EMS Helicopter Rates—even Dr. Kahn might not have solved the issue

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EMS Helicopter Rates Regulation in North Dakota

The North Dakota legislature is debating whether it can or should regulate the charges of the Emergency Medical Services offered by helicopters. The issue is properly characterized by the famous Winston Churchill quote: “riddle wrapped in a mystery inside an enigma.” The dimensions of the policy questions include the following factors (more?):

• An EMS helicopter offering its services must meet the FAA’s Part 135 safety standards.

• As an air carrier, Congress in the 1978 Airline Deregulation Act overwhelmingly prohibited the regulation of an EMS helicopter’s “rates” by both the federal and all state/city governments.

• It can be argued that a vital lifeline (literally) should be considered a natural monopoly and/or public utility. Such segments of the economy have been subject to state rate regulation.

• However, many will vehemently deny that such a jurisdictional basis exists or that a PU Model works better.

• The primary, if not sole, price discipline of the private sector is competition.
  • Multiple EMS helicopters in a geographical area may not be economically ideal.
  • Selection of EMS based on price may not be feasible (shopping around while the patient bleeds).

It is clear that there is no intuitive answer and it is equally opaque whether EMS price can/should be regulated. Even if that seminal question is answered, there remains:

• Regulate at state or federal level?
  • Can there be a national standard or are the local cost characteristics critical to determining the rate?

• One of the great economic tests of CAB rate regulation was the Domestic Passenger Fare Investigation and the economists/accountants had difficulty of defining those costs or setting basic measures like a reasonable “Return on Investment”? Would it be possible to establish the basic criteria for these determinations?

• If the authority is devolved to the states, could 50 state PUCs handle this complex functions?

• What roles should hospitals, health providers, insurance and patient groups play in these regulatory proceedings?

Unfortunately, Dr. Kahn, the father of the Airline Deregulation Act, is no longer with us; so some other academic pundit will have to be called upon to unwrap this riddle. There is, however, no mystery as to the safety regulation of EMS helicopters; the FAA does it. The true enigma is how this complex policy issue will be resolved? Congress would have to revise the Deregulation Act and presently it appears to be unable to pass a simple FAA Reauthorization Act.

 

 

ARTICLE: Air Ambulances, an Unregulated Lifeline, Cost $80,000 for Some Patients

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