New report shows how government rules deny Americans access to hospital care and other health care services

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Outdated “Certificate of Need” laws keep billions in health care investment from reaching vulnerable communities

Arlington, Va. — Before and during the Covid-19 pandemic, many areas that were hit hardest by the virus were poised to expand their health care networks. A new report published today by Americans for Prosperity Foundation (AFPF) reveals how obsolete and harmful state laws got in the way.

In 1974, Congress required states to adopt “certificate-of-need” (CON) laws to receive certain health care funds. The idea: bureaucrats would control the expansion of health care resources in key areas, preventing redundancy, and thereby control the growth of health care costs. Yet CON laws failed spectacularly at this, prompting Congress to repeal the mandate in 1987. Though more than a dozen states have repealed some or all of their CON laws since then, these laws remain on the books in the majority of the country.

AFPF’s new report, “Permission to Care,” highlights the harmful impact that CON laws in 8 states have had over the last few years. In each, AFPF discovered that CON application denials have caused health care need to go unfulfilled, quashed millions or billions of dollars in ready-to-go health care investments, or both. For example:

  • In West Virginia, from 2017–2020, healthcare entrepreneurs withdrew at least 20 applications totaling $43.7 million in proposed capital expenditures after rival providers filed opposition.
  • In North Carolina, competing providers have appealed dozens of CON approvals since January 2020, delaying the development of approximately $423 million in already-approved health care provisions.
  • In South Carolina, CON applications for $400 million in new health care provisions were appealed or withdrawn from January 2018–February 2021.
  • In Georgia, as of January 3, 2023, rival providers were contesting a dozen CON approvals, delaying approximately $269 million in already-approved health care investment.

“Our review of certificate of need data in eight states confirms CON laws harm patients and providers,” said Kevin Schmidt, director of investigations at AFP Foundation and co-author of the report. “In every state we looked we found millions to billions of dollars in denied health care investment, unnecessary delays in deployment of critical care provisions, and reduced access to care driven by industry gatekeeping.”

“CON regimes put government planners and crony profits over patient wellbeing,” said Thomas Kimbrell, analyst at AFP Foundation and co-author of the report. “Patients missed out on billions of dollars in health care investment denied under these laws, but that is only a fraction of the true cost because many providers are unwilling to attempt to even apply for a CON in a rigged game.”

One of the most common obstacles to derail CON applications only adds insult to the injury: opposition from existing providers who fear new competition. And the victims are often the most vulnerable and at-risk human populations.

Take Michigan, for instance. In 2019, the state’s CON commission reported the need for at least 3,000 new nursing home beds. The state immediately received applications for new nursing home construction totaling