Picking Health Care Winners and Losers | Eastern North Carolina Now

    Publisher's note: The author of this post is Dr. Roy Cordato, who is Vice President for Research and Resident Scholar for the Carolina Journal, John Hood Publisher.

    RALEIGH     During a recent 24-hour period, the state of North Carolina, invoking the infinite wisdom of politicians and bureaucrats, announced plans to subsidize investments of several favored biotech and pharmaceutical firms while at the same time denying the right of a Wilmington clinic to pursue its investment plans.

    Gov. Pat McCrory and outgoing Commerce Secretary Sharon Decker announced that the state would be giving away over $640,000 in taxpayer money through the One North Carolina (slush) Fund to 13 research and technology-related health care businesses.

    It should be noted that in order to qualify for these state funds, the 13 businesses collectively had to have already received millions of dollars in federal corporate welfare. So if we don't know anything else about these companies, we do know that they are particularly good at sucking up to politicians and latching on to the taxpayers' udder.

    Almost simultaneously, using its near dictatorial powers over the creation and expansion of health care facilities under certificate-of-need laws, the state also announced that it is denying the right of Wilmington Health to add two new operating rooms. Wilmington Health is a private health care provider that describes itself as a "multispecialty clinic with primary care providers integrated into the system."

    Certificate-of-need laws govern the expansion of nearly all health care facilities, including the building of hospitals, purchase of new technologies, addition of new patient beds and operating rooms, and numerous other health care investments or potential investments made in the state of North Carolina. Central planning boards set up by state government decide whether or not CON-covered investments can be made based on a complicated formula that allegedly determines whether the investment in question is "needed" by the community.

    The decision to go ahead with any covered investment is taken out of the hands of health care entrepreneurs and consumers, i.e., the health care marketplace, and placed in the hands of bureaucrats in Raleigh. It represents a level of power over local health care investment decisions that President Obama, through his Affordable Care Act, can only dream of having.

    These two decisions combined demonstrate quite clearly that the state of North Carolina is totally dedicated to the central planning of health care investment decisions. From what kind of technologies are researched and developed all the way down to basic health care consumers' needs, such as how many operating rooms there should be in a clinic, the state has decided that it knows better than the free market which businesses should be the winners and which should be the losers - the actual marketplace be damned.

    Of course this is nothing new. The assumption of power to pick winners and losers on the part of bureaucrats and politicians has been a part of the political culture in Raleigh for many decades. And, for certain, there is no economic justification for substituting the decisions of politicians and their appointees for those of entrepreneurs and investors in the private sector who are putting their own capital at risk.

    The only outcome can be slower economic growth and fewer and lower-quality services for consumers. In some areas this might not be so bad, but in health care, where free markets are needed the most, this is a tragedy.

    For many of us there was some hope that, under the leadership of a new regime that has touted a belief in free markets and the value of private entrepreneurship, this might change. Unfortunately, this is a disease that infects politicians regardless of party. Nobel Laureate Friedrich Hayek called this the "pretense of knowledge."

    It is the idea that politicians and central planners fool themselves into thinking that they can make better investment decisions than market participants by pretending to have information about consumer needs and investment possibilities that they cannot possibly have. The unfortunate thing is that, particularly in the area of health care, our market overseers in Raleigh are not just playing with other people's money; they're playing with other people's lives.