The Iowa House of Representatives is considering a bill that would remove Certificate of Need (CON) requirements for birth centers.
HF 277 “removes birth centers from the meaning of institutional health facility (facility),” the bill text explains. “Under current law, certain health care providers are required to obtain a certificate of need (CON) from the department of inspections, appeals, and licensing prior to creating or expanding a facility or introducing certain medical services within a specific area. By operation of law, removing birth centers from the meaning of facility would allow health care providers to create, relocate, expand, or offer new services in birth centers without the need to obtain a CON.”
CON laws are intended to reduce costs and improve access to health care by controlling the availability of medical facilities through state-based regulation. Unfortunately, CON laws decrease health care access, raise costs, lower quality, and stifle innovation by giving competing health care providers veto power over the construction or improvement of facilities or other capital improvements such as advanced imaging devices.
The House Committee on Health and Human Services unanimously approved the bill on a vote of 19-0. It is now under consideration by the full chamber.
This CON reform would improve access to health care for prospective mothers in Iowa while putting beneficial pressures on costs and quality by encouraging greater investment in new facilities and improvements of existing ones.
Patients and the public health benefit when states reduce regulatory barriers to the construction of new health care facilities. Years of evidence clearly show the free market does a better job of controlling costs and at least as good a job at ensuring people have access to health care as CON laws do. “A review of 20 academic studies finds that CON laws have largely failed to achieve their stated goal of reining in healthcare costs,” Matthew Mitchell of the Mercatus Center wrote. “The overwhelming balance of evidence suggests that CON laws are associated with both higher per-unit costs and higher expenditures.”
As the research shows, CON laws do the opposite of what they are intended to do. In the 1960s, policymakers began to worry that the free market would concentrate lucrative medical services in some areas while creating an undersupply of services everywhere else. Beginning in 1964 with New York and extending to nearly every state throughout the 1980s, legislatures began to control the licensing of new facilities. In 1987, federal mandates requiring CON were removed. Since then, states have begun to reform and repeal their CON laws as many legislatures have determined that rationing health care in this way has done more harm than good.
Currently, 35 states and the District of Columbia require care providers to go through a CON approval process before constructing a facility or in some cases even buying certain equipment such as imaging machines. As of 2024, 12 states had completely repealed their CON laws.
The following documents provide useful information about Certificate of Need policy:
Described as “An Act removing birth centers from the meaning of institutional health facility,” the bill sponsored by Rep. Bobby Kaufmann “would allow health care providers to create, relocate, expand, or offer new services in birth centers without” having to obtain a certificate of need.
Do Certificate of Need Laws Limit Spending?
Matthew Mitchell from the Mercatus Center examines the cost implications of Certificate of Need laws across the health care system.
2022 Testimony on the South Carolina Certificate of Need Repeal
Matt Dean of the Heartland Institute testified about a South Carolina bill to repeal CON.
Certificate of Need (CON) State Laws
The National Conference of State Legislatures provides a state-by-state update on Certificate-of-Need laws with an interactive map.
CON Laws in 2020: About the Update
Matthew Mitchell and Anne Philpot of the Mercatus Center update the CON legislative landscape and provide context for state policy reforms.
Tearing Down Regulations That Restrict the Supply Of Health Care Has Become Bipartisan
Policy reporter Patrick Gleason examines the political currents and crosscurrents that created rare bipartisanship in favor of CON repeal.
Certificate of Need Laws; A Systematic Review and Cost-Effectiveness Analysis
Christopher Conover and James Bailey from BCM Health Services provide an analysis of 90 studies of the effectiveness of CON legislation in the states.
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 and other topics, visit the Health Care News website and The Heartland Institute’s website.
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S. T. Karnick
S. T. Karnick is a Senior Fellow at The Heartland Institute.
S. T. Karnick is a senior fellow and director of publications for The Heartland Institute.
