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John Hood: Deregulation has place in COVID-19 crisis

By John Hood

RALEIGH — As North Carolina and other states inch towards increasingly draconian measures in response to the COVID-19 outbreak, we are all weighing the potential costs of both underreaction and overreaction.

Whatever we think of school closures, restaurant bans, and “shelter in place” orders that shut down broad swaths of our economy, few of us would deny that state and local governments possess the legal authority to regulate private actors in order to combat infectious disease — provided, of course, that such authority is exercised according to the rules and procedures set forth in the relevant statutes.

But increasing government regulation isn’t the only way to respond to disasters such as pandemics. Indeed, deregulation also has its uses.

Within days of the arrival of COVID-19 in North Carolina, my colleagues at the John Locke Foundation had produced a handy list of responses — some quickly adopted by the Roy Cooper administration, others still awaiting action — that focus on eliminating barriers to private action rather than erecting new ones.

For example, as part of his emergency declaration, Gov. Cooper has already waived licensing rules that would have prevented health care professionals licensed by other states, but not by North Carolina, to deliver medical services in our state for the duration of the crisis. The state has also suspended certificate-of-need (CON) laws that keep hospitals and other providers from adding new capacity — such as, in this case, hospital beds and equipment to treat COVID-19 patients — without getting explicit approval from state regulators via a long, costly process.

Both decisions deserve praise. JLF policy analyst Jordan Roberts suggests that North Carolina do still more to increase the supply of health providers and services.

For starters, physicians licensed in other states should receive permission to deliver services to North Carolinians through the use of telemedicine. While obviously not a substitute for in-person care in many instances, telemedicine does allow providers to consult with patients, diagnose common ailments, and prescribe appropriate remedies.

Remember that in countries such as Italy where fatalities have been relatively high, a major contributing factor has been the strain on the maximum capacity of the health care system. People will keep getting sick or suffering injuries that have nothing to do with COVID-19. Keeping those patients out of doctor offices and emergency rooms, so those resources can be directed at the immediate threat, is a wise and potentially life-saving approach.

Roberts also proposes that nurse practitioners and pharmacists be empowered to deliver some basic medical services that must currently be delivered or supervised by physicians.

“Any policy responses should focus on utilizing the current health care infrastructure the state already has,” Roberts says, “utilizing all medical professionals as much as possible and increasing the ways that patients can get diagnosis or treatment with the goal being to mitigate any further spread of the virus.”

Beyond health care, regulation in other areas also limit the ability of private households and businesses to respond quickly and effectively to an emergency.

For example, although “price gouging” laws may seem like a reasonable precaution to keep panicked consumers from being taken advantage of, in practice the law offers no definition of a “just price” that can offer retailers a safe harbor from legal jeopardy. When high demand outstrips the immediately available supply of a product, its price rises. That’s a piece of information, not a gouge.

It signals to producers how much more to make, and it signals to suppliers where the product may be most needed. If government suppresses the price by threatening legal action, the shortage will last longer.

We should also dismantle regulatory barriers to running a business out of one’s home and refitting factories and stores quickly to offer new, highly demanded products and services to willing consumers. Anything that mitigates the heavy economic toll imposed by government responses to COVID-19 would be most welcome.

Government plays an indispensable role during an emergency.

That includes swinging the hammer of more regulation. But not every problem is a nail.

Hood is chairman of the John Locke Foundation.



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