January 28, 2015

Certificate-of-Need Laws: Implications for New Hampshire

Testimony before the New Hampshire House Health, Human Services and Elderly Affairs Committee
Key materials

See updated research: Certificate-of-Need Laws: Implications for New Hampshire

January 28, 2015 

Representative Frank Kotowski
Health, Human Services & Elderly Affairs Committee New Hampshire House of Representatives 

Dear Chairman Kotowski: 

Thank you for the opportunity to provide some comments regarding New Hampshire’s certificate-of-need (CON) program. The Project for the Study of American Capitalism at the Mercatus Center at George Mason University is dedicated to advancing knowledge about the effects of government-granted privilege on society. As part of its mission, the program conducts careful and independent analyses that employ economic and legal scholarship to assess legislation, regulation, and taxation from the perspective of the public interest. Therefore, this commentary does not represent the views of any particular affected party but is designed to assist your Committee as it explores these issues. 

Attached, please find a research brief by George Mason University economist and Mercatus Center Scholar Thomas Stratmann and me about the effects of CON regulations on the provision of health care services in the state of New Hampshire. Our findings show that continued application of New Hampshire’s CON program, and its restrictions on the provision of health care services within the state, limits the choices available for those seeking quality care. In particular, using the general findings from recent research by Thomas Stratmann and Jacob Russ,1 we estimate that continued application of the state’s CON program has reduced the provision of health care services in the following ways: 

  • 1,300 fewer hospital beds,
  • 7 fewer hospitals offering MRI services, and
  • 9 fewer hospitals offering CT scans. 

Moreover, while New Hampshire’s CON program may have been initially intended to control costs and increase care for the poor, recent research has demonstrated that these goals have never been achieved through CON regulations. There is little evidence to support the claim that certificates of need are an effective cost-control measure, and Stratmann and Russ have found that these programs have no effect on the level of charity care provided to the poor. While controlling health care costs and increasing care for the poor may laudable public policy goals, the evidence is strong that CON regulations are not an effective tool for doing so. Instead, these programs simply decrease the supply and availability of health care services by limiting entry and competition.

Thank you for giving me the opportunity to provide comments regarding the history and effects of New Hampshire’s certificate-of-need regulations. As we note in the attached paper, this is an opportunity for policymakers in New Hampshire to reverse the course and open the health care market for greater entry, more competition, and ultimately greater choice for those seeking care. 

Sincerely, 

Christopher Koopman
Research Fellow, Project for the Study of American Capitalism Mercatus Center at George Mason University 

Continue reading