Is It Time to Burn Down the Regulatory House?

Cut to red tape would help fast-track businesses: IPAThe Wuhan epidemic is bringing to light many regulations and processes that have needlessly impeded efforts to fight the virus by private industry, as well as by government. Quite a few such regulations are now being suspended, causing many to ask, why did we have them in the first place?

Minnesota’s governor has ordered a draconian shutdown that is devastating the state’s economy and will bankrupt thousands of small businesses. Why? As elsewhere, to “flatten the curve.” The concern is that Minnesota doesn’t have enough hospital beds and, especially, enough ICU beds to accommodate COVID-19 patients who will need them during the height of the epidemic. That is the fundamental reason why millions of Minnesotans have been ordered to stay home, at great cost.

In 1984, Minnesota enacted a hospital construction moratorium. This prohibits the building of new hospitals as well as “any erection, building, alteration, reconstruction, modernization, improvement, extension, lease or other acquisition by or on behalf of a hospital that increases bed capacity of a hospital.” Whenever hospitals or provider groups propose an exception to the moratorium, the Minnesota Legislature requires the Department of Health to conduct a “public interest review.” *** [I]t is incredible to note that, as with [Certificate of Need] laws, the purpose of this system is to make it harder to provide hospital beds in Minnesota. [Researcher Patrick] Moran says: “Policymakers hoped that the moratorium would be more effective than CON in reducing the growth of hospital beds.”

They would appear to have been successful. In the twenty years from 1984 through 2004, 16 exceptions were granted permitting just 94 additional licensed beds. As the chart below shows, between 1996 and 2016, the number of licensed beds in Minnesota actually fell by 921 while the population increased by 81,000.

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