By Malcolm Lee Kitchen III | Margin Of The Law

Your doctor did not set the price of your appointment. Your insurance carrier did not design the form you filled out in the waiting room. The hospital did not decide which treatments qualify for coverage. In most of those cases, a federal agency did.

Healthcare in the United States operates under one of the densest regulatory frameworks in the administrative state. The decisions that shape your access to care, your out-of-pocket costs, and the range of available treatments originate not in your doctor’s office but in the rulemaking authority of agencies like the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services (HHS), and the Food and Drug Administration (FDA). Most Americans have never read a page of the rules that govern those decisions. Most were never given a reason to.

That is the problem.

The Law You Did Not Vote On

The Affordable Care Act, signed in 2010, runs 2,700 pages. The regulations it produced exceed 20,000 pages. No member of Congress wrote those regulations. The statute delegated rulemaking authority to HHS, and HHS used it. Under the administrative law principle established in Chevron U.S.A., Inc. v. Natural Resources Defense Council (1984), federal agencies received substantial deference from courts when interpreting the statutes they administered. The Supreme Court partially dismantled that doctrine in Loper Bright Enterprises v. Raimondo (2024), but the rulemaking architecture it enabled remains largely intact.

What that meant in practice: the agency writing the rule was also the agency deciding what the rule meant. Healthcare policy became largely administrative policy. Administrative policy operates outside the Article I legislative process your civics class taught you to associate with lawmaking.

You did not elect the officials who decided which preventive care services your insurance must cover. You did not vote on the actuarial tables that define essential health benefits. Those decisions came from a regulatory process, not a constitutional one. Understanding that distinction is not a minor point. It is the foundation of the entire analysis that follows.

What Certificate of Need Laws Actually Do

Before a hospital in most states can build a new wing, purchase an MRI machine, or open an outpatient surgical center, it must obtain government approval. These are Certificate of Need laws, commonly referred to as CON laws. Thirty-five states plus the District of Columbia maintain them in some form.

The stated rationale is to prevent duplication of services and control costs. The documented effect is different: CON laws insulate existing providers from competition.

A new surgical center seeking to open in a CON state must prove to a government board that the community needs the service. Existing hospitals, which stand to lose market share, are permitted to participate in that review process and raise objections. In practice, established institutions regularly use CON proceedings to block competitors from entering the market. The Federal Trade Commission documented this directly. A 2017 joint statement by the FTC and Department of Justice on healthcare competition identified CON laws as barriers that can prevent the efficient functioning of health care markets.

The consequences for patients are measurable. You pay more for procedures in states with strong CON regimes. Wait times are longer. Facility options are fewer. This is not a market failure. It is a regulatory structure producing a predictable and documented outcome. Recognizing that distinction matters because the solution to a regulatory problem is different from the solution to a market problem.

The FDA’s Role in Drug Pricing

The FDA approves new drugs and medical devices before they reach the U.S. market. That approval process now takes an average of twelve years and costs between one billion and 2.6 billion dollars per drug, according to a 2016 study published in the Journal of Health Economics. Those costs do not disappear at the point of approval. They transfer to the price you pay at the pharmacy counter.

The regulatory pathway itself functions as a barrier to entry. A small company with a promising compound faces the same approval process as a large pharmaceutical corporation. Many do not survive it financially. The companies that do hold market exclusivity periods granted by law, including patent protections and FDA-granted exclusivity under the Hatch-Waxman Act of 1984. Generic competitors cannot enter the market until those periods expire.

The result is a structure where barriers to entry are written into statute and enforced by an agency with independent rulemaking power. When a brand-name drug costs several times more in the United States than in comparable markets abroad, the regulatory and exclusivity framework is part of that calculation. The complexity embedded in this structure was not accidental. It was designed and codified through law.

CMS: The Largest Payer Nobody Elected

The Centers for Medicare and Medicaid Services administers coverage for roughly 150 million Americans through Medicare, Medicaid, and the Children’s Health Insurance Program. It is the single largest payer in the U.S. healthcare system, and its decisions function as price signals for the entire market.

