Since 1972, Michigan has restricted the supply of health care with certificate-of-need (CON) programs. These programs prohibit health care providers from entering new markets or making changes to their existing capacity without first gaining the approval of state regulators. Research shows that reforming or repealing these laws would improve both the quality and acessiblity of health care for Michiganders while lowering its cost.
Healthcare Services that require a CON in Michigan as of January 2020
Ambulatory Surgical Centers (ASCs)
Computed Tomography (CT) Scanners
Hospital Beds (Acute, General Licensed, Med-Surg, etc.)
Linear Accelerator Radiology
Long-Term Acute Care (LTAC)
Magnetic Resonance Imaging (MRI) Scanners
Mobile Hi Technology (CT/MRI/PET, etc.)
Neonatal Intensive Care
New Hospitals or Hospital-Sized Investments
Nursing Home Beds / Long-Term Care Beds
Positron Emission Tomography (PET) Scanners
Ambulance service CONs are often regulated by transportation agencies and not healthcare agencies. Because ambulance restrictions may not have the same implications as other CONs, some researchers do not include them in regression analyses.
CON restrictions are in addition to the standard licensing and training requirements for medical professionals, but are neither designed nor intended to ensure public health or ensure that medical professionals have the necessary qualifications to do their jobs. Instead, CON laws are specifically designed to limit the supply of health care and are traditionally justified with the claim that they reduce and control health care costs. The theory is that by restricting market entry and expansion, states will reduce overinvestment in facilities and equipment. In addition, many states—including Michigan—justify CON programs as a way to cross-subsidize health care for the poor. Under these “charity care” requirements providers that receive a certificate of need are typically required to increase the amount of care they provide to the poor. These programs intend to create quid pro quo arrangements: state governments restrict competition, increasing the cost of health care for some, and in return medical providers use these contrived profits to increase the care they provide to the poor.
How to Reform State CON Laws
Eleven states have already done away with their CON regulations, and many legislators rightly see CON repeal as a common-sense way of improving health care in their states. While full repeal is best, there are still ways to make meaningful reforms happen even when full repeal is not feasible.