A bill that would repeal and replace Georgia’s certificate of need (CON) law failed to reach the Georgia House floor for a vote by February 29, this year’s “Crossover Day,” the deadline for passing and submitting that chamber’s legislation to the Senate for consideration.
House Bill 1055, sponsored by state Rep. Wendell Willard (R-Sandy Springs), “did not cross over from one house to the other by the 30th day of the legislative session, known as Crossover Day,” The Atlanta Georgia-Constitution reported. “By tradition, if a bill or constitutional amendment resolution is not passed out of its chamber of origin by Crossover Day, it becomes inactive until the legislative session resumes next year.”
Willard’s bill would have repealed provisions of the law requiring prospective builders and operators of medical facilities to obtain a CON from the state before entering the health care marketplace. It would have also allowed the Department of Community Health to grant permit applicants “variances and waivers” from “literal requirements” of certain CON rules and regulations.
As a condition of licensure, applicants would have been required to commit to donating “charity and indigent care” services valued at 3 percent or more of their facility’s annual adjusted gross revenue, the bill’s text states.
Indigent Care Costs
Kelly McCutchen, president and CEO of the Georgia Public Policy Foundation, says the effort to repeal Georgia’s CON law has been a long, ongoing battle, in large part because of efforts made by hospital groups to lobby against the proposed changes.
“CON regulation limits competition, which is why hospitals like it,” McCutchen said. “The argument, particularly from rural hospitals, is that they need protection in order to support the losses they incur treating indigent patients. Hospitals say they are lucky to collect 5 cents on the dollar from indigent, uninsured patients.”
Instead of restricting the supply of providers, a better way to contain the health care costs would be to help the indigent buy insurance, McCutchen says.
“It costs taxpayers about $2,000 a year on average to subsidize low-income, uninsured patients,” McCutchen said. “Our solution would be to take the money we are already spending and offer these individuals the opportunity to buy private insurance. Any money left over would go to the safety-net providers to reimburse them fully for their services, something [health care analyst] John Goodman first proposed years ago.”
CON a ‘Blunt Instrument’
Far from containing costs, “CON is a blunt instrument with many unintended consequences,” McCutchen said.
CON laws have never achieved their intended consequences, says Thomas Stratmann, a scholar at the Mercatus Center and professor of economics at George Mason University.
“When CON was introduced, health care spending had increased rapidly, and people believed that this was because physicians created their own supply—[that] they performed unnecessary procedures,” Stratmann said. “I believe there was some saying like, ‘A bed built is a bed filled.'”
The federal government repealed its CON mandate for states in 1987. Stratmann and Christopher Koopman wrote in their 2015 study Certificate-of-Need Laws: Implications for Georgia the reason for the repeal was CON laws proved unable to control costs. Georgia’s CON requirement restricts 17 different services, devices, and procedures—three more than the average CON law among the 36 states with such statutes, the study states.
A separate Mercatus Center study found CON regulations disproportionately harm rural dwellers.
“These laws never were helpful to rural people,” Stratmann said. “Moreover, these laws stifled competition. Repeal is the most sensible policy response, in my view.”
Jenni White ([email protected]) writes from Oklahoma City, Oklahoma.
Matthew Glans, “Certificate of Need Debate Continues in Georgia,” Research & Commentary, The Heartland Institute, November 3, 2015: https://heartland.org/policy-documents/research-commentary-certificate-need-debate-continues-georgia
Thomas Stratmann, Christopher Koopman, and Mohamad Elbarasse, Entry Regulation and Rural Health Care: Certificate-of-Need Laws, Ambulatory Surgical Centers, and Community Hospitals, Mercatus Center, February 18, 2016: https://heartland.org/policy-documents/entry-regulation-and-rural-health-care-certificate-need-laws-ambulatory-surgical-ce
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