The Rural Transformation Program helps liberalize health care markets in the United States
In recognition of the difficulties faced by rural hospitals, Congress recently established the Rural Health Care Transformation Program. The program aims to increase access to health care in areas that need it most and create appropriate incentives to reduce rates of chronic diseases. The Rural Health Care Transformation Program will help struggling rural health care facilities by providing $50 billion in aid over five years.
When the government wants to solve a problem, the discussion usually centers around one thing: government spending. But the government blindly throwing money at a problem fails to create lasting change, especially when anticompetitive health care is the root cause of many health care problems.
Fortunately, the Rural Health Care Transformation Program does more than just spend money; It stimulates growth and competition in the healthcare market.
Recently, the Centers for Medicare and Medicaid Services provided states with guidance on how to distribute the $50 billion. Each state must apply for funding and will be registered. While the primary criteria are the size of a state’s rural population and the amount of uncompensated care provided by the state’s hospitals, CMS will also consider whether the state will continue to enforce anticompetitive health care laws.
These anticompetitive laws remain common throughout the country. For example, so-called “certificate of need” laws make it difficult or impossible to open new health care facilities. These laws, originally designed to reduce health care spending, even prevent existing providers from expanding or adding new services.
That’s why every presidential administration since Ronald Reagan has called on states to repeal certificates of need laws. However, more than 30 states continue to enforce these laws, which, for example, prevent ambulance providers from reaching rural areas of Arizona; It led to the death of a newborn by preventing a Virginia hospital from opening a neonatal intensive care unit; and contributing to the national crisis of hospitalization, where patients remain stuck in emergency beds for weeks or months due to unavailability of beds in existing substance abuse treatment facilities or psychiatric facilities.
Although every state has had certificate of need laws at some point, about 40 percent of the country’s population today lives in a state where such laws are limited or do not exist. This makes it easier for economists to compare the results with the vast majority of studies that conclude that certificate of need laws fail to achieve their goals.
Other laws, called “scope of practice” laws, place arbitrary limits on the services advanced practice providers can independently provide to patients. Instead of allowing providers to do everything they are trained to do, they often prevent providers from exercising their full potential, to the detriment of patients.
For example, many advanced practice registered nurses are trained to provide high-quality primary care services. The 2022 Medicare Payment Advisory Commission report found that advanced practice registered nurses and physician assistants make up half of the rural primary care workforce and one-third of the primary care workforce overall.
This is promising news for rural residents looking for increased access to care. However, many states force advanced practice registered nurses to work under the supervision of a physician. At first glance, this doesn’t seem crazy. In practice, physicians provide no meaningful oversight, yet advanced practice registered nurses must continue to pay their direct competitors for the privilege of working.
However, independent practice of advanced practice registered nurses leads to better patient outcomes. A 2023 study found that instead of increasing malpractice claims, relaxing practice restrictions for advanced practice registered nurses results in a 21 percent to 24 percent reduction in physician malpractice rates, with no increase in professional malpractice claims for advanced practice registered nurses.
Advanced practice registered nurses also provide cost savings. One 2013 study estimated that nearly $2 billion would be saved if all states allowed advanced practice registered nurses to practice independently.
However, people tend to associate lack of access to health care with lack of adequate financing. They spend little time thinking about how supply-side constraints in health care affect patients.
The Rural Health Care Transformation Program is taking steps to address this problem. States will be judged on whether they have provided positive certification of repairs of need and whether advanced practice providers can practice independently. States like Montana and South Carolina will be rewarded for recently repealing their certificate of need laws, and the 30 states that allow some form of independent practice for advanced practice registered nurses will also benefit.
It is naive to think that all health care problems can be solved on the supply side, but it is equally shocking that countries have distorted health care supplies so badly for decades, yet continue to complain of inaccessibility. Finally, a government policy that motivates countries to get out of their own way. Caregivers and their patients, not the government, are in the best position to determine what care is needed.
Jimmy Kavanaugh is an attorney and state policy consultant, and John Sweeney is a state policy analyst at Pacific Legal, a public interest law firm that defends Americans’ freedom against government overreach and abuse.
