Government Regulations Reduce Access to Mental Health Services

Justin Haskins Heartland Institute
Published March 9, 2016

Consumer Power Report #497

In January, President Barack Obama announced a proposal to spend $500 million on improving access to mental health care and to provide better mental health information for firearms background checks.

“We must continue to remove the stigma around mental illness and its treatment and make sure that these individuals and their families know they are not alone,” said Obama in a January 4 statement. “While individuals with mental illness are more likely to be victims of violence than perpetrators, incidents of violence continue to highlight a crisis in America’s mental health system.”

Obama’s proposal is primarily intended to help reduce gun-related violence linked to those with mental health problems, but the Obama administration and politicians on both sides of the aisle have acknowledged the severe shortage of mental health care facilities and physicians is a problem that affects far more than violent crime rates.

While increasing public funding for mental health programs has been one of the more popular policy proposals offered by lawmakers at the national and state levels, existing government regulations on the health care industry may be more to blame for the lack of mental health care services in some parts of the country, especially in rural regions.

Certificate of need (CON) laws impose regulations on the health care industry. They mandate health care providers receive approval from a state government agency for various expenditures, including the construction of new hospitals, the purchase of some medical equipment, and the expansion of existing services, among many others. Currently, 36 states have certificate of need laws, although the number of CON regulations vary significantly by state.

The goal of CON laws is to reduce health care costs by eliminating unnecessary services and encouraging the consolidation of health care providers. Numerous studies show CON laws have actually caused a number of significant problems.

According to research conducted by Thomas Stratmann and Jake Russ at the Mercatus Center at George Mason University, states that have enacted CON laws have on average “99 fewer hospital beds per 100,000 people” and “4.7 fewer hospital beds per 100,000 people for each additional service a state regulates,” compared to states without certificate of need laws.

Research shows this has directly impacted the availability of mental health care services. Out of the 26 states listed as having the greatest number of health professional shortage areas (HPSAs) related to mental health by the Health Resources and Services Administration, a division of the Department of Health and Human Services, 19 states – approximately 73 percent of the total – have CON laws.

CON laws have been particularly harmful in rural parts of the nation, which have fewer mental health service providers than more populated regions. In February, research authored by Stratmann and Christopher Koopman and published by the Mercatus Center shows there is a “statistically significant” correlation between certificate of need laws and the availability of rural hospitals. Stratmann and Koopman also found “CON programs have an even more negative effect on the number of hospitals in rural areas in a state than they do on the overall number of hospitals in the same state.”

This is particularly troubling because reduced access to mental health care services has been linked to higher suicide rates. According to the National Rural Health Association, suicide rates for men and boys living in rural areas, which have statistically fewer mental health professionals available, are “significantly higher than in urban areas.” Further, NRHA reports, “The suicide rate among rural women is escalating rapidly and is approaching that of men.”

Of the 20 states with the highest suicide rates, according to CBS News, 13 have certificate of need regulations in place.

Increasing public funds to help improve access to mental health care services may have a positive effect, but without more mental health care doctors and facilities, both of which are restricted in many certificate of need states that limit market entry for new and existing hospitals, all the federal funds in the world won’t help to solve this tragic problem.

Research shows when CON laws are not in place, there are more health care services available, including services to help those with a mental illness. This means by eliminating certificate of need, the lives of countless people suffering with mental health problems will be improved, making the United States a healthier and safer nation for everyone.

— Justin Haskins



Virginia hospitals have prevailed, for this year at least, on one of the most heavily lobbied issues of the 2016 General Assembly – one that pitted them against the state’s doctors and health care insurers.

Efforts supported by physicians and insurers to overhaul or phase out a 40-year-old system of state regulations governing the construction of new health care facilities fizzled out Monday in the state Senate.

As a result, the state’s Certificate of Public Need program, which hospitals lobbied vigorously to keep intact, will remain in place at least until 2017. The system requires issuance of a state certificate before new health care services can be introduced in a locality.

The most sweeping attempt to overhaul the system, which passed the House of Delegates last month, would have removed the certificate requirement for hospitals, outpatient surgery centers, medical-imaging services and similar facilities by July 1, 2017.

By Monday, the only remaining component of those efforts was a much narrower measure that would have removed the certificate requirement only for medical imaging services by Jan. 1, 2019. That bill, HB350, was sent to the Senate Finance Committee and carried over to the 2017 Assembly session.

SOURCE: By Bill Sizemore, The Virginian-Pilot


San Jorge Children’s Hospital is Puerto Rico’s largest pediatric hospital, drawing patients from throughout the Caribbean. …

A nearly decade-long recession has taken a severe toll on the island’s economy. Half of San Jorge’s patients are on Medicaid now, up from a fifth just a few years ago. And, for decades, the U.S. government has capped Medicaid reimbursements in Puerto Rico at a level far below what states receive. [The hospital’s vice president of operations, Domingo Cruz Vivaldi,] says that cap has forced his hospital and many others to cut services – he’s had to close two wings and 40 rooms.

