The political-economy of hospitals
What interests are represented in hospitals?
What interests do conservatives represent in healthcare debates? This is often shrouded by rhetoric, so we should look at the main thrusts of conservative political advocacy in healthcare.
The main conservative political positions so far have been opposing the Affordable Care Act, opposing the Medicaid expansion and supporting deregulation of hospitals by ending ‘’certificate of-need’’ (CON) laws.
For the uninitiated, Medicaid is a government insurance program for poor individuals, while certificate-of-need are a type of regulation that forces hospitals to get approval from the state for major capital expenditures, such as construction, facility expansion and mergers.
Republican state legislatures have consistently resisted expanding Medicaid.
In particular, the last two ideas may be interesting, because the so-called ‘’hospital industry’’ usually opposes both of these things. But this conceals some important divisions.
Within the hospital sector, there are non-profits and for-profits. For-profits are generally what we may term ‘’capitalist hospitals,’’ because they operate on a commercial basis.
Studies have generally found that states that have expanded Medicaid and have certificate-of-need laws have fewer for-profits. States with CON regulations have a higher proportion of non-profits.
CON laws, because they require regulatory approval for capital expenditures and mergers, tend to block the entry of hospital businesses that are constructing an interstate chain. Meanwhile, they protect non-profit hospitals that use the controls to maintain a patronage system, which would otherwise be unprofitable in market conditions.
A similar thing can be observed with the issue of Medicaid. Medicaid effectively provides public rents for non-profits that want to support non-market activities, whereas for-profit ‘’capitalist’’ hospitals discriminate against expensive (including poor) customers and are not as interested in this.
Political conflict roughly falls along the lines of for-profits and non-profits. Non-profits are philanthropic or patronage institutions, which seek government support for their activities. For-profits are commercial businesses, which sneer at the idea of becoming entangled with the government.
