Certificate of Need Repeal Must Become a Legislative Priority
As our readers are well aware, the last two years have been harrowing from the perspective of public health policy. The coronavirus pandemic immediately altered the way that government interacts with the public in unexpected and almost schizophrenic ways. On the one hand, the potential reach of government medical mandates and lockdowns has never been greater; on the other hand, market-oriented health care policies like licensing reform and scope of practice expansion have been more widely adopted than at any time in recent memory.
But while the jury is still out on whether society-wide lockdowns really work to stop pandemics, the jury is not out on the importance of supply-side health care reforms: supply-side health care reforms work, and they help patients.
Of course, we’ve made this point often, and one reform we have emphasized in particular is Certificate of Need (CON) repeal. In short, a CON law “gives government the power to manage competition in a given industry through the allowance, or disallowance, of new providers, facility expansions, or certain services as defined by the law.”
In Missouri, the health care facilities covered by the state’s CON law include nursing homes and hospitals, and competing hospitals and care centers are included in the process of deciding whether to allow new competitors into their health care markets. The economics here are simple: more competition means more choices, which puts downward pressure on prices. That’s good for customers and their pocketbooks, but naturally, incumbent hospitals and other care centers would rather have less competition.
But just because hospitals and other care centers might not want competition doesn’t mean the government should be empowered to prevent it. Imagine if grocery stores, or gas stations, or restaurants had a say in deciding whether consumers could have new options for groceries, gas and dining. It’d be bizarre, anti-market, and anti-consumer. Yet, this is how large swaths of Missouri’s health care market operate, and this system survives at least in part because most of the public doesn’t realize what’s happening.
Supply-side health care reforms like interstate license reciprocity have both immediate benefits for combatting a pandemic as well as long-term access benefits beyond the pandemic itself, and such a reform was very popular because the benefits were immediate and easily explainable. But it’s important for legislators to start considering long-term supply-side reforms, like CON repeal, that may have been a low priority during the pandemic because the benefits would be slower to materialize. Fortunately, several bills have been filed for 2023 that would repeal the state’s CON law; I hope they fare well in the coming year.
Something that sounds like “hospital construction reform” may be a low priority when people are being exposed to a lethal respiratory disease, but policymakers should prepare our health care system for the (hopefully) vast period of time between now and the next pandemic, when more typical health care needs will need to be met and the price for care will be an acute concern for payers. Competition in health care is a good thing for patients’ wallets, and Missouri should repeal its CON law to ensure the state’s health care market is as competitive as possible.