Gov. Sarah Palin on health care

Colleague Bob Laszewski has ferreted out a couple of health care-related items from Sarah Palin’s brief tenure as Governor of Alaska. One is her push to eliminate Certificate of Need requirements for building health care facilities, the other calls for more transparency via government intervention; “Alaska Health Care Transparency Act to provide consumers with information on quality and cost which would be provided by a new government-run health care information office.”
Today we’ll focus on Palin’s efforts to overturn the Alaska CON process.
The short take? She has no clue what she’s talking about.
According to Palin, “The Certificate of Need is being used by lobbyists and health-care organizations to limit competition — through appeal of other’s certificate awards or by filing suit against the state for those awards…[eliminating the CON process] will not only reduce the cost of health care, it will also improve the access to health care, allow more competition and improve quality of care for patients.”
Palin referenced a recent paper authored by the Federal Trade Commission as support for her position; I’d note that the document was written during the present administration, one that has not been noted for an even-handed approach to science, analysis, and research. In fact, the FTC report clearly states its intent to encourage movement to a ‘consumer driven’ health care system that relies on market forces to determine costs access and quality. (for a thorough critique of the FTC paper, click here.)
In addition to the FTC report cited by Palin, another study from twenty years ago (based on 1983 and 1984 data) concludes that there is :”no evidence that CON programs have led to the resource savings they were designed to promote, but rather indicates that reliance on CON review may raise hospital costs.”
The study goes on to say that were states to significantly relax their regulatory thresholds, “total hospital costs would not increase, but rather would decline by 1.4 percent.”
Turns out that the FTC (then and now) may have missed something – a 1998 Duke University study found “Mature CON programs are associated with a modest (5 percent) long-term reduction in acute care spending per capita, [emphasis added] but not with a significant reduction in total per capita spending.” And this is supported by more recent research, which clearly indicates the supply of health care facilities drives demand, not the other way ’round.
Ohio eliminated their CON program in 1995. Over the next four years, there were 19 new hospitals built, a five-fold increase in the number of freestanding MRIs, and the number of ambulatory surgical centers grew by 600%. These weren’t being built to reduce costs.
Wait, there’s more. The big three automakers all compared costs in CON v non-CON states, and found that states with substantial CON programs had significantly lower health care costs. In fact, when considering locating plants and facilities, the big three consider CON “as a positive factor“. Chrysler found that their per-employee health care costs were substantially lower in CON states than in non-CON jurisdictions, with costs as much as 164% lower in CON states. GM found its health care costs were nearly a third less in CON states in a similar analysis. Their report states “”Some argue that deregulating health facility expansion will trigger free-market forces of supply and demand, and lead to lower costs. On the contrary, General Motors has not found that to be true based on our vast experience in states that have varying degrees of CON regulation.”
And an analysis by Ford found that inpatient and outpatient hospital costs were 20% lower in CON states.
Specific procedure prices were also lower in CON states, refuting Palin’s contention that freeing up the market to more competition will reduce costs. MRIs were at least 11% more expensive, and CABG operations were at least 20% more expensive. Ambulatory surgery center charges were also 25% lower.
Quality is also higher in CON states.
A study published in JAMA found that the quality of outcomes in coronary artery bypass surgery was directly linked to the CON process. Those who had CABG in non-CON states were significantly more likely to die (5.1% chance v 4.4% in CON states) due primarily to the higher volume per facility in CON states. Notably, in states that repealed CON laws, the percentage of patients undergoing CABG in low-volume hospitals tripled.
The CON legislation Palin supported has yet to be approved by Alaska’s legislature, and continues to face strong opposition from within the state.
Here’s the net. Palin’s doctrinaire position on health care is in lock-step with the GOP – it relies on an unfounded and unsupported faith in the free market’s ability to somehow reduce health care costs and increase quality, despite all evidence that there is no such linkage.
What does this mean for you?
As John Wennberg and others have demonstrated conclusively, the more supply there is, the higher costs are. Health care is not like other economic goods, no matter how much Palin et al may want it to be. If you are looking for solutions you’ll not get any examining Palin’s record on health care.
For a thorough summary of the current CoN picture across the country, click here.