75.

Advocates of CON laws argue that they help the health care system by preventing duplication and keep prices down by restricting competition, but this contradicts the basic tenets of supply and demand. Instead, patients are forced to pay a higher price for care in older facilities with outdated equipment.

A report by the Mercatus Center at George Mason University estimates that by removing CON laws, Delaware could see a $270 saving on total health care per capita and $99 savings in physician spending per capita. The same study estimated increased access to services with a 42% increase in total hospitals and 17% increase in the number of ambulatory surgical centers.

In short, residents of the First State would have better access to care, and would pay less for it.

The benefits of repeal don’t stop there. The evidence from the Mercatus report suggests that hospital readmission, post-surgery complications and mortality rates would decrease in the absence of CON laws. Innovation and quality of health care would rise, in a market full of opportunity.

Delaware has had harmful CON laws on the books since 1978. Forty-one years later, and after a pandemic that strained our hospitals, it’s time to reevaluate, and make decisions that serve the health and well-being of every Delawarean.

These laws are hurting Delaware health care

The COVID-19 pandemic has shone a light on many issues in the state, from government transparency to education, but perhaps the biggest focus: health care.

Our Governor, along with many others, said that the mandatory shut downs one year ago were to prevent our hospitals from going over capacity. But was the problem COVID cases or our lack of hospitals in the state?

Delaware has certificate-of-need (CON) laws in the form of the Delaware Health Resource Board. These laws require that health care providers show a need in the community for new devices, certain technologies, or expand or establish a practice. However, research finds that CON laws are associated with higher health care spending per capita and higher physician spending per capita. In Delaware, CON laws create a barrier to entry into the market, inhibit expansion, and fail to provide adequate health care services in some areas.

Delaware has seen the consequences of CON laws in health care. The First State has the highest average monthly insurance premium and one of the lowest percentages of medical residents retained.

Additionally, Delaware spends more per-capita on healthcare than every nearby state excluding New York, and ranks 7th overall for state health spending. For health care spending for patients over 65, Delaware ranks 5th highest, 6th highest for state government spending.

This isn’t the only negative impact these laws have had on our state. The presence of a CON program tends to be associated with fewer rural hospitals. Last year, we saw a battle in Sussex County regarding an expansion of services, since currently only three hospitals service 1,196 square miles of the rural county. The request to expand was denied by the HRB.

Why does Delaware still allow a virtual monopoly in health care that drives up everyone medical bills?

Proponents of CON laws argue that they help to reduce health care costs and increase access to care. Contrary to typical supply and demand, they also argue that a shorter supply of health care services in the market results in a reduction of average prices.

report by the Mercatus Center at George Mason University estimates that by removing CON laws, Delaware could see a $270 saving on total health care per capita and $99 savings in physician spending per capita. The same study estimated increased access to services with a 42% increase in total hospitals and 17% increase in the number of ambulatory surgical centers.

If this outdated Board had been sunset by the Joint Legislative Oversight and Sunset Committee last year, our COVID story may have been different.

Residents of the First State deserve to have better access to care with lower costs. Delaware has had harmful CON laws on the books since 1978. Forty-one years later, it’s time to reevaluate, and make decisions that serve the health and well-being of every Delawarean.

Restaurant Chain Announces Bankruptcy, Says Minimum Wage Hikes to Blame

From the Foundation for Economic Education

Restaurants Unlimited, a Seattle-based chain with restaurant locations in 47 US cities, announced on Sunday it was seeking Chapter 11 protection, citing “progressive” wage laws.

The company, which has operated since the Lyndon Johnson Administration, said rising labor costs—part of a national trend of government-mandated minimum increases—were part of its decision.

“Over the past three years, the company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage,” Chief Restructuring Officer David Bagley said in court filings, The Seattle Times reports. “As a large employer in the Seattle metro market, for instance, the company was one of the first in the market to be forced to institute wage hikes.”

The minimum wage was not the only factor Restaurants Unlimited blamed for their impending bankruptcy. The company also cited a pair of soft restaurant openings and a decline in casual dining.

The Congressional Budget Office released a report estimating that a House bill designed to raise the federal minimum wage to $15 an hour would cost 1.3 million jobs.

The announcement, however, mirrors labor trends on the east and west coasts. BLS data show that New York City experienced its sharpest decline in restaurant jobs since 9/11 following its passage of a $15 minimum wage law. In California, a local newspaper recently detailed how an entire business district virtually disappeared following the city’s aggressive minimum wage push.

Restaurants Unlimited’s announcement came a day before the Congressional Budget Office released a report estimating that a House bill designed to raise the federal minimum wage to $15 an hour would cost 1.3 million jobs.

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Delaware eases restrictions on restaurants, bars, sports as cases continue to surge: What to know

From Delaware Online

Starting Friday, Delaware bars and restaurants will no longer have a curfew, and the state is easing restrictions on sports competitions.

Gov. John Carney announced the eased restrictions in a press release on Friday.

The state’s stay-at-home advisory and mandate that everyone wear a mask when indoors with people whom they don’t live with, including in private settings, are still in place.

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Georgetown launches online financial ‘transparency center’

From Delaware Online

Much of Georgetown’s financial information can now be viewed online by anyone, anytime.

The Sussex County seat is the first Delaware municipality to use ClearGov software to provide residents with an online financial “transparency center.”

“These days, not everyone has the time to attend public meetings. The transparency center will make it easy and convenient for interested residents to stay informed,” Mayor Bill West said.

ClearGov aims to make financial information easy to access and understand. It breaks down Georgetown’s revenues and expenditures by category, each of which can be clicked to view further breakdowns. Clicking “download financials” at the top of each revenue and expenditure page provides even more information.

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