Health care continues to become more expensive despite having worse access and outcomes. Certificate of Need (CON) laws are an anti-competitive relic of the 20th century that limits the supply of care and worsens the problems we face. States should reform and repeal their CON programs, allowing providers and facilities to meet the needs of their patients. Let’s play “Two Truths and a Lie” to find out how much you know about CON laws.
A. CON laws reduce the number of hospitals and surgical centers, worsen health outcomes, and raise prices by protecting existing providers from competition.
B. The federal government has not repealed the CON law mandate.
C. Artificially limiting the supply of medical facilities leads to greater prices.
A. TRUTH! States that do not have CON see expanded access, lower costs, and improved care compared to states that do. Removing CON means that providers will be able to respond to the needs of their patients, and all Americans will have an easier time finding the care they need in their community without breaking the bank.
B. LIE! In 1986, the federal government repealed the CON law mandate just 12 years after it was passed in 1974 due to CON laws not achieving their intended goals. Eleven states repealed their CON laws by 1990, and a few more followed, with New Hampshire being the most recent to do so in 2016.
C. TRUTH! When existing facilities are protected from competing with new ones, they are able to exercise more power over their pricing, most likely increasing prices since patients don’t have a choice to go elsewhere. CON laws are associated with 10% higher variable costs in general acute hospitals, 20.6% higher expenditures per capita, and higher Medicare and Medicaid costs. Research has also found that repealing CON can decrease costs, with overall healthcare spending falling by 4% after five years in states that repealed CON.
Bottom Line:
Certificate of Need laws were created with the intention of controlling costs and ensuring access to quality health care. However, decades of evidence show that they have had the opposite effect by restricting competition, reducing the supply of care, and driving up prices. By having costly barriers to entry and allowing existing competitors to block new facilities, CON laws undermine the very goals they were meant to achieve. States that have repealed or reformed these requirements have greater access to care, better outcomes, and lower costs. The lesson is clear that health care does not thrive under bureaucratic gatekeeping, but free-market competition. To make our healthcare system more affordable and accessible, policymakers must dismantle these outdated regulations and allow communities to meet their own healthcare needs without unnecessary interference.
To learn more, read the Policy Focus: Reform and Repeal Certificate of Need Laws.