Skip Navigation

Research & Commentary: Delaware Should Make Certificate Of Need Laws A Priority In Upcoming Legislative Session

November 13, 2020

In this Research & Commentary, Christina Herrin provides evidence of the need for reform of unnecessary certificate of need laws, which are currently enforced in Delaware.

Delaware is one of 35 states that enforce certificate of need (CON) laws, which are intended to decrease duplication and promote health care consolidation. Unfortunately, CON laws increase health care costs by reducing competition and innovation. They also force providers to use older facilities and equipment.

Currently, Delaware laws limit health care service expansion and access for patients. The costs of health care in America are unsustainable and continue to rise. According to the Health and Human Services (HHS) report: Reforming America’s Healthcare System Through Choice and Competition, both the Federal Trade Commission and Antitrust Division of the Justice Department recommend that states repeal or reform CON laws.

States originally adopted CON programs in response to incentives offered in the National Health Planning and Resources Development Act of 1974, which was repealed in 1986 at the federal level due to the fact that CON laws haven’t helped lower costs. Moreover, they have become a burden on the free market and have created unnecessary barriers to enter the medical marketplace. 

The impact CON laws have on health care costs are inescapable. For years, they have negatively impactedDelawareans. The Mercatus Center at George Mason University published a report estimating that health care spending in Delaware would drop by nearly $270 per person if CON laws were repealed.

States with CON laws consistently carry higher costs than those without. The Kaiser Family Foundation found a positive correlation between CON laws and increased health care costs on a statewide basis. For example, states with CON laws on 10 or more services averaged per-capita health care costs 8 percent higher than the average for states enforcing CON laws for fewer than 10 services. These numbers can’t be ignored.

Furthermore, when new competitors attempt to gain access to the health care market, CON laws are used for anticompetitive practices to block potential competition. The result is devastating, and the high costs are becoming unmanageable.

The issue of CON laws was brought up earlier this year on March 11, 2020 in the Delaware State Legislature. Unfortunately, the COVID-19 pandemic interrupted any prospect of reform for CON laws this year. Yet, 2021 presents an excellent opportunity for the legislature to bring the issue back up and discuss ways to provide quality care at affordable prices by promoting choice and competition within the marketplace.  

The Caesar Rodney Institute (CRI)—a Delaware-based, non-partisan, and non-profit research organization that focuses on economic issues—is also in favor of reform, pointing to increased costs and diminished access to care within the state. CON laws have made it more difficult for new entities to enter the marketplace and CRI argues that the decisions of Delaware’s Health Resources Board need to be assessed.

Furthermore, CON laws have contributed to the First State ranking third in the nation in health care costs per capita by restricting access to the marketplace resulting in too few hospital beds, ICU beds, and ER facilities. It is not the government’s role to pick the winners and losers within the marketplace, nor managing the needs of businesses. The most vulnerable in society have been negatively impacted by these policies and Delawareans deserve better.

States such as Delaware unnecessarily limit the expansion of health care facilities, providers, and services because of antiquated CON laws. These laws lack transparency and political accountability. Policymakers should reform, if not repeal, this outdated and unnecessary laws.

 

The following articles provide information about certificate of need laws.

 

Reforming America’s Healthcare System Through Choice and Competition
https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf

Report prepared by the Department of Health and Human Services (HHS) in collaboration with the Departments of the Treasury and Labor, the Federal Trade Commission, and several offices within the White House. This report describes the influence of state and federal laws, regulations, guidance, and polices on choice and competition in health care markets and identifies actions that states, or the Federal Government could take to develop a better functioning health care market.

Certificate of Need Laws: Delaware State Profile
https://www.mercatus.org/system/files/delaware_state_profile.pdf

This state profile from the Mercatus Center examines Delaware’s CON laws and compares health care outcomes and costs in other states. The studies attempt to give some insight into what is likely to happen in Delaware if the state were to eliminate its CON laws.

CON Laws Has Garnered Attention in the State Legislature

https://delawarebusinesstimes.com/news/certificate-of-need-future/

The 2021 legislative session will present an opportune time for CON laws to be addressed by state elected leaders.

Letter to Governor Carney

https://www.caesarrodney.org/CRI-news/Letter-to-Governor-Carney--We-urge-you,-Sir-to-suspend-the-CON-laws-immediately.htm

In brief, CON laws have been analyzed by non-partisan government agencies, states and non-partisan think-tanks and conclusively shown to be an artificial barrier to normal market competition perpetuated by a government regulated healthcare agency.

Certificate of Need: State Health Laws and Programs
http://www.ncsl.org/research/health/con-certificate-of-need-state-laws.aspx
The National Conference of State Legislatures outlines the various state CON laws and the positions of CON law proponents and critics.

Author
Christina Herrin is the Campaign Manager for Free to Choose Medicine.
cherrin@heartland.org @_Free2Choose