Therefore, rather than increasing prices, allowing the supply of medical care to grow will have the opposite effect, allowing for more access to healthcare for more people.
In order to achieve this goal, Tennessee can enact five reforms which are demonstrated to reduce costs and increase access to healthcare.
1. Expand telemedicine to embrace technology and
innovation which are leading the way towards drastically reducing patients
costs while increasing patient access—particularly for those who are low-income
or living in rural areas.
Compelling evidence shows that telemedicine does work for a wide range of conditions if the process is structured in a smart way. And the health care system will only get better at utilizing telemedicine. Better software platforms to manage telemedicine and changes to the patient interaction process, e.g. making it more asynchronous, promise improvements. Entrepreneurs and startups are leading the way here.
Second, the economics of telemedicine are compelling for providers. Telemedicine visits tend to be shorter than office visits, so provider time is used more effectively. The overhead required to support telemedicine visits is also less: office space, receptionists, and data collection time. From my work with a primary care provider organization, I’m convinced that about half of primary care visits can be accomplished by telemedicine at about 2x the productivity of office visits. This can go a long way to alleviate the shortage of primary care providers and help hold down the cost of medical care.[i]
2. Reduce existing state-level mandates so that Tennessee insurers can
begin offering plans that give patients more affordable and customized options
that fit their individual needs.
While a single health benefit mandate may only increase premium rates between $50 and $700 dollars annually per employee depending on the plan type and coverage, the accumulation of multiple health benefit mandates can result in a significant increase in the cost of health insurance benefits for small business employers and employees. Even at the lowest annual increase of $50, 20 mandates will result in an increase in premium costs of at least $1,000 annually.[ii]
3. Authorize Health Savings Accounts
(HSAs) within the TennCare program. In doing so, we provide those low-income
Tennesseans with more options to make cost-conscious and individualized
decisions that improve their financial and healthcare outcomes, while also
addressing concerns over ballooning state costs.
4. Eliminate Certificate of Need
(CON) laws
Tennessee, in detail: https://www.mercatus.org/system/files/tennessee_state_profile.pdf
Tennessee, in detail: https://www.mercatus.org/system/files/tennessee_state_profile.pdf
The weight of evidence suggests
that a full repeal of CON laws would expand access to healthcare in Tennessee
that is of both high quality and low cost.
Given the substantial evidence that CON laws do not achieve their stated goals, one may wonder why these laws continue to exist in so much of the country. The explanation seems to lie in the special-interest theory of regulation. Specifically, CON laws perform a valuable function for incumbent providers of healthcare services by limiting their exposure to new competition. Indeed, recent evidence suggests that special interest groups are able to use political donations to increase the odds that their CON requests will be granted. This aspect of CON laws helps explain why economists as well as antitrust authorities have long argued that these regulations are anti-competitive and harmful to consumers.[iii]
Given the substantial evidence that CON laws do not achieve their stated goals, one may wonder why these laws continue to exist in so much of the country. The explanation seems to lie in the special-interest theory of regulation. Specifically, CON laws perform a valuable function for incumbent providers of healthcare services by limiting their exposure to new competition. Indeed, recent evidence suggests that special interest groups are able to use political donations to increase the odds that their CON requests will be granted. This aspect of CON laws helps explain why economists as well as antitrust authorities have long argued that these regulations are anti-competitive and harmful to consumers.[iii]
5. Eliminate professional licensing in medicine and
leave education, credentialing, and scope-of-practice decisions entirely to the
private sector and the courts.
Medical licensure fails to meet
expectations in the area of discipline and consumer protection. State medical boards’
disciplinary efforts can arguably be said to protect clinicians more than
consumers. Many actions against clinicians are settled privately and after
extended periods of time. Clinicians who have faced disciplinary actions often
continue to practice, with no public disclosure of the reasons for the sanction.
The persistent difference between the promise of licensing and its actual
performance is summarized by one long-time observer of New York’s licensing
laws, who describes that state’s statutory authority as “exemplary” but the state’s
use of that authority “shameful.”[iv]
[i] Hixon,
Todd. “Will Telemedicine Change Healthcare Or Prove To Be Another Venture Fad?”
Forbes, 10 June 2016,
www.forbes.com/sites/toddhixon/2016/06/10/will-telemedicine-change-healthcare-or-prove-to-be-another-venture-fad/#418129744248.
[ii] COST
OF STATE AND FEDERALLY MANDATED HEALTH BENEFITS
Report to the Tennessee General Assembly. Prepared by
the Fiscal Review Committee Staff, June 29, 2011
[iii] Mitchell,
Matthew D. Tennessee's Certificate-of-Need Program: Lessons from Research.
Mercatus Center - George Mason University, 31 Oct. 2019,
www.mercatus.org/system/files/mitchell_-_testimony_-_testimony_on_tennessees_certificate_of_need_program_-_v1.pdf.
[iv] Svorny,
S. (2008, September 17). Medical Licensing: An Obstacle to Affordable, Quality Care.
Retrieved January 3, 2020, from https://www.cato.org/sites/cato.org/files/pubs/pdf/pa-621.pdf.
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