He only managed to avoid staff layoffs, he says, by freezing 100 open positions – doctors, nurses, technicians and support personnel. And last year, when Puerto Rico ran out of money and couldn’t make a $250 million payment to hospitals, San Jorge was forced to reduce hours and cut pay for all employees.

Since long before the advent of Obamacare, Puerto Rico has had a health care plan that covers nearly everyone on the island. Sergio Marxuach, public policy director for Puerto Rico’s Center for a New Economy, says it’s a generous plan, but has never been adequately funded.

“It has become, in a way, the third rail of Puerto Rican politics,” Marxuach says. “Nobody wants to touch benefits. Obviously it’s very politically sensitive. Low-income residents love it. So, it’s going to be very hard to modify unless we get additional Medicaid funding, or somehow get some sort of fix that we can do locally.”

The head of Puerto Rico’s Health Insurance Administration, Ricardo Rivera-Cardona, describes it in another way.

“There’s a saying here in Puerto Rico,” he says, “which, if you translate literally into English, is ‘You are against the wall and the knife.'”

Stopgap funding for Puerto Rico’s Medicaid system that the Affordable Care Act has provided will run out next year. The Obama Administration has proposed a solution: removing the Medicaid cap, and giving Puerto Rico the same level of funding that goes to the states.

If Congress doesn’t take action on that proposal soon, Rivera says, Puerto Rico will face tough decisions on how to provide care for 1.6 million Medicaid patients.

“We are looking at one million people that will have to be forced out of the Medicaid system,” Rivera says. “The remaining 600,000 will have to experience a reduction in benefits and an increase in deductibles and copays.”

That’s a problem in a territory where the median household income is about $19,000 – half that of Mississippi. Across Puerto Rico, clinics are closing, and at least four hospitals have filed for bankruptcy. If enough hospitals close, those remaining will be overwhelmed, say Puerto Rico officials.

SOURCE: By Greg Allen, National Public Radio


The New Hampshire business community is divided over the future of Medicaid in the state, as the House prepares for a key vote this week on the health insurance program for low-income families and individuals.

The statewide Business and Industry Association on Monday urged lawmakers to continue the Medicaid expansion launched two years ago, while a coalition of conservative business owners called the program “corporate welfare” for the hospitals and insurance companies.

More than 135,000 low-income Granite State residents are on traditional Medicaid, meaning they met the requirement of low income and an additional condition, such as dependent children or disability.

The House is scheduled to vote this week on a bill – HB 1696 – that could decide the fate of another 50,000 residents who have acquired health insurance since eligibility for Medicaid was expanded two years ago.

The two-year-old expansion under Obamacare, launched in 2014, raised the qualifying income levels and eliminated additional requirements, so that for the first time in New Hampshire, able-bodied young men or women with no dependent children could qualify for taxpayer-funded health insurance.

According to Greg Moore, state director of the Americans for Prosperity Foundation, that has left too many young workers on the sidelines, contributing to a labor shortage in the state. “With unemployment at 2.9 percent, and jobs going unfilled, it is absolutely essential to give people a reason to work, not an incentive to avoid work,” said Moore. “We need these people in the workplace.” Moore was surrounded by sympathetic business owners and lawmakers at a press conference in the Legislative Office Building on Monday, as he made the case for a mandatory work requirement that has been added to the Medicaid expansion bill.

There is widespread support for a work requirement similar to what is expected of those who receive Temporary Assistance for Needy Families, but there is no guarantee the federal government will approve a Medicaid expansion plan with a “workfare” provision.

SOURCE: By Dave Solomon, New Hampshire Union Leader


[The State of Vermont] says it is reducing how much it pays the University of Vermont Medical Center and six other hospitals to treat Medicaid patients.

The Department of Vermont Health Access released a document Thursday saying it would trim the reimbursement rate to equal what it pays Dartmouth-Hitchcock Medical Center.

Dartmouth-Hitchcock sued the state in November, claiming it was not paying the hospital as much as in-state hospitals to treat Vermont Medicaid patients. Forty percent of Dartmouth-Hitchcock’s patients come from Vermont, though not all are insured through Medicaid.

On Monday, the Green Mountain Care Board shared a spreadsheet with VTDigger that was labeled as coming from the Department of Vermont Health Access. The Vermont Association of Hospitals and Health Systems, which represents all Vermont hospitals, shared it with its members and the board.

The spreadsheet shows that six other hospitals would also see a rate cut: Rutland Regional Medical Center, Central Vermont Medical Center in Berlin, Northwestern Medical Center in St. Albans, Southwestern Vermont Medical Center in Bennington, Brattleboro Memorial Hospital, and the Brattleboro Retreat.

SOURCE: By Erin Mansfield, VTDigger