Sunday, June 4, 2023 | 2 a.m.
View more of the Sun's opinion section
Patients in several states could soon find it easier to access life-saving medical care, if state legislators and executive officials eliminate so-called certificate-of-need restrictions for new acute-care hospitals in rural areas.
Certificate-of-need laws require health care providers to get a state government’s sign-off before building new facilities, expanding existing ones, or even purchasing new equipment. These laws are currently on the books in nearly three dozen states.
It makes little sense to artificially restrict the supply of medical care when our nation is in the midst of a decades-long health cost crisis. We need more competition among providers if we’re to drive down costs and improve quality. Scrapping certificate-of-need laws can deliver that additional supply — and thereby expand access to care.
Certificates of need were conceived about a half-century ago as a way to control the rise in health care spending. The idea was that by requiring health care providers to demonstrate that a proposed medical facility or expansion meets an existing public need, lawmakers could prevent providers from spending recklessly on unnecessary projects and equipment.
Since their inception, however, certificate-of-need laws haven’t lived up to that promise. A 2016 analysis by the Mercatus Center looked at four decades of research on the subject and found “no evidence that CON regulations limit health care price inflation and little evidence that they reduce health care spending.”
Incumbent health care providers have grown to love certificate-of-need laws because they give them an opportunity to lobby against the entry of competitors. That may be good for their balance sheets. But it’s bad for patients and their ability to access care.
By one estimate, there were roughly 2,000 fewer hospitals in 2021 than there were in 1998 — a drop of around 25%. During that same period, the U.S. population increased by just over 20%.
This helps explain why states with CON laws have far higher rates of mortality from pneumonia, heart failure and heart attacks than non-CON states, according to a separate Mercatus Center analysis.
Moreover, certificate-of-need requirements have helped contribute to a historic wave of hospital mergers. According to a 2020 analysis by the consulting firm Deloitte, just 10 hospital systems control nearly a quarter of the nation’s hospitals.
This trend toward greater hospital consolidation has, in turn, led to significantly higher costs. A recent study in the journal Health Affairs found that insurance premiums for Obamacare marketplace plans were 5% higher in areas with more hospital market concentration compared with those with less concentration.
To their credit, 25 states rolled back certificate-of-need laws during the depths of the pandemic in order to accommodate the swelling demand for hospital care. Many states — most recently Georgia, Tennessee, South Carolina, Virginia and Washington — have taken steps to loosen these requirements.
For decades, certificate-of-need rules have served to enrich a few entrenched players in the hospital industry at the expense of patients. It’s time to eliminate them — and expose our health care sector to the kind of competitive pressures that can keep prices down, quality high and people healthy.
Sally Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.
