Eliminating Oregon’s Certificate of Need laws would significantly improve health care
By Vlad Yurlov
COVID-19 cases are spiking in Oregon and hospitals across the state are struggling to keep up. The Oregon Health Authority (OHA) reports that over 80% of Oregon’s adult Intensive Care Unit beds are full. But the OHA has continued to suppress health care facilities and services, by using Certificate of Need (CON) laws. For more than 50 years, Oregon has required health care facilities to demonstrate a “need” for any new or expanded facilities. Throughout the lengthy certificate of need process, competing providers are permitted to provide evidence showing that current and future demand for services can be satisfied by existing facilities. In this way, existing providers can block the entry of newcomers. In the best of times, stifling the supply of health care facilities can be life threatening. During a pandemic, it can be catastrophic.
In 1974, the National Health Planning and Resources Development Act established CON laws at a federal level. The Act stated “[t]he achievement of equal access to quality health care at a reasonable cost is a priority of the Federal Government.” But CON laws create a series of unintended consequences that reduce health care accessibility and quality, while increasing costs. In 1986, the United States Congress recognized the damage that CON laws inflict and repealed the 1974 act.
As part of Oregon’s CON process, the OHA regularly uses the analysis and opinions of incumbent service providers to judge the “need” for new facilities. This creates a conflict between the new entrant and existing providers. Competing health care providers have a direct motive to impede the availability of new services. Just like every other market, competition forces incumbent businesses to either improve services or cut costs to retain customers and profits. Instead, the American Medical Association says “CON programs tend to be influenced heavily by political relationships, such as a provider’s clout, organizational size, or overall wealth and resources, rather than policy objectives.”
CON laws have serious consequences for the delivery and quality of health care. In research published by the Mercatus Center at George Mason University, Thomas Stratmann and David Wille found that limiting entry into the hospital market is associated with the quality of the hospitals in the area. For example, mortality rates are statistically higher in areas that have such laws. Competition forces hospitals to provide the best possible care to their patients. With CON laws, hospitals don’t have to compete with as many other providers, which harms patient outcomes.
In response to the COVID-19 pandemic, 20 states have loosened CON laws in order to boost the supply of hospital beds and treatments. Meanwhile, Oregon has made no moves to reduce the state’s burdensome rules.
Mercatus recently published the estimated effects of Oregon’s CON laws on health care costs and outcomes. They found that 19 health care services are subject to a CON or a cap, which may produce similar effects. The average Oregonian is estimated to save $220 in annual health care spending if CON laws are abolished in the state. Furthermore, deaths resulting from post-surgery complications are estimated to decrease by nearly six percent. Access to health care could also improve, because total facilities are estimated to increase from just 63 to 89. The research suggests that without CON laws, Oregon would have better health outcomes at a lower cost to consumers.
Supporters of CON laws argue that suppressing “excess” services reduces the incentive for hospitals to charge high prices to cover their costs. But even the federal government has conceded that this has not been the result. A joint statement published by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice stated “CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers.” Despite this, Oregon has kept its practice of government insiders picking and choosing how many services its residents “need.”
Each year shows more harmful effects of CON laws’ unintended consequences. They degrade the incentive and results that competition provides. It is clear that CON laws restrict health care supply, reduce quality, and increase costs of services, which are directly opposite to the laws’ intention. Oregon should repeal Certificate of Need laws and allow equal access to health care for Oregonians.
 https://www.ftc.gov/system/files/documents/advocacy_documents/joint-statement-federal-trade-commission-antitrust-division-us-department-justice-regarding/v170006_ftc-doj_comment_on_alaska_senate_bill_re_state_con_law.pdf 15
Vlad Yurlov is a policy analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He can be reached at email@example.com.
By Rachel Dawson
The U.S. Fish & Wildlife Service estimates up to 500,000 birds are killed annually in the United States due to wind turbine collisions. The number of deaths will continue to increase as more turbines populate our nation’s landscape.
Raptors are especially vulnerable to colliding with wind turbines due to their flight patterns. They typically soar during high winds, bringing them in line with spinning turbines that appear to them as nothing more than a blur.
The first wind farm to formally ask the Fish and Wildlife Service for permission to harm golden eagles is located right here in Central Oregon. The Obama Administration later passed a rule allowing energy companies to apply for 30-year permits for any “non-intentional eagle deaths at wind farms.”
However, Norwegian researchers may have a simple solution to save their lives.
Dr. Roel May from the Norwegian Institute for Nature Research presented a decade-long study to the Oregon House Committee on Natural Resources earlier this year about how black paint could minimize fatalities.
