An opportunity to remove barriers

Could removing business barriers to entry permanently allow us to be better prepared for the next health crisis?

Despite the ongoing political polarization endemic to the country, we’ve seen a bright spot of agreement emerging the last few years —the need for occupational licensing reform.

Licensure reform is rooted in a simple idea: let people who have a skill and want to practice it, practice it. From casket makers and hair braiders, to tax preparers and pet massage therapists, occupational licensing reform is an issue that has brought a truce in the partisan battles.

But regulations and barriers to entry for new businesses aren’t limited to independent entrepreneurs. Larger organizations can also be subject to certificate of need laws, colloquially known as a “Competitor’s Veto.”

Certificate of need requires new medical businesses to prove that their services are necessary. These laws were originally intended to prevent waste and over-investment. In practice, applications for new services or suppliers are often denied because existing businesses – i.e. their competitors – protest. The government typically sides with these existing businesses due to political pressure. Currently, 36 states and the District of Columbia have these laws in place for medical providers and services.

Certificate of need has come under scrutiny recently due to COVID-19 and the impact these laws have on slowing the response to coronavirus.

We recently spoke with attorney Anastasia Boden on Ideas at Work. Anastasia’s focus is on relaxing or removing certificate of need laws that prevent entrepreneurs from meeting their community’s medical needs. She notes:

Even during a pandemic, it’s a long, onerous, expensive process [to acquire a certificate]. It requires an attorney; it’s basically like litigation. You don’t want to slow providers down in the middle of a pandemic.

In her April 30th Wall Street Journal op-ed, Boden highlights how these laws are affecting response efforts during the COVID-19 crisis.

One of the most essential responses to a pandemic is ensuring medical providers can adapt quickly to meet new demands. Yet recently an all-female EMT brigade in New York, a family-run ambulance business in Ohio and a fifth-generation ambulance company in Florida were all stopped from providing vital medical transportation. Why? Because they couldn’t prove to the government’s satisfaction that their services were “needed.”

In a pandemic, there are few bright spots, but perhaps one is the opportunity for bipartisan agreement on an issue that could save lives. More than 20 states have relaxed their certificate of need laws during the pandemic. Could removing these barriers to entry permanently allow us to be better prepared for the next health crisis? It’s a conversation worth having.