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The Leaflet: States Do Not Need Certificate of Need Laws

April 26, 2019

States are moving to repeal their certificate of need laws, which make it difficult for providers to offer new or additional medical services or facilities. CON laws increase health care costs and reduce quality.

Florida might soon repeal its certificate of need (CON) laws, which restrict competition in the health care market. House Bill 21 would eliminate the Sunshine State’s entire CON review program and allow licensed providers to offer new or additional medical services without obtaining a certificate of need. 

Florida House Speaker Jose Oliva (R-Hialeah) described CON reform as “an idea whose time has come.” Oliva is confident the overdue reform bill, which passed his chamber in late March, will be signed into law soon. Gov. Ron DeSantis has said CON reform is one of his top priorities this legislative session.

CON proponents claim these regulations are necessary to control health care costs. However, the law of supply and demand (and common sense) proves the opposite is true. By limiting the supply of medical facilities and services offered, CON laws increase health care costs and reduce quality. 

Health care costs are 11 percent higher in CON states than in non-CON states, according to the Kaiser Family Foundation. Further, states with CONs governing 10 or more services averaged per-capita health care costs that are 8 percent higher than the $6,837 average for states requiring certificates of need for fewer than 10 services. In Florida, health care spending per capita could drop by $235 if CON laws were repealed, according to a Mercatus Center study. The same study also finds the Sunshine State has 104 fewer hospitals and that the quality of health care in the state is artificially depressed because of CON laws.   

Currently, 35 states have CON laws. South Carolina, like Florida, is considering a bill that would eliminate the state’s CON laws. The Palmetto State regulates 22 medical services, devices, and procedures under its CON program, compared to the national state average of 14. If South Carolina lawmakers were to repeal these unnecessary laws, total health care spending could drop by $200 per person. Additionally, Palmetto State residents would have access to 34 additional health care facilities, 12 ambulatory surgery centers, and nine rural hospitals if the state were to end its CON requirements.

CON laws, which date back to the 1960s, are crony capitalism at its worst. States with outdated and obsolete CON laws should immediately repeal them and embrace free-market health care reforms.

 

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Author
Arianna Wilkerson worked in government relations at The Heartland Institute from 2017 - 2019.