Researchers painted one turbine blade black, reducing the “motion smear” that makes it difficult for birds to see the spinning blades. The result was an astonishing 71% decrease in collisions. Wind farms should not get a free pass to kill a protected species. However, if the government continues to turn a blind eye, wind farms should at least consider the results of this study and paint turbine blades black to save our birds.
Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.
By Eric Fruits. Ph.D.
Winter is coming to Oregon, and it might be a rough one. As if the pandemic, riots, and a recession weren’t enough, the Northwest is looking at La Niña weather conditions that will bring us a cold, wet winter. While most of us will tough it out in our warm homes, thousands of unsheltered homeless will be stranded on the streets or in camps, unless we make better use of the resources we have.
In November 2016, Portland voters approved a $260 million bond measure to build more affordable housing in the city. Two years later, Metro voters approved a $650 million affordable housing bond. Combined, the measures promised to build more than 5,200 units of affordable housing throughout the region. Currently, only 51 units have been completed.
This year, the region’s voters approved Metro’s two new income taxes to provide “supportive housing services” to the homeless and those at risk of becoming homeless. The taxes are anticipated to bring in approximately $250 million a year. During the campaign, proponents claimed, “We know what works, it’s just a matter of scale.” They say what works is a “Housing First” approach providing thousands of units of permanent affordable housing along with a wide range of support services for those placed in housing.
To be blunt, no one knows what works, and there appear to be no economies of scale. For more than two decades, the Housing First approach has been heralded as the best solution. But, these projects take years to build and construction costs per unit are more than double private sector costs. The “wrap around” services are expensive and require individuals to have the ability and intent to fully use them. Even worse, there is no evidence that the Housing First approach is effective at reducing the total number of unsheltered people in a community.
Observers and experts concluded Portland and Multnomah County’s emphasis on a Housing First approach diverted money away from emergency shelter beds. Housing redevelopment projects before and after the Great Recession replaced single-room occupancy apartments and low-cost motel rooms with high-end apartments and condominiums. Put simply, there are not enough beds to support all the homeless in the region. Local governments’ slow-motion construction of affordable housing units can’t satisfy existing demand, let alone keep up with future demand.
With winter approaching and an unknown end to the pandemic, the region needs thousands of emergency shelter beds now. Fortunately, the region has a facility that is well suited to house thousands of people in such an emergency.
The Portland Expo Center is a 330,000-square-foot exposition center sitting on 53 acres. The Expo Center is owned and operated by Metro. The facility has meeting rooms, a full-service kitchen, a restaurant, and flexible outdoor exhibit space. The facility has been losing money for years and needs significant capital upgrades to compete in the exposition market.
The exhibition space alone could serve 2,000 to 3,000 individuals. Its 2,500-vehicle parking lot provides ample space for individuals who prefer to camp or sleep in vehicles. It is located away from residential and commercial areas, but also has easy access to public transit—the TriMet Yellow Line terminates at the front of the Expo Center and provides frequent service to downtown Portland.
Because the pandemic effectively closed the Expo Center, Metro should work with other local governments to immediately open the Expo Center as a temporary emergency homeless shelter. Repurposing an existing exposition center would be much less expensive than Metro and the City of Portland’s current “affordable housing” construction projects. Over time, Metro can use its Supportive Housing Services funds to redevelop the Expo Center into a permanent emergency and/or transitional housing shelter providing services to those in need.
Converting the Expo Center could bring immediate relief to thousands of homeless individuals and families while providing a much better return on investment than current plans to remodel the site for low-attendance expositions. If we’re truly all in this together, it’s time to put the Expo Center to work.
Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization, and an adjunct professor at Portland State University, where he teaches courses in urban economics and regulation. He can be reached at firstname.lastname@example.org. A version of this article was published in the Portland Tribune on November 22, 2020.
Voters approve Measure 110, decriminalizing drugs while creating an unaccountable bureaucracy
By Eric Fruits, Ph.D.
Oregon voters recently approved a ballot measure that decriminalizes possession of small amounts of “hard” drugs, including heroin, cocaine, LSD, and methamphetamine. Supporters see the measure as a big step toward ending the failed 50-year “War on Drugs.” Opponents fear the measure will lead to widespread and rampant drug abuse and turn the state into a destination for narco-tourism. While drug decriminalization made news headlines, the media missed the fact that Measure 110 is a head-on attack on our democratic institutions.
The measure creates a new bureaucratic agency to be known as the “Oversight and Accountability Council.” Despite its name, the council has neither accountability nor oversight. The council is appointed by an unelected bureaucrat, answers to no one, and is guaranteed funding outside the legislative budget process. In other words, with Measure 110, Oregon voters just created an agency that doesn’t have to answer to voters or elected officials.
