May 16, 2016

Certificate of Need Laws Only Complicate Health Care and Stifle Competition

Christopher Koopman

Senior Affiliated Scholar
Summary

A review of the literature shows that there is no clear evidence that certificate or need laws control costs; in fact, some studies suggest they may do the opposite.

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Sometimes complex problems require complex solutions. Sometimes issues become so twisted and tied that only the most sophisticated answers could solve them. Trying to dissect the current debates over health care would leave one thinking that we've found ourselves in such a mangled situation that only Rube Goldberg himself could devise an appropriate solution.

This thinking, however, is not new or unique to today's debates about health care. In fact, it is what has created much of the current mess in the first place.

Take, for example, little-known yet hugely significant certificate of need or CON laws. Thirty-six states currently require government permission before health care providers can open or expand a practice or invest in certain devices or technology. Permission is granted on the basis of so-called "need" by using complex formulas, hearings and a bureaucratic process that tends to look like high-stakes litigation. In fact, in most instances, current providers are invited to challenge a would-be competitor's right to open a practice. And it may take years and hundreds of thousands of dollars before a provider is granted permission to buy something as straightforward as an MRI machine.

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