Skip Navigation

Certificate of Need Laws: A Prescription for Higher Costs

October 1, 2015
By Maureen K. Ohlhausen

In this article from Antitrust Magazine, Maureen Ohlhausen examines CON laws and argues for their repeal.

America has struggled with the cost of health care for decades. Health care costs are excessive for many reasons, and there are inherent trade-offs between among quality, cost, and access that make reducing costs in isolation a daunting exercise. Although there are no silver bullet solutions, we must still pursue many avenues to foster and maintain competition among providers, which helps keep down costs and improve quality for health care consumers. State certificate of need (CON) laws—which require state approval for new entry and expansions by health care providers—stand out as an example of regulation that squelches the beneficial effects of competition in health care markets without delivering valuable public benefits in return. Yet, even the repeal of these outdated laws is controversial in some quarters. The current debate over CON laws has been long on theory but relatively short on practical analysis.

The antitrust toolkit provides a useful framework to guide the way toward more health care competition, cost savings, and quality improvements. Of course, the sovereign, direct actions of the states in our federal system are not subject to the antitrust laws. Yet, state CON laws are restraints of trade all the same, and we would do well to analyze them as such when determining whether they constitute sound public policy. Once you look at these laws through the eyes of an antitrust lawyer, the case for repeal comes into sharp focus.