Alaskans are Getting Conned by Current Certificate of Need Laws | Citizens Against Government Waste

Alaskans are Getting Conned by Current Certificate of Need Laws

The WasteWatcher

The Alaska legislature has an opportunity to correct an existing law that reduces access to affordable healthcare in the state.  Currently, H.B. 77 is moving through the Alaska legislature, which would repeal these outdated and costly laws.  Certificate of need (CON) laws are monopolistic policies that result in higher costs, lower quality, and less accessible healthcare. 

These laws require any new facility development or existing facility attempting to expand to apply to the state and prove need in the community they serve.  No other industry operates under a system like this, where a restaurant or small business must prove there is a need in the community for their service before entering the marketplace.  One flaw with the premise of CON laws is that the government can determine a community’s need in the first place.  Only the consumers in the market can accurately determine the need for a service or good. 

These laws were originally created with good intentions to manage costs by restricting oversaturation in the healthcare marketplace.  Although after years of healthcare data and research regarding the impact CON laws have on patients, the results don’t align with the original intent.  States that have enacted CON laws have higher healthcare costs, and a history of restricting access to healthcare, including limitations on expanding the number of hospital beds or promoting larger-scale projects like constructing a new healthcare facility.

The COVID-19 pandemic offered an opportunity to evaluate our healthcare systems during a pandemic and exposed deficiencies in the healthcare market.  Alaska, like many states, temporarily suspended CON laws during the height of the COVID-19 pandemic to allow medical facilities to meet the needs of patients.  With states having success in a temporary repeal of CON laws, many like Alaska are now moving to reform or repeal CON laws permanently. 

The argument in support of CON laws is sustained by a baseless claim that these regulations lower costs, but the truth is that states that enforce CON laws have healthcare costs that are 11 percent higher than those without.  By limiting supply, CON laws distort the medical marketplace, which results in higher prices for patients.  These laws don’t control costs; instead they act as a mechanism for established industry leaders to control the market and cut out the competition.  In testimony before the Alaska Senate Labor and Commerce Standing Committee on April 21, 2021, Mercatus Center Senior Research Fellow Matthew Mitchell estimated that healthcare spending in Alaska would be $294 less per person annually if CON laws were repealed. 

In addition, CON laws often lead to poorer quality care, and Alaska has been no exception.  Repealing existing CON laws would reduce post-surgery complications by 5.6 percent.  CON states also have 30% fewer hospitals across the state meaning less access for patients.

Alaska’s CON laws include a steep application fee that can reach $75,000 to apply for construction permits for new healthcare facilities.  If an existing facility is attempting to expand, or a new facility wants to enter the market, the application costs alone can halt development.  These laws are monopolistic and breed cronyism by keeping competition out of the marketplace, hurting patients.  Any healthcare policy state legislators introduce should be patient-centered by making healthcare more accessible and affordable for everyone without additional burdens imposed on providers. 




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