Americans are Still Getting Conned by Certificate of Need Laws | Citizens Against Government Waste

Americans are Still Getting Conned by Certificate of Need Laws

The WasteWatcher

Legislators at every level of government are always trying to make healthcare more accessible and affordable.  One way to reducing costs that is often overlooked is to repeal or reform certificate of need (CON) laws in the states.  These anti-competitive, costly, outmoded laws require government approval before new healthcare facilities are built or existing facilities are expanded.  CON laws hinder growth, reduce access to quality care, and cause healthcare to be more expensive. 

CON laws were initially implemented to control healthcare costs, but they have moved far away from their original intent and are used to protect incumbents’ share of the healthcare market.  Large players in the healthcare market use these laws act as a shield to control and dictate the market for their own monetary benefit.  Patients face higher costs and receive poorer quality of care in CON-regime states. Some of those states are impacted more than others  Residents of states with CON laws and significant rural populations spend more money and use more healthcare services than in rural states without CON laws.  Rural patients in CON law states have higher Medicare spending per beneficiary, hospital readmission rates, ambulance utilization, and emergency room utilization. 

States operating with CON laws also have higher healthcare spending per capita.  Alaska, for example, has some of the highest healthcare costs in the nation, spending 50 to 80 percent higher than the national average on hospitals, physicians, and clinical services. 

CON program in a state is associated with 30 percent fewer hospitals per 100,000 residents across the entire state.  CON states have higher mortality rates following heart attacks, heart failure, and pneumonia than those without CON laws.  A January 21, 2023, Americans For Prosperity report found that CON regime states deny billions of dollars in new health care investment each year.  North Carolina denied $1.5 billion from January 2012 - June 2022, Michigan denied $585 million from January 2018 - February 2021, and Iowa denied $250 million from July 2016 - February 2020.

Some states are taking steps to fight against these crony laws by introducing legislation to reform or fully repeal CON.  On January 9, 2023, Alaska State Sen. David Wilson (R-District D) introduced S.B. 8, which would enact a full repeal of the state’s CON laws.  Representative Brian Seitz (R-District 156) of Missouri introduced H.B. 168 to repeal the state’s CON laws.

CON repeal or reform is a simple fix to lowering healthcare costs in 2023.  Instead of implementing more price controls that further distort the medical marketplace, legislators should create an environment that spurs competition and removes barriers to entry, like burdensome CON laws.  Allowing for more competition in the marketplace is the solution to reducing costs, not more government regulation.

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