The Washington Post
By: George Will
August 15, 2018
Governments, seemingly eager to supply their critics with ammunition, constantly validate historian Robert Conquest: The behavior of any bureaucratic organization can best be understood by assuming that it is controlled by a secret cabal of its enemies. Consider North Carolina’s intervention in the medical-devices market.
Born in India, Gajendra Singh is an American citizen and a surgeon in Winston-Salem who wants to supply something useful for which there is a strong demand. North Carolina’s government is, however, an almost insuperable impediment to his doing so.
Singh runs a medical diagnostic imaging center where patients can get X-rays, echocardiograms, ultrasounds and CT (computed tomography) scans. It cannot, however, be a full-service center without an MRI (magnetic resonance imaging) machine, and local hospitals offering MRIs are averse to competition.
Americans with high-deductible insurance plans, which are increasingly prevalent, especially need low-cost diagnostic services. The median Winston-Salem household income is about $40,000. The average MRI at a North Carolina hospital costs $2,000. Singh charges $500 to $700 for the MRIs he does using rental machines that the state’s harassing law requires to be moved once a week. Singh wants to buy an MRI machine. North Carolina, however, has a “certificate of need” (CON) law, requiring Singh to prove to the Soviet-style central planners in the state government that Singh’s area needs another machine.
Such state and local CON laws proliferated in the 1970s as the federal government began pouring money into health care and government-funded hospitals tried to protect their revenue streams. Just for the privilege of submitting an application to buy an MRI Singh would have to pay a nonrefundable $5,000 fee and be prepared to spend $400,000 (lawyers, consultants, economists) to surmount the opposition of determined competitors. The only two providers of fixed (not mobile rental) MRIs in Singh’s county are two multibillion-dollar hospitals.
Fortunately, Singh has the support of Institute for Justice litigators, who are wielding on his behalf four provisions of North Carolina’s constitution: First, “Perpetuities and monopolies are contrary to the genius of a free state and shall not be allowed.” Second, “No person . . . is entitled to exclusive or separate emoluments or privileges.” Third, “No person shall be denied the equal protection of the laws.” Fourth, Singh has a due-process right to participate in the health-care market without arbitrary, irrational impediments.
There are states where aspiring entrepreneurs must pay (application fees, lawyers) just to try to surmount the opposition of established businesses in order to get a CON entitling them to open a car dealership, operate a moving company, run a food truck or enter other areas of enterprise. And the audacity of economic interests clamoring for government protection from domestic competition seems to be increasing as the Trump administration, with tariffs and import quotas, practices crony capitalism to protect favored industries and companies from foreign competition.