Certificate of Need laws in healthcare are associated with higher costs, lower quality, and decreased access to the treatments regulated. The most recent academic paper on the topic finds that it results in less access to care in rural areas.
Certificate-of-need (CON) laws have a long and varied history. New York was the first state to implement CONs in 1964, and the federal government later incentivized their adoption by requiring CONs to receive certain federal funding. In 1986, realizing the policies were not leading to better outcomes, the federal government scrapped the requirement. Fast forward to today and many states have repealed or reformed their CON laws giving researchers a chance to examine their effects in greater detail.
The findings make a clear case for repeal. CON laws are associated with lower quality hospital care, higher hospital and non-hospital expenditures, increased Medicaid and Medicare costs, and they also cause people to travel further for care because the supply of a regulated item decreases. Even when we turn to concerns over equity in health care researchers also find that CONs lead to greater disparities against minority groups and no increase in care for the indigent. CON laws are also associated with access to less care in rural areas.
None of this should be a surprise when we review the CON process. To distill it down to its basic essence: Existing health care providers decide whether another provider can exist, expand, or improve.
Connecticut residents can see the results for themselves. A proposed Danbury Proton therapy center to treat cancer patients was just denied by the CON process through OHS, even though lobbying by Hartford HealthCare and Yale New Haven Health lead to approval for a similar facility.
To provide a parallel, it would be like having the local Ford and Honda dealership deciding whether Subaru should be allowed to sell cars in town — or allowing just one newspaper to be given a license to publish in Connecticut. In the rare instance the existing firms would allow for new competition, under CON laws they would still have a say in whether the new competitor could expand operations or bring in innovative technology.
Nobody would support this anti-competitive policy in abstract, and yet we are doing just that in health care right now.
The General Assembly correctly noted this negative effect during the pandemic when Connecticut, like otherstates, suspended parts of our CON program. Our elected officials would do well to follow-up on that temporary change by expanding it and making it permanent — as bills introduced by Sen. Ryan Fazio and Rep. Mark Anderson would do.
We do not need more political grandstanding from elected officials, nor is it necessary to implement a new tax incentive, state-run program, or nuanced regulation to improve health outcomes and lower health care costs in Connecticut — the simple repeal of this law will make a difference.
Existing providers and some government officials will inevitably push back on the reform, but there is no good reason to continue this harmful policy.