CMS sets reimbursement rates. When CMS determines what it will pay for a specific procedure, that figure operates as an anchor for private insurance negotiations. Physicians build their practices around those reimbursement structures. A rule finalized inside CMS does not stay contained to the federal programs it governs. It moves through the entire system.

The reimbursement structure CMS maintains creates measurable incentives. When that structure rewards high-volume, low-complexity procedures and undervalues time-intensive primary care, physician behavior shifts accordingly. Primary care shortages in rural and underserved areas are not simply market phenomena. They are the downstream result of reimbursement policy written by an unelected administrative body.

The physicians and hospital administrators operating within that structure did not build it. They adapted to it. That is a critical distinction. Critiquing the regulatory framework is not a critique of the professionals working within it. It is a critique of the architecture they were handed.

Price Transparency and What the Data Reveals

In 2021, a CMS rule took effect requiring hospitals to publish their standard charge information, including negotiated rates with private insurers, in machine-readable format. A parallel rule in 2022 placed similar requirements on insurers.

Both rules met significant resistance from the industry. The American Hospital Association sued, arguing the disclosure requirements exceeded the agency’s statutory authority. The D.C. Circuit Court of Appeals upheld the hospital price transparency rule in 2021.

The data produced by these disclosures is instructive. Negotiated rates for identical procedures vary by several hundred percent between facilities in the same metropolitan area. A knee replacement priced at 17,000 dollars at one in-network facility costs 61,000 dollars at another facility in the same city. You cannot make informed decisions about your care based on pricing information you were never permitted to see.

Price transparency does not repair the regulatory structure that produced the opacity. But it documents the direct effect of that structure on what you pay. The fact that hospital systems fought disclosure with legal action is itself significant. The financial stakes of visibility tell you something material about how the system was constructed and who benefited from the prior arrangement.

The Administrative Process Is Open to You

The regulations governing your healthcare are not fixed. They change through a rulemaking process defined by the Administrative Procedure Act of 1946. Agencies propose rules, accept public comment, and finalize them. That process is legally open to participation.

The comment period on a major CMS rule is public. Proposed rules are published in the Federal Register. Citizens can submit formal comments. Those comments become part of the administrative record. Courts reviewing agency action consider whether the agency adequately addressed significant comments received during the process. Your voice can legally enter that record and influence the outcome.

Most Americans are unaware of this. The process operates at a scale and complexity that effectively assumes public disengagement. That assumption has served the administrative state well for decades. It continues to do so because the information required to engage meaningfully is neither centralized nor explained in plain language by the agencies producing the rules.

Knowing the process exists is the first requirement for using it.

What This Means for You

The policies that govern your healthcare are not natural features of a market. They are deliberate choices made by agencies operating under statutory delegations from Congress, frequently with significant input from industry stakeholders during the rulemaking period.

When your premiums rise, the cause is partially actuarial, partially statutory, and partially regulatory. When a drug costs substantially more in the United States than in other markets, the patent exclusivity regime and FDA approval structure are part of that calculation. When your county has one hospital and no competing facilities, Certificate of Need law may be a direct factor.

You have a right to understand the structure that governs your care. That structure did not emerge from a free market. It emerged from law. Law can be read, traced, and challenged through the processes the Constitutional Republic provides.

Constitutional literacy in healthcare means knowing which agency holds rulemaking authority over your insurer, which statute created that authority, and what the Administrative Procedure Act gives you the right to do when that authority operates against your interests. It means understanding the difference between a rule made by Congress and a rule made by an agency Congress authorized to act.

The gap between what most Americans believe about their healthcare system and what the regulatory record documents is not a minor misunderstanding. It is structural. Structural problems require structural understanding before they can be addressed.

Read the record. Know the agencies. Understand the rules.

© 2026 – MK3 Law Group
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