The Oversight and Accountability Council awards grants to government agencies and community-based nonprofits who will create “Addiction Recovery Centers.” These centers will address the acute and ongoing needs of drug users, provide “intensive” case management, and link drug users to care. All of these services are to be provided free-of-charge to drug users. Put simply, Measure 110 asserts a right to free health care for those with substance abuse issues. The council also awards grants to government agencies and nonprofits to provide housing and peer support to people with substance use disorder. Not only does the council award the grants, but it also writes the rules governing the grants, establishes the requirements for the Addiction Recovery Centers, and oversees their implementation. This Oversight and Accountability Council has enormous authority and will be handling at least $57 million a year, in addition to an undefined amount related to state savings from reduced arrests and convictions.
The 17-member council will be “established” by the director of the Oregon Health Authority, an unelected agency head appointed by the governor. Each member serves a four-year term. Measure 110 does not specify any conditions under which a council member can be removed and provides no process for removing a member. While the governor can be voted out and the OHA director can be fired, Oversight and Accountability Council members face no risk of removal. In this way the council is accountable to no one.
Funding for the Oversight and Accountability Council and its grants will come from the state’s marijuana tax. The measure specifies that this will be at least $57 million the first year that the measure is in effect, 2021. The measure also provides for yearly increases in line with inflation or increases in marijuana tax revenues, whichever is larger. With a dedicated and guaranteed source of funding, Measure 110 bypasses the legislative budget process. While schools, universities, police, and transportation must go to the legislature for most of their funding, the Oversight and Accountability Council sits comfortably on a steadily increasing revenue stream.
Measure 110 won by a wide margin, because the headlines promised it would decriminalize drug possession. With no organized opposition and press that cheered it on, the nefarious details of the measure never got their own headlines. As a result, Oregon voters approved the creation of a huge new bureaucracy that is unaccountable to voters and elected officials and disconnected from the same budget pressures faced by nearly every other state agency. The Washington Post tells us “democracy dies in darkness.” It also dies from voter approval of misleading ballot measures.
Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization. He served on the City Club of Portland’s research committee on substance use disorder in Oregon.
By Rachel Dawson
Governor Kate Brown recently decided to take her Coronavirus “two-week pause” one step further by issuing an aggressive statewide “two-week freeze” running from November 18th through December 2nd (with an additional two weeks for Multnomah County).
Among its many restrictions, the freeze forces restaurants and bars to offer take-out only, and gyms, museums, and many indoor entertainment activities will be required to close once again.
The freeze comes at a time when more Oregon restaurants and bars are permanently shutting their doors due to lost revenue from the pandemic. Unfortunately, they will feel some of the hardest effects of the freeze even though health officials found that restaurants are not to blame for the recent rise in covid cases. Oregon health officials stated that social gatherings, including at least five Halloween events and parties, are the main culprits for the case increase over the past few weeks.
According to the president of the Oregon Restaurant & Lodging Association, “Few cases of the virus have been linked to the state’s food and drink establishments, which provide a needed refuge.” Placing stricter rules on restaurants and bars may very well backfire on officials as Oregonians shift their outings elsewhere, increasing the number of private gatherings where social distancing is less likely than in a formal restaurant setting. Restaurants represent many Oregonians’ livelihoods and should not be used as a scapegoat for the state. Governor Brown should rescind her restriction on restaurants.
Rachel Dawson is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research center.
By Helen Doran
“What is going on?” That’s what many Oregon parents are asking as their kids struggle with online learning, all while public officials flip-flop on education policies during a wave of COVID-19 cases.
On October 30th, Governor Kate Brown added to the mayhem. On the same day the state announced a record breaking number of cases, the governor rolled out relaxed safety standards for reopening Oregon elementary schools. Since then, the case count has climbed higher by the day.
The Oregon Department of Education explained that the change in direction was because the benefit of in-person education outweighed the risk of spreading the disease. But why was this announced when cases are at an all time high…after two months of distance learning?
The governor’s relaxed standards at a time when cases are trending dramatically in the wrong direction is a cognitive dissonance for exhausted parents who have been told that keeping their kids behind a laptop was for the greater good. Students and families can’t afford to ride the ODE’s wave of ever-changing priorities and promises. A money-back guarantee would be a lifeline for students struggling in the public school system and needing a solution urgently. Oregon needs to make school choice a priority during the 2021 legislative session. Children’s futures depend on it.
Helen Doran is a Program Assistant, External Affairs at Cascade Policy Institute, Oregon’s free market public policy research center.
