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Op-Ed:
North Carolina is being conned by Certificate of Need laws
[The Center Square]
Christina Herrin | The Heartland Institute
One of the biggest cons in
America is certificate of need (CON) laws, which riddle the health care
system with burdensome regulations, resulting in higher costs and less
access. |
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 These laws were initially passed by states in the 1960s, with
the goal of decreasing health care prices by limiting the duplication of
services. In the early 1970s, the federal government adopted CON policies,
applying the same regulatory principles to Medicare and Medicaid by offering
federal funding to states that implemented CON laws.
In 1987, the federal government repealed the CON mandate due to its
ineffectiveness. Since then, CON laws have actually led to increased health care
costs.
Currently, 35 states, including North Carolina, enforce some
type of CON laws. In North Carolina, a certificate of need is required for any
new health care facility development or expansion, or new technological
advancements for procedures. The regulations impact everything from
multi-million-dollar health care facility construction to how many in-patient
beds a facility is allowed to have.
 Costs are much higher in states that operate with CON than those without.
According to data from the Kaiser Family Foundation, health care costs are 11%
higher in CON states than in non-CON states.
Not only are these regulations costly, they also negatively impact quality of
care. CON laws are directly linked to reduced quality of care in hospitals and
less health care access for rural communities. The reality is that states
operating with CON laws have rates of mortality about 5.5% higher than states
operating without CON laws, according to a report by the Mercatus Center at
George Mason University.
If North Carolina lawmakers took seriously the consequences that CON laws have
on the health care system and moved to repeal CON permanently, the state’s
health care costs could drop by $213 per person.
Many states temporarily suspended their CON laws during the COVID-19 pandemic to
allow health care facilities to respond to market demand. North Carolina is one
of 20 states that temporarily suspended CON laws during the height of the
COVID-19 pandemic.
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CON laws are burdensome laws that stifle growth and
innovation in the health care marketplace. These laws also inhibit
competition, resulting in higher costs.
If the Tar Heel State took the necessary steps to
repeal CON laws, health care costs would drop and health care
quality and access would be substantially improved for North
Carolinians. North Carolina could have 55 more hospitals if its CON
laws were eliminated, according to a Mercatus study. Furthermore,
patients could have access to more imaging tests outside the
hospital setting, resulting in less travel, lower costs, and more
convenience.
North Carolina has some of the most stringent CON laws on the books,
which disproportionately harm rural residents. Research shows that
CON states have 30 percent fewer rural hospitals and 13 percent
fewer rural ambulatory surgical centers when compared to states
without CON laws.
Earlier this year, there was an effort by the North Carolina
Legislature to reform the state’s onerous CON laws. The bill would
exempt a majority of health care facilities from having to operate
under the confines of CON laws. This would be a solid first step for
the state, but ideally the Legislature would repeal the entire CON
program.
These laws are a perfect example of the “unintended consequences” of
centralized planning by government. The free market is the only way
to accurately determine need in the marketplace, the government nor
any state board can accurately do that.
The best way to cut costs and provide better access to quality
health care would be to remove regulations that limit competition.
CON laws are an antiquated policy that negatively affect the most
vulnerable in our society. State lawmakers should take the necessary
steps to permanently remove these laws.
Christina Herrin (cherrin@heartland.org) is a
government relations manager at The Heartland Institute, a
nonpartisan, free-market think tank headquartered in Arlington
Heights, Illinois.
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