3 Ways Government Regulation Is Creating a Hospital Bed Shortage
by Hannah Cox, 8/31/21, Foundation For Economic Education

Hospital beds are again filling up across the country as
America copes with another variant of the COVID-19 virus.
3/4 of intensive care unit (ICU) beds are occupied at the
moment, & 28% of those are by COVID patients.

Furthermore, almost half of all states report their
hospitals’ ICU beds have exceeded 75% capacity. And hospitals
across the US report 75% of their general inpatient beds are
also filled, with 13.4% of those being COVID-19 patients.

This is a big problem. Not only does that mean people with
the coronavirus may be unable to access needed & timely
care, it also means that individuals seeking assistance
for other pressing medical issues may be severely delayed.

But, when outlets merely report that hospitals are at or
approaching capacity, it neglects a key part of the equation.
75% of beds being full sounds scary, but people need to ask:
75% of what number of beds in the first place? 75% of 200
beds in a given region is a lot of patients; 75% of 4 beds
is a different story.

In reality, it doesn’t take much for most hospitals to
reach “capacity,” because their supply of beds is already
severely restricted even before an emergency takes place.
And the reason for that traces right back to govt policies
that make healthcare more expensive & harder to access for
all. Let’s examine a few.

Certificate of Need (CON) Laws
========================
Many Americans are unaware of the presence of Certificate
of Need (CON) laws. These laws are appropriately named
because they are a total con: an arrangement between the
govt & large healthcare providers to limit competition &
keep prices artificially high.

This is a textbook case of cronyism, which John Stossel
defines as “the economic system in which the marketplace
is substantially shaped by a cozy relationship among govt,
big biz, & big labor. Under crony capitalism, govt bestows
a variety of privileges that are simply unattainable in the
free market.” Cronyism is not to be confused with
free-market capitalism.

Implemented in the 70s, a total of 27 states still have
CON laws in operation, & many of those states—like Alabama,

Mississippi, & Arkansas—are the ones most strapped for
hospital beds at the moment.

That’s because these laws arbitrarily restrict the amount
of beds in a state, as well as the number of hospitals &
other medical equipment. They do this by mandating would-be
providers go before a board & show evidence of their need
to add additional beds, equipment, services, & locations.
At the same time, their competitors get to come in & argue
against them, & often win out—esp. when large hospital
corporations (who are often in cahoots with regulators)
are pitted against independent providers.

All of this means consumers have fewer healthcare options
& higher costs for services.

The US only has 2.6 beds per 1,000 people, which is below
the rate we see in countries like Italy, China, & South
Korea. Acc. to reporting by Reason, “Since Mar 2020, states
that use CON laws to regulate the supply of hospital beds
have seen an average of 14.99 days/month where ICU capacity
has exceeded 70%, acc. to Matthew Mitchell, a senior research
fellow at the Mercatus Center who crunched Dept of Health &
Human Services (HHS) data...Meanwhile, states that don't
have CON laws governing the supply of hospital beds have
seen an average of just 8.65 days/month with ICU capacity
exceeding 70%, acc. to Mitchell.”

Mitchell & his colleagues also found that states using CON
laws to regulate healthcare have fewer hospitals, dialysis
clinics, & surgical centers. And on top of all of that,
even more studies show CON laws lead to lower quality of
care, higher risks of complications after surgery, & even
higher mortality rates for some conditions.

All of this was true & problematic long before COVID, but
the pandemic exacerbated the pre-existing condition.

Mandatory Vaccinations for Healthcare Workers ==================================
The govt’s contribution to the healthcare shortage doesn't
end with CON laws, though. It has also implemented policies
& pushed practices that have led to a shortage in healthcare
workers.

As one nurse in Tennessee, who spoke to me on the condition
of anonymity, put it, “To be honest, the biggest problem
we’re having is nurses to staff the beds. We say we are
maxed out, but it’s usually more that we don’t have the
staff to take care of the people rather than the physical
space to put them.”

Why don’t hospitals have the nurses they need?
Where to start.

Nurses unquestionably have one of the hardest jobs in the
country—physically & emotionally. They work incredibly long
hours, have to move heavy patients, are often abused by
patients in distress, & deal with all of the grossest aspects
of the human body. The pandemic has only added to that, &
many have expressed feelings of despair & burnout for months.

They do all of this even while their salaries have been
stagnating for some time.