Dude, where’s my car? New Oregon data shows where electric vehicles are located and where they continue to remain a rarity
By Rachel Dawson
Where are all the electric cars in Oregon? If you live in Portland, they’re hard to miss. But leave the metro area, and EVs are a rare sight. To get an idea, check out the Oregon Department of Energy’s new interactive EV dashboard. The dashboard tracks EV purchases by county and model.
The dashboard clearly shows that Oregon’s wealthy and urban counties are benefiting most from subsidies for a costly technology that remains out of reach for many Oregonians. Rather than letting the market operate freely, Oregon officials and utilities alike are attempting to push more consumers towards purchasing EVs by offering taxpayer funded rebates.
Where are those subsidies going? Nationally, around 60% of EV buyers have six-figure incomes. About half are aged 25 to 55, and 75% are male.
At the state level, the Oregon Department of Environmental Quality (DEQ) offers a “Clean Vehicle Rebate” program and a “Charge Ahead Rebate” program that provides up to $2,500 for the purchase or lease of a new qualifying EV with an additional $2,500 for Oregonians with low or moderate incomes for either a new or used EV. However, low-income Oregonians can only receive both rebates if they purchase a brand new EV. DEQ receives $12 million annually to fund these programs from a vehicle privilege tax imposed on car dealers throughout the state. In other words, someone purchasing a traditional gas power car is helping pay for someone else’s EV purchase.
On top of that, the federal government offers a tax credit for all new EVs and hybrids up to $7,500, depending on the model. Additionally, many Oregon utilities offer monetary incentives for EVs and charging infrastructure. For example, the Emerald People’s Utility District (PUD) offers a $100 incentive for customers registering new or used EVs, while the Central Lincoln PUD offers customers a $250 rebate for purchasing a level 2 EV charger.
Of the 31,977 EVs in Oregon, around 64% (or 20,559 vehicles) are located in the Portland area. One could argue that more EVs are in the Portland metro area due to its larger population size. However, data from ODOE’s own dashboard shows that EV adoption grows as a county’s wealth increases even when accounting for population size.
Further, the most commonly purchased EV is a Tesla, which accounts for around 27% of all EVs registered in Oregon. The vast majority of these, around 70%, are registered in the Portland area. You certainly won’t see a Tesla driving around Harney, Morrow, or Wheeler counties in Eastern Oregon.
This is likely because in addition to being costly, current EV technology faces difficulties with range and cold temperatures. The vehicles use lithium-ion batteries which are sensitive to temperature changes. Cold temperatures can cut their range by up to one-third. These issues make EVs a suitable option for warm, urban areas—a big reason why the largest markets for EVs in the US can be found in California, Texas, and Florida. However, EVs may experience difficulties during Eastern Oregon’s cold winters.
David Larson, Jaguar Land Rover’s general manager of product development, told ABC news that EVs “still cost a lot more than ICE [internal combustion engine] cars and charging takes a long time…. For a rancher in Montana, EVs are not the solution. These cars are for people who live in urban areas and don’t travel more than 100 miles or more a week.”
As car companies continue to innovate, the cost of EVs will likely continue to fall while EV registrations increase without additional government pressure. People should be free to make the decision to purchase an EV using their own hard-earned money. However, the state should not be using tax dollars, especially from rural and low-income Oregonians, to subsidize their cost.
The privilege tax does not bring the state together. Rather, it illuminates the existing rural and urban divide. If Governor Brown were truly committed to equity, she would repeal this divisive privilege tax.
Rachel Dawson is a Policy Analyst at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. She can be reached at email@example.com
By Vlad Yurlov
While many people in the Portland region value efficient governments, prevailing wage laws are rarely questioned. Prevailing wage laws drain tax-payer funded resources by increasing the labor costs of public construction projects such as affordable housing. These laws were originally enacted to shut out minorities from construction jobs in the 1930s. Portland and Metro are currently using more than $900 million in tax dollars to build affordable housing projects. Both jurisdictions are subject to prevailing wage laws that significantly decrease their efficiency.
Portland and Metro’s housing bonds are already spending roughly $300,000 per new unit, which is nearly double market-rate projects. The Bond Stakeholder Advisory Group of the Portland Housing Bureau found that “[p]revailing wage typically increases the labor costs in a project by approximately 12% to 18%.” This means fewer housing units can be built.
One of Portland’s recent projects avoided paying prevailing wages by limiting the number of project-based vouchers that their building contained. This clearly shows that prevailing wages inhibit the creation of affordable housing. To increase efficiency in affordable housing construction, Oregon must end prevailing wage laws.
Vlad Yurlov is a Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.