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, Dr. Gajendra Singh is a U.S. 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 impediment to his doing so.
Singh runs a medical diagnostic imaging center where patients can get X-rays, echo-cardiograms, ultrasounds and CT scans. It cannot, however, be a full-service center without an MRI 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 scan at a North Carolina hospital costs $2,000. Singh charges $500-$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,” or CON, law, requiring Singh to prove to the Soviet-style central planners in the state government that Singh’s area needs another machine.
Mischief teaches lessons
Such state and local 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 MRIs in Singh’s county are at two multibillion-dollar hospitals.