Mississippi is one of 35 states that enforce burdensome certificate of need (CON) laws. These outdated laws arbitrarily limit health care services, resulting in less access and higher health care costs.
Mississippi was one of the 23 states that suspended some aspect of CON laws during the COVID-19 pandemic. The temporary suspension of these laws allowed hospitals to provide necessary protective equipment and services for patients battling COVID-19. If these antiquated policies hadn’t been lifted, hospitals would not have been able to meet the needs of patients during the height of the pandemic. Many states have now permanently passed CON law reform or repeal due to the temporary suspension. Unfortunately, a bill to repeal CON law died in Mississippi earlier this year.
Supporters of CON often argue these regulations improve health care quality, but research says otherwise. For instance, rural states operating with CON laws have 13 percent fewer hospitals per capita than rural states operating without CON laws. Similarly, rural communities in states with CON laws have higher levels of Medicare spending per beneficiary, ambulance utilization, and emergency room use.
According to the Kaiser Family Foundation, health care costs are 11 percent higher in states operating with CON laws than those without. Mississippi is no exception. Per a Mercatus state profile, the Magnolia State could reduce total health care costs by $208 per person if CON laws were repealed. Currently, Mississippi has 18 CON restrictions on the books. If the state repealed its CON laws, it could have an additional 49 hospitals in the state.
The negative effects of CON are passed on to consumers by hindering competition and forcing providers to use older facilities and equipment. CON allows cronyism to run rampant while government plays favorites with established industry leaders. A study from the National Institute for Health Care Reform found, “in five of six states studied, the CON approval process can be highly subjective and tends to be influenced heavily by political relationships rather than policy objectives.”
The original intent of CON was to control supply and lower health care costs. However, as the data show, these laws clearly do not lower costs. Too many states limit the expansion of health care providers and services because of these antiquated laws. Repealing CON is common sense policy that would result in lower health care costs and better services for patients. If states are unable to fully repeal CON laws, the next best step would be to reform the policy to only impact large scale projects, thus lessening restrictions on other areas of the health care market.
The following articles provide information about certificate of need laws.
Entry Regulation and Rural Health Care: Certificate-of-Need Laws, Ambulatory Surgical Centers, and Community Hospitals
https://heartland.org/policy-documents/entry-regulation-and-rural-health-care-certificate-need-laws-ambulatory-surgical-ce
Thomas Stratmann and Christopher Koopman of the Mercatus Center at George Mason University evaluate the impact of CON regulations related to ambulatory surgical centers (ASCs) on the availability of rural health care. Their research shows despite the expressed goal of ensuring that rural populations have improved access to health care, CON states have fewer hospitals and ASCs on average—and fewer in rural areas—than states without CON regulations.
Are Certificate-of-Need Laws Barriers to Entry? How They Affect Access to MRI, CT, and PET Scans
https://heartland.org/policy-documents/are-certificate-need-laws-barriers-entry-how-they-affect-access-mri-ct-and-pet-scan
A study published in January 2016 from the Mercatus Center at George Mason University examines how CON regulations affect the availability of imaging services provided by hospitals and other medical providers. The results show CON regulations adversely impact non-hospital providers; hospitals largely remain unaffected. The study also shows residents of CON states are more likely to travel out of state to obtain imaging services than residents of non-CON states.
Certificate-of-Need Laws and Hospital Quality
https://heartland.org/publications-resources/publications/certificate-of-need-laws-and-hospital-quality
Thomas Stratmann and David Wille of the Mercatus Center at George Mason University challenge the claim CON laws improve hospital quality. “Using a broad dataset, the study finds no evidence that CON laws improve hospital quality. In fact, there are more deaths and serious postsurgery complications in hospitals in states with CON laws,” wrote Stratmann and Wille.
Certificate-of-Need Laws Lower Quality of Care, Study Finds
http://www.modernhealthcare.com/article/20160928/NEWS/160929875
Shelby Livingston of Modern Healthcare examines a new study from the Mercatus Center that argues certificate of need laws that govern the construction and development of health care facilities do not raise the quality of care at hospitals and may even lead to higher readmission rates.
Certificate of Need Laws: A Prescription for Higher Costs
https://heartland.org/publications-resources/publications/certificate-of-need-laws-a-prescription-for-higher-costs
In this article published in Antitrust Magazine, Federal Trade Commissioner Maureen Ohlhausen examines CON laws and argues for their repeal. “Regardless of one’s perspective on the proper balance between state and federal power, there are some very good reasons to repeal state CON laws,” wrote Ohlhausen.
The Great Healthcare CON
http://fee.org/the_freeman/detail/the-great-healthcare-con
Jordan Bruneau of the Foundation for Economic Education finds CON laws raise health care prices and reduce availability. He advises, “Rather than pinning our hopes on grand plans to overhaul the system, we should first look at where we can make changes on the margin that would move us in the right direction. Abolishing CON laws – a barrier to entry that drives up price, restricts access, and is maintained by cronyism – would be a great place to start.”
Certificate of Need: State Health Laws and Programs
http://www.ncsl.org/research/health/con-certificate-of-need-state-laws.aspx
The National Conference of State Legislatures outlines the various state CON laws and the positions of CON law proponents and critics.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
If you have any questions about this issue or The Heartland Institute’s website, contact the government relations team, at [email protected] or 312/377-4000.
Christina Herrin is a former state government relations manager at The Heartland Institute.
