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Alaska Considers CON Law Repeal

December 27, 2018

Alaska lawmakers are expected to reintroduce a measure to repeal the state’s certificate of need (CON) laws, which limit the services health care providers can offer.

In 2017, Alaska state Sen. David Wilson (R-Wasilla) introduced a bill to repeal the state’s CON laws, which prevent health care providers from offering new services and facilities unless the government deems them necessary. The bill failed to pass, and its sponsors reportedly plan to revive it in the 2019 legislative session.

Alaska is one of 35 states with CON laws, which lead to higher health care costs, restrain innovation, and reduce access to care by imposing limits on the services individual providers can offer. CON laws can create premature deaths by limiting access to medical equipment and services that diagnose and treat illnesses.

‘Particularly Disruptive’ Laws

Thomas Stratmann, an economics professor for George Mason University and a senior research fellow at the Mercatus Center, testified in favor of the 2017 bill before the Alaska Senate’s Labor and Commerce Committee.

Alaska’s geographical isolation makes its CON laws particularly damaging, Stratmann said in his testimony.

“In the lower 48, patients can travel across state borders to access medical services not provided in their states,” Stratmann told the legislators. “For most Alaskans, such travel is cost-prohibitive, and they have to live with the harmful effects of CON.”

If Alaska did not have CON laws, the state would have 30 percent more hospitals overall, nearly 50 percent more rural hospitals, almost 50 percent more ambulatory surgical centers, one-third more MRI scans, and 30 percent more CT scans, Stratmann said during his testimony.

“Comparing states with CON laws versus those with no CON laws shows that states with CON laws have lower quality of service, as measured by their hospital mortality rates and hospital readmission rates,” Stratmann testified.

CON Costs

In addition to decreasing access to health care services, CON laws have driven up the average cost of health care by forcing providers to operate in outdated facilities with obsolete equipment.

Nationwide, health care costs are 11 percent higher in states with CON laws, according to data compiled by the Kaiser Family Foundation. In fact, states requiring CON on 10 or more services averaged 8 percent higher health care costs per capita than those requiring CON for fewer than 10 services, the Kaiser study found.

Repeal of Alaska’s CON laws could reduce the average price of health care per consumer in the state by $294 per year, the Mercatus Center reported in 2017.

Stifling Competition

Matthew Glans, a senior policy analyst for The Heartland Institute, which publishes Health Care News, says CON laws are particularly harmful to low income and geographically isolated people.

“CON laws can keep an enterprising physician who may have the desire to open a clinic to serve an underserved population from fulfilling that dream,” Glans said. “If they know this arbitrary regulation exists that will keep them tied up in red tape simply for trying to serve patients, they are likely to scrap the idea of striking out on their own. That means those underserved areas miss out on a chance for better, geographically closer health care services.”

‘More Choice,’ ‘Higher Quality’

The U.S. Federal Trade Commission and the Department of Justice’s Antitrust Division recommended Alaska repeal its CON laws during discussion of the bill in 2017. The Trump administration’s December 2018 report on “Reforming America’s Healthcare System Through Choice and Competition” calls for policies to encourage states to rid themselves of CON laws. (See story on page 1).

Repealing those laws would be the right choice for Alaska, Stratmann says.

“Removing certificate of need requirements to provide health care services in Alaska will benefit Alaskans because they will have more choice and experience higher-quality medical services,” Stratmann said.

Cory Compton (thecomptonjr@ gmail.com) writes from Cheboygan, Michigan.

INTERNET INFO:

Thomas Stratmann, “The Failure of Alaska’s Certificate-of-Need Laws,” testimony before the Alaska Senate Labor and Commerce Committee, Hearing on Repeal of Certificate of Need Program, April 7, 2017: https://www.mercatus.org/publications/failure-alaska-certificate-need-laws

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