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Testimony before the South Carolina Committee on Ways and Means Regarding S 209

April 19, 2022

Matt Dean Testifies before the South Carolina Committee on Ways and Means Regarding Certificate of Need Laws.

Dear Chairman Smith and members,

Thank you for your work to address the access to care crisis in South Carolina. My name is Matt Dean, and I am a senior policy fellow for healthcare outreach with the Heartland Institute. The Heartland Institute is a 37-year-old independent, national, nonpartisan, nonprofit organization whose mission is to discover, develop and promote free-market solutions to social and economic challenges. Heartland is headquartered in Illinois and provides national, state and local elected officials with reliable and timely research and analysis to help them meet these challenges. 

Your colleague, Rep Mike Burns, who represents a section of Greenville county, got my attention in a recent interview. “We’ve got 350 or 400 square miles if you live up where we do and you get sick, you’re going to wait 45 minutes for an ambulance a lot of times” Rep Burns said, noting that an ER might be another 30 minutes away. If you have a stroke, heart attack or severe trauma, each additional minute can mean the difference between life and death.

Fortunately, South Carolina can quickly improve access to care by removing antiquated certificate of need restrictions that are currently blocking 28 projects and more than $1 billion in medical investment.  This includes a 98-bed hospital in Lancaster County, expanding the NICU in Charleston, and programs to expand rural outreach and treatment.

The Covid-19 pandemic has exposed many flaws in our healthcare delivery systems. Now it is clear that certificate-of-need (CON) laws, that restrict the supply of hospital beds and technologies by requiring regulatory approval, have made things worse for states scrambling to alleviate the stress on overwhelmed hospitals. Restricting hospital beds and resources, and placing them into fewer and larger facilities, has made our care delivery less resilient and more susceptible to the spread of the coronavirus. Legislatures are now planning for the permanent reform of their CON laws, as temporary executive order repeals expire.

 

CON LAWS BEGAN AS A 1970S RATIONING SCHEME

In the 1970s, healthcare policy activists began to worry that the great proliferation of medical technology and rapid consolidation of health systems would create disparities in access. Their fears quickly led to legislation aimed at preventing the expansion of medical care disproportionately favoring a select few (presumably) at the expense of poorer and more rural Americans. In a growing number of states, If you wanted to serve more people with additional beds or new technology, you were forced to go before a regulatory board.

Quickly, most states adopted certificate of need laws in the hopes that by limiting the supply of care, it would somehow become more fairly distributed by regulators. The federal government used its checkbook to threaten states that didn’t enact CON laws. As certificate of need laws expanded, surgical centers, imaging facilities, addiction recovery centers, psychiatric facilities and nursing homes were added to the list of regulated services.

CON LAWS SHOW HIGHER COST, LESS CARE

Not long after CON laws were instituted, legislators began to wonder whether the bureaucracies created to control the supply of care were making healthcare harder to find and more expensive to buy. In a recent study of states that have repealed their CON laws, the Mercatus Center found that after five years, the hospital charges were 5.5 percent lower than they would have been with CON.

For the past twenty years, that skepticism has progressively turned into legislation to reform, unwind and repeal certificate of need laws. Studies have consistently shown that states with certificate of need laws have more expensive healthcare that is less available for people in rural areas. The CON legislation was causing the disparities it was supposed to prevent.

This realization led to an uncommon bipartisan reform in healthcare policy. The Obama and Trump administrations both promoted reforms aimed at reforming certificate of need legislation.

THE PANDEMIC AND CON LAWS

As the coronavirus took hold in early 2019, hospital beds quickly filled, and the top priority of every governor became finding more beds and ventilators to handle the coming wave of critically ill patients. Limiting hospital beds had already been viewed by many as a weird relic of the 1970s, but the pandemic made getting rid of bed restrictions an easy decision for governors looking to respond to the coming surge of critically ill people. 20 states quickly set aside certificate of need laws and more followed.

As the pandemic enters its third year, hospitals are again overwhelmed with coronavirus variants, seasonal illness and a sharp labor shortage. States abandoning 1970s soviet-era moratoria are looking for ways to create less concentrated care delivery models that focus on the best interests of the patient. Replacing hospital moratoria with market driven solutions will improve care and save money.

Thank you for your attention and for your work on this important issue.

 

Nothing in this testimony 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 and other topics, The Heartland Institute’s website provides a great link to many policy resources.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Heartland’s government relations department, at governmentrelations@heartland.org or 312/377-4000

Author
Matt Dean is Senior Fellow for Health Care Policy Outreach at The Heartland Institute.
mdean@heartland.org