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Here’s how to improve healthcare in Hawaii

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When people talk about healthcare regulation, it tends to come off as a little dry and abstract. Medical “certificate of need” laws, for example, would seem to have little relevance to the average Hawaii resident.

Unfortunately, these laws affect us in very real, and sometimes critical, ways, so it’s important that we understand them.

That’s why the Grassroot Institute of Hawaii sponsored a webinar on the subject this week, titled “How CON laws have limited healthcare in Hawaii.”

Listening to our three featured guests, we learned that certificates of need, if granted, are basically permission slips from the government that allow healthcare investors to build new medical facilities or offer new medical services. Such laws determine how many MRI machines there may be on your island, how many hospices, how many dialysis machines and so on.

As I’ve mentioned before, Hawaii has some of the strictest CON laws in the nation, covering 28 different medical services and leading to the fewest hospital beds per capita in the nation. Since 2006, state officials have rejected over $200 million worth of certificate-of-need requests, which would have added more than 200 hospital beds to meet Hawaii’s medical needs. State officials determined that we didn’t “need” those proposed extra hospital beds and other new facilities, so the requests to provide them were denied.

Webinar guest Naomi Lopez-Bauman, healthcare policy director for the Arizona-based Goldwater Institute, pointed out how relevant these CON laws can be.

“Take, for example, an older couple where one of these spouses needs to go into long-term care,” she said. “That’s a very difficult decision. It’s very personal. But because the state of Hawaii restricts the number of nursing home beds that are available without going to get the certificate of need, those beds are not even available.”

Similarly, “If someone is having a mental crisis, … a lot of these individuals end up in the criminal justice system and not in the medical facility that will provide them the psychiatric services that they need.”

Also, Lopez-Bauman said, “If a baby is born and needs to go into ICU immediately, that’s another example where that service may not be as readily available.”

Another one of our webinar guests was Joe Pluta, a Maui resident who has spent decades trying to bring a state-of-the-art hospital to isolated West Maui. Pluta, who also is head of the West Maui Taxpayers Association, said having such a facility in West Maui is a “life or death” issue, yet community efforts to get a hospital built the have been stymied by the state’s CON requirements.

He said major hospital operators from the mainland told him that if he could just assure them they could get a certificate of need, they would “come in and … commit hundreds of millions of dollars to Maui.

“We believe in Hawaii and in Maui and the future,” he said they told him. But, they also said, “We’re not going to throw money in a hole to be denied.”

So how did we get certificate-of-need laws in the first place? They are a relic of the 1970s, imposed at a time when healthcare payments and administration were vastly different. They were enacted by the states at the urging of the federal government. But eventually, after seeing how these laws affected healthcare cost and access, the federal government changed course and urged states to repeal them.

Eleven states have since fully repealed their CON laws, and many more have reformed them. Hawaii, however, is still stuck in the ‘70s.

Some people might try to justify our excessive CON restrictions by arguing that Hawaii is different from other states. That’s true enough, but it only means that Hawaii suffers more from the higher costs and fewer facilities that are associated with CON laws. As Lopez-Bauman explained:

“You might have somebody near a state border and they’re able to just easily cross the border by car to get the care that they need. [But] when you’re talking about Hawaii, you’re talking about having to get on a plane to go and get care.

“For example, San Francisco has a strong market of cardiac care specifically for Hawaiians. When you think about how the CON laws impact each state, it’s particularly detrimental to those in Hawaii who don’t have the financial means to hop on a plane to get that care when needed, or [who] don’t have a second home [on] the mainland where they can stay and get care frequently.”

If there’s anything positive about CON laws, it is that support for their reform is nonpartisan. Our third webinar guest, Sal Nuzzo, director of the Florida-based James Madison Institute’s Center for Economic Prosperity, said no matter what presidential administration you supported, from Clinton through Trump, every single one supported the repeal of CON regulations.

Nuzzo recalled that in advancing CON reform in Florida, the biggest opposition to change came from existing facilities and hospitals, who liked the fact that CON laws limited their competition.

More important, he said the gloomy predictions of those who opposed CON law reform have not panned out since it was implemented in 2019. In fact, he said, his group has collected “up to about 50 or 60 articles about hospitals building new transplant wings, adding MRI machines, adding hospital beds [and] building new ER annexes in rural communities to meet the needs of an underserved population.”

Imagine if we could see such changes in Hawaii. I know Pluta would love to see a series of articles about healthcare expansion in West Maui. Reforming CON laws would not solve all of our healthcare problems in Hawaii, but it would be an important first step.
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This commentary was Keli’i Akina’s weekly “President’s Corner” column for Nov. 20, 2021. If you would like to have his columns emailed to you on a regular basis, please call 808-864-1776 or email info@grassrootinstitute.org.

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