Economy & Business

Deregulate to Help the Private Sector Fight Coronavirus

The U.S. Capitol dome and U.S. Senate in Washington, D.C. (Jonathan Ernst/Reuters)
Regulations stand in the way of a quick private-sector response to the coronavirus.

Amid the humanitarian and economic crisis brought on by the coronavirus pandemic, an intelligent policy response can save lives and livelihoods. In addition to the many measures being introduced and passed into law, including economic-stimulus measures and funding for testing, one critically important government response is to cut red tape and regulatory burdens that stand in the way of a quick and impactful response from businesses that can meaningfully help in the crisis.

Several regulatory practices impede a quick and urgent response to the COVID-19 outbreak.

For instance, since 1938, federal regulations limit most commercial truck drivers to eleven hours of driving time in a 14-hour workday. The restriction is intended to reduce accidents caused by highway fatigue. The rule doesn’t necessarily encourage safety, however, as truckers may be forced off the road at the end of their workday in areas not hospitable to truckers.

Amid grocery-store shortages during the coronavirus pandemic, it’s up to truckers to get items to affected areas quickly and efficiently so that shelves can be restocked and demand met.

Last Friday, after the president’s declaration of a national emergency, the Department of Transportation announced a nationwide exemption to the 82-year-old rules. Now truckers can help deliver badly needed supplies more quickly and efficiently while still safely splitting their required ten-hour rest period into two separate breaks instead of having to all take it at once. Truckers are also pleading to the government to reopen rest centers, gas stations, and parking lots that are used by truckers and that are being banned by state shutdown orders.

Similarly, state occupational-licensing rules stand in the way of allowing licensed professionals to help in the crisis. According to estimates by economists Morris Kleiner and Alan Krueger, approximately 30 percent of all U.S. jobs (an asymmetric proportion of which are deeply involved in the COVID-19 fight) require a license, up from around 5 percent in the 1950s. Ideally, to address physician shortages and further assist those in need, a relaxation of occupational-licensing laws should extend to physicians, echoing measures that Milton Friedman argued for long ago, in Capitalism and Freedom (1962).

Massachusetts governor Charlie Baker has unveiled legislation that improves the scope of practice for registered nurses (allowing them to prescribe without a physician) and allows nurses licensed in other states to work in Massachusetts. Believe it or not, Massachusetts and 15 other states still require nurses to obtain new licenses when coming from another state and have yet to join the Nurse Licensure Compact.

Thanks to the Trump administration, there is now an ongoing deregulatory effort to allow physicians to work across state lines. As of now, the Center for Medicaid and Medicare Services (CMS) is allowing clinicians to bill Medicare and Medicaid from outside their state of enrollment, but much more effort is needed to help physicians be mobile as they respond to COVID-19 in New York City and other severely affected regions.

For an example of the many nonsensical, uneven regulations and other roadblocks that prevent an efficient private-market response to the crisis, consider that manufacturers that provide respirator masks that can be used in public-health emergencies are not protected from liability risk. Typically, under the Public Readiness and Emergency Preparedness (PREP) Act, the government assumes the cost of liability claims when it asks companies to provide products, but respirator masks historically have not been included. Their omission from liability protection would likely discourage manufacturers from producing enough masks for nurses and doctors in the ongoing coronavirus response. The Families First Coronavirus Response Act (HR 6201) which was passed by Congress and signed into law earlier this week, amends the PREP Act to give such liability protection. Beyond the COVID-19 crisis, broader tort reform could also help reduce the liability risk of opportunistic lawsuits.

There are still regulatory roadblocks to producing respirator masks. The National Institute for Occupational Safety and Health (NIOSH) has told those working on production of new N95 masks that approval for a new mask-production facility will take at least 45 days and possibly up to 90. Further effort is needed to break down regulatory barriers to allow a quick private-sector response. Fortunately, private companies including 3M have now committed to producing thousands of masks.

The administration should expand deregulatory efforts to enable the private sector to respond quickly. It will ultimately be in the hands of private-sector pharmaceutical companies to produce the therapeutics and vaccines needed to overcome this pandemic, and they’ll need all the deregulatory assistance they can get.

Jon Hartley is an economics Ph.D. student at Stanford University and a visiting fellow at the Foundation for Research on Equal Opportunity. He formerly served as a senior policy adviser to the Congressional Joint Economic Committee.


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