Research & Commentary: Oregon’s Certificate of Need Laws Limit Mental Health Services

Published May 25, 2017

According to the National Alliance on Mental Illness, “1 in 5 Americans will be affected by a mental health condition in their lifetime and every American is affected or impacted through their friends and family.” A recent study from the National Center for Health Statistics found the suicide rate rose by 24 percent from 1999 to 2014. Suicide has become the 10th-leading cause of death in the United States, the third-leading cause of death for people aged 10–24 and the second-leading cause of death for people aged 15–24, according to the Centers for Disease Control and Prevention.

Unfortunately, there is an alarming shortage of mental health facilities and services for the 62 million Americans who experience mental illness each year. Few segments in need of mental health services are more underserved and in need of help than those who served in the military. According to the Department of Veterans Affairs (VA), around 20 percent of Iraq and Afghanistan war veterans have post-traumatic stress disorder. Tragically, an average of 20 veterans commit suicide each day.

Oregon ranks 49th for access to behavioral health care, in part because Oregon is one of 36 states that currently use certificate of need (CON) laws, which are meant to slow the growth of health care prices, promote consolidation of health care providers, increase charity care, and limit duplication of services. States with CON laws require commission approval for a wide range of expenditures, including construction and modification of health care facilities, the purchase of major pieces of medical technology, and the offering of new inpatient beds, services, and medical procedures.

In Oregon, a new proposal attempts to address this growing issue by creating a two-year exemption period for hospitals needing to obtain a certificate of need to expand select mental health services for veterans and active-duty service members. It would allow hospitals to expand inpatient and outpatient mental health and chemical dependency services and would require the services to be provided for at least eight years.

While full repeal of certificate of need laws should always be the goal of any state CON reforms, this proposal addresses a crucial problem. The proposal’s sponsors estimate CON application fees can cost as high as $70,000, making it difficult for small or rural facilities to cover the costs of the certificate.

In an article published in Inside Sources and the Las Vegas Sun, Justin Haskins of The Heartland Institute and Jacquelyn Corley of Duke University outlined steps states can take to improve mental health services, with a special focus on CON repeal.

Haskins and Corley found that CON laws may lead to mental health service shortages in states across the country. “[O]f the 30 states and the District of Columbia ranked by Mental Health America as being the worst for access to mental health care services and prevalence of mental illness, 23 have CON laws or variations on CON legislation.” Haskins and Corley also note of the 26 states with the greatest shortages of mental health care professionals, 19 have CON laws.

The unintended consequences of CON laws have led many experts to call for the reform or repeal of these policies. The lack of mental health services is a public health and safety issue that states need to address. Simply throwing money at the problem will not suffice; states need to give mental health providers the flexibility to change and grow. Ending CON laws would be a step in the right direction.

The following documents provide additional information about CON laws.

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

Government Regulations Reduce Access to Mental Health Services
In this edition of the Consumer Power Report, Justin Haskins, executive editor of The Heartland Institute, discusses President Barack Obama’s announced  proposal to spend $500 million on improving access to mental health care and to provide better mental health information for firearms background checks. Haskins argues repealing CON laws would go a long way to helping Americans find care. “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,” wrote Haskins.

Research & Commentary: Missouri Should Pursue Certificate of Need Reform–commentary-missouri-should-pursue-certificate-of-need-reform?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines Missouri’s certificate of need laws, their effect on mental health services in the state, and he argues for their reform or repeal.

Amid Shortage of Psychiatric Beds, Mentally Ill Face Long Waits for Treatment
Michael Ollove writes in Stateline about the growing problem many states are facing with housing mentally ill patients and how some are held in emergency rooms, hospitals, and jails while they wait for a bed – sometimes for weeks. “The problem extends far beyond Washington[, DC]: In a 2014 survey, 19 of 38 state mental health directors said their states had been threatened with or found in contempt for failing to admit jailed inmates found mentally incompetent into mental health facilities in a timely manner,” wrote Ollove.

Three Ways to Address Mental Health
In this article published by Inside Sources and the Las Vegas Sun, Justin Haskins, executive editor of The Heartland Institute, and Jacquelyn Corley of Duke University outline steps states can take to improve mental health services. “Despite the many advantages of direct primary care practices, many states don’t allow this model to be used or treat these practices as though they are insurance companies, making it difficult or impossible to operate effectively,” wrote Haskins and Corley.

The Great Healthcare CON
Jordan Bruneau of the Foundation for Economic Education says CON laws powerfully distort the health care market. 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 prices, restricts access, and is maintained by cronyism—would be a great place to start.”

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: A Prescription for Higher Costs
In this article published in Antitrust Magazine, 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.

Are Certificate-of-Need Laws Barriers to Entry? How They Affect Access to MRI, CT, and PET Scans
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.

Do Certificate of Need Laws Increase Indigent Care?
Thomas Stratmann and Jacob Russ of the Mercatus Center at George Mason University examine certificate-of-need laws and their effects on pricing and health care access. “While certificate of need laws significantly reduce available health care services for everyone, they do not lead to an increase in care for the needy.”

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 Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

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