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West Virginia Missed the Opportunity to Repeal Inefficient and Costly Certificate of Need Laws

August 13, 2021

In this Research & Commentary, Christina Herrin evaluates how West Virginia would benefit from Certificate of Need Law Repeal.

West Virginia is one of 35 states that enforces certificate of need (CON) laws. In essence, CON laws typically result in extensive government overreach in the health care marketplace. This occurs because CON laws require government approval before health care facilities are expanded or new facilities are built. The goal of CON laws is to reduce duplication of health care services, thus lowering the cost. However, historically this has not been the case. West Virginia lawmakers had the opportunity to repeal outmoded CON laws during the state’s 2021 legislative session. Yet, the bill was not passed.

 If passed, House Bill 2077, introduced by Delegate Amy Summers (R-49), would have repealed West Virginia’s CON laws. It stated, “…the certificate of need program previously authorized by this article is terminated as of July 1, 2021. Any reference elsewhere in this code to a certificate of need as required by this article shall cease to be enforceable as of that time. A health care facility may not be required to obtain a certificate of need or similar authorization after that date before operating in this state.”

If the West Virginia Legislature had voted to repeal, the state could potentially have reduced health care spending by at least $232 per person. In addition to this reduction in spending, the legislation would have improved the average quality of health care for West Virginia residents..

Health care professionals who witness the negative effects of CON support the repeal of these outdated policies. The aforementioned Delegate Summers—an emergency room nurse in addition to her role as Majority Leader of West Virginia’s House of Delegates—provides a particularly compelling perspective. Summers argues, “Why should we as a governmental regulatory body prohibit other providers from coming in that would take care of those patients? Choice is all we have for these patients. That is the only control that patients have. As a state, through the Certificate of Need process, we are denying that from happening all in the name of trying to control health care costs. What costs more: driving to another facility in your area or driving an hour away because your area is not allowed to get approval to have another facility?”

States operating with CON laws have mortality rates 5.5 percent higher than states operating without CON, according to a report by the Mercatus Center. Additionally, states with CON have higher rates of death from post-surgery complications as well as increased readmission rates following heart attacks and heart failure.

Similarly, states operating with CON laws have health care costs that are on average 11 percent higher than states operating without CON, according to the Kaiser Family Foundation.

Rural communities suffer substantially under CON law. Rural states operating with CON have 13 percent fewer hospitals per capita than their fellow rural states who have not adopted stringent CON laws. West Virginia lawmakers would be wise to repeal, or at least substantially reform these laws, in an effort to create a more cost-effective, more accessible, and higher quality system of health care for its residents.

West Virginia must eliminate CON to make patient centered care a priority. If the Mountain state removed these burdensome barriers to entry the health care would be more accessible and affordable for patients.

 

The following documents provide additional information about certificate of need laws.


Certificate of Need Laws: West Virginia State Profile
https://www.mercatus.org/system/files/west_virginia_state_profile.pdf
This state profile from the Mercatus Center examines West Virginia’s CON laws and compares the health care outcomes and costs in other states to those in West Virginia. The studies attempt to give some insight into what is likely to happen in West Virginia if the state were to eliminate its CON laws.

Certificate-of-Need Laws and Hospital Quality

https://www.heartland.org/publications-resources/publications/certificate-of-need-laws-and-hospital-quality
Thomas Stratmann and David Wille of the Mercatus Center at George Mason University challenge the claim that CON laws improve hospital quality. “Using a broad dataset, the study finds no evidence that CON laws improve hospital quality. In fact, there are more deaths and serious post-surgery complications in hospitals in states with CON laws,” wrote Stratmann and Wille.

Certificate-of-Need Laws Lower Quality of Care, Study Finds

http://www.modernhealthcare.com/article/20160928/NEWS/160929875
Shelby Livingston of Modern Healthcare examines a new study from the Mercatus Center that argues certificate of need laws that govern the construction and development of health care facilities do not raise the quality of care at hospitals and may even lead to higher readmission rates.

Certificate of Need Laws: A Prescription for Higher Costs
https://www.heartland.org/publications-resources/publications/certificate-of-need-laws-a-prescription-for-higher-costs
In this article published in Antitrust Magazine, Maureen Ohlhausen examines CON laws and argues for their repeal. “Regardless of one’s perspective on the proper balance between state and federal power, there are some very good reasons to repeal state CON laws,” wrote Ohlhausen.

Do Certificate of Need Laws Increase Indigent Care?
https://www.heartland.org/publications-resources/publications/do-certificate-of-need-laws-increase-indigent-care?source=policybot
Thomas Stratmann and Jacob Russ of the Mercatus Center at George Mason University examine certificate of need laws and their effects on pricing and health care access. “While certificate of need laws significantly reduce available health care services for everyone, they do not lead to an increase in care for the needy.”

The Great Healthcare CON
http://fee.org/the_freeman/detail/the-great-healthcare-con
Jordan Bruneau of the Foundation for Economic Education finds CON laws raise health care prices and reduce availability. He advises, “Rather than pinning our hopes on grand plans to overhaul the system, we should first look at where we can make changes on the margin that would move us in the right direction. Abolishing CON laws – a barrier to entry that drives up price, restricts access, and is maintained by cronyism – would be a great place to start.”

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 a former state government relations manager at The Heartland Institute.
cherrin@heartland.org @_Free2Choose