Brady: Government running business a bad idea
Jane Brady is the chair of A Better Delaware. She previously served as state attorney general and as a judge of the Delaware Superior Court.
Delaware’s government clearly does not run like a business. It never has. But some in our state’s government think they can run a business better than the business can.
House Bill 350, a bill pending in the Delaware General Assembly, would give a review board, comprised of five members appointed by politicians, the authority for “review and approval of annual hospital budgets,” according to the synopsis of the measure. In the interim, before the review board is appointed and ready to undertake responsibilities, the bill limits what the hospital can charge for services.
There are a number of problems with the concept.
First, the sponsors assume that the cost of health care is governed by hospital costs. There are many factors other than the cost of hospital services that affect the cost of health care, including the costs of prescription drugs, shortages of doctors and nurses, and lack of competition.
The sponsors also ignore several less intrusive ways to manage the issue and to better address their concerns.
This bill is not about the quality of care patients are receiving and does not expand access to that care. It is prompted by the high cost of health care for state employees and retirees. There has not been an increase in premiums for state health care recipients in about seven years. Regularly adjusting the premiums to costs makes sense in every other employer’s office. Our government should try it.
Studies have consistently shown that eliminating the certificate-of-need laws would lower costs and improve access. Delaware is one of only a few states that still retain this harmful law. We should repeal it.
Delaware hospitals should comply with federal requirements and adopt practices that make the cost of procedures more transparent, so patients can make informed decisions regarding where to seek treatment. Resistance to competition could result in a state takeover of health care, as this bill demonstrates.
Our hospitals are nonprofit entities and are required to file reports with the state each year identifying what money they raise, how they spend it and how much of it they retain and for what purpose. Government officials can easily review those to be sure the hospital is performing the public services it promises. If they are showing a profit or do not have designated, service-related purposes for reserves, then action can be taken.
But the way this bill would work is to substitute the judgment of political appointees over that of the experts and administrators of these facilities. Indeed, the primary sponsor of this bill said that she believes “hospitals should invest in doctors, nurses, medical equipment and the health of our citizens.” If they don’t do so in a way that meets her and others’ approval, the politicians will decide how the money is spent. And there is no contention that will improve quality of care or access to care. Indeed, several professionals who testified in the legislative hearings expressed concern that the bill would “create an environment where programs serving people with special needs, such as those with Down syndrome or cerebral palsy, would be sacrificed due to cost.”
This is socialized medicine by any other name. But this is not the first time that the government has intruded into the business of business. The federal government decided you should not be able to buy incandescent light bulbs anymore, and they are gone. More recently, Delaware’s government has told car dealers what kinds of cars they must sell. There is no justification in the financial return or consumer demand for these state-imposed requirements. Not surprisingly, it is not going well. Manufacturers are cutting back on the number of electric vehicles they are making because the demand is simply not there.
These decisions made by our government to intrude into the corporate boardroom are not based on public safety concerns or citizen welfare. They are based on preferences or the costs for government. This is a dangerous precedent. We have a robust corporate community in Delaware because we have carefully crafted our laws and practices to make it desirable to incorporate here.
The state is intruding into the hospitals’ business because the state thinks it has to pay too much. What is to prevent the government from deciding to tell contractors (construction, information technology, etc.) what they can charge, and review their budgets to be sure the state is getting a good price and that the owners aren’t keeping too much of the profits for themselves?
There is a legal concept called the “business judgment rule.” In essence, it allows a business to act in its best judgment. Those making the decisions are, generally, well trained and experienced in the business practices and nuances of their industry. Government has never had to meet a bottom line. It can simply raise taxes or spend in deficit. Businesses should not be run by individuals who are uninformed and lack the expertise to exercise good judgment in the business world. We are jeopardizing our standing as a place to do business if we enact this bill.
And, while we are discussing budget scrutiny, perhaps we should put together a committee to review the governor’s budget and examine how the state of Delaware spent nearly $4 billion in surplus dollars (surplus means more than we needed to meet our budget) over the last three years. I expect there would be resistance.
HB 350 is a bad idea for all Delawareans. It puts our government in charge of private matters, creates a precedent that jeopardizes our economy and continues a bad trend to inject priorities other than the success of a business into decision making.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