Now, on top of everything else, they are being forced to
make a choice between getting vaccinated or leaving their
jobs. And many have decided enough is enough. Bloomberg
reports 1 in 8 nurses say they won't take the vaccine.

As a result, 150 medical pros were fired in Houston over
refusals to take the vaccine. Shortly thereafter, Houston
suffered a massive nurse shortage. Similar stories are
cropping up across the country. At the beginning of the
pandemic, nurses were touted as the heroes of the pandemic.
Now that they’ve worked to bring us thru the worst of it,
they’re treated as disposable—an attitude that's expediting
the exodus of many nurses. Reportedly 20-30% of frontline
healthcare workers say they're considering leaving the
profession.

It’s important to remember that the hospitals are largely
forcing vaccines on their workers out of fear of liability
& governmental pressure. But while they will insist these
mandates are to keep customers safe, the science doesn’t
actually match up. First, nurses have been exposed to COVID
more than any other group, & many have built up natural
immunity as a result. Secondly, data from the CDC shows
vaccinated people can still get & transmit the virus, &
that these people carry just as many particles of the virus
in nasal passages & their throat as unvaccinated people.

Occupational Licenses and Other Provider Restrictions ==========================================
Did you think we were done? Hardly. We’ve barely scratched
the surface of all the ways the govt has meddled in the
healthcare market & blocked access to affordable care.

Up until the pandemic, states kept a whole hoard of crony
regs on the book meant to restrict supply, prevent compe-
tition, & keep prices artificially high. While many states
have eased the enforcement of these laws since the pandemic
began, their presence in the first place has still created
barriers to care & the inability for the healthcare market
to increase supply to the levels needed to address a crisis.

One of those regulation types is occupational licenses,
which litter the healthcare sector more than virtually any
other field. Often implemented under the mantle of public
health & safety, all occupational licenses really do is
ensure people have to pay the state to work. They often
include expensive & time-consuming barriers to entry in a
field, high fees, & the inability to take one’s skill set
across state lines. On top of that, many arbitrarily
exclude large numbers of the population from working in
a certain field, or prevent people from fully offering the
services they're trained in.

For one example, nurse practitioners must complete years
of schooling & training. By all metrics they are more than
equipped to handle the vast majority of issues that come
before a general practitioner. But in most states they are
prohibited from seeing patients unless they work under a
doctor. Why? Because this prevents them from competing with
doctors & keeps prices & doctor salaries high. There’s a
massive shortage of GP's in the country, which could be
quickly eased by widening the scope of practice for nurse

practitioners—which would also free up the doctors’ time
for more pressing matters. But cronyism stands as a barrier.

Another example of govt policies that create supply
shortages in healthcare are “ethical clauses” within
occupational licenses. In many states people with a record
are prohibited from obtaining such a license, permanently
blocking them from employment opportunities in numerous
fields. This not only prevents millions of Americans from
rising, it also means important jobs go unfilled. When you
consider all of the petty laws on our books & how easy it
is for someone to transgress one of them, you begin to
recognize how silly & unjust these laws are.

Lastly, in another example, doctors in Mississippi who
wished to make house calls during the pandemic were blocked
from doing so. Why? Because state regulators capped the
number of licenses for home healthcare services in 1981
under the argument that no more would ever be needed.

Occupational licenses are a dirty scam the public keeps
falling for. They aren’t in place to keep you safe (as if
the govt even could). They are in place to keep your health-
care prices high. And when a pandemic hits, that artificial
restriction of supply also means you can’t access the care
you need.

Another corrupt govt reg that blocks supply is telehealth
restrictions. These regs have impeded care for decades, &
the govt has worked hard to ensure existing providers were
blocked from the competition telehealth could provide.

Though some of these restrictions were also eased at the
beginning of the pandemic, the market can’t create the
needed infrastructure to provide these services overnight,
& so the industry has been operating from behind the 8-ball.

In conclusion, COVID is a crisis, & it's one we should all
be concerned about. But we should also be aware that this
is a crisis largely of our own govt’s making.

When we allow the govt to interfere with the market, as it
has in healthcare for over a 100 years, it always leads to
higher costs, less access, and lower quality: to the harm
of the many and to the benefit of a privileged few. This
isn’t capitalism, it’s cronyism—it’s important people know
the difference.

Hannah Cox is the Content Manager and Brand Ambassador
for the Foundation for Economic Education.

https://fee.org/articles/3-ways-government-regulation-is-creating-a-hospital-bed-shortage

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