My great-grandfather lived through the Depression and, like many of his peers, was fiercely independent. At the age of 92 he decided that, due to his age, living by himself in the home where he had spent the previous 25 years was no longer realistic. However, a nursing home was not only a threat to his independence, he simply did not need the level of care provided by a nursing home. Luckily, one of the first assisted-living homes in the nation had recently opened in his neighborhood, and he became one of its first residents.
For him, assisted living was very similar to moving into a condominium. He could use his own furniture, he had his own entrance, he could have overnight guests, and he had complete control over his daily lifestyle. In addition, he could eat in the dining room rather than cooking for himself, the management constantly checked up on him, and he had an emergency call button in every room in case he needed it. I know it made him happier, and I firmly believe it added several years to his life.
Sadly, the State of Georgia has now decided that some Georgians who wish to make the same decision that my grandfather made may not have that option. The State Health Planning Agency (SHPA) has implemented a temporary statewide moratorium on new certificates of need that are required for the construction of assisted-living facilities for the elderly.
It should shock the average citizen that our state government has the power to arbitrarily prohibit the expansion of a private industry. Evidently, SHPA believes that too many of these facilities are being built. However, there is no more justification for the state to interfere in this industry than there would be to limit the number of hotels, day-care centers, condominiums, or coffee shops. If the state can place a moratorium on this industry, which industry is next? Although Medicaid funding is often used as an excuse to regulate medical facilities such as nursing homes, assisted-living facilities are not eligible to receive such funding.
The free market has a time-tested method for regulating the supply of services: prices. If the market is oversupplied, prices go down, which benefits customers. If prices decline far enough, developers lose money or go bankrupt. This sounds harsh, but it happens every day in the business world. In order to achieve progress, businesses must be allowed to fail. That is one of the most fundamental principles of the free-market system. In fact, through trial and error, failure often leads to innovation and progress.
Restricting competition and consumer choice is not a wise public policy. In addition to limiting the choices of future customers, it also artificially raises prices and unfairly benefits the few developers lucky enough to be left in the market. Elderly Georgians who are priced out of the assisted-living market will be forced to choose between using services they do not need in a nursing home (funded by Medicaid/taxpayer dollars) or continuing to run the risk of living by themselves. A moratorium on assisted-living facilities will mean that everyone loses: business, taxpayers, and, most importantly, our senior citizens.
Kelly McCutchen is the executive vice president of the Georgia Public Policy Foundation. The Georgia Public Policy Foundation is an independent, nonpartisan organization dedicated to keeping all Georgians informed about their government and to providing practical ideas on key public policy issues. The Foundation believes in and actively supports private enterprise, limited government and personal responsibility.
Nothing written here is to be construed as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. © Georgia Public Policy Foundation (March 22, 1999). Permission is hereby given to reprint this article, with appropriate credit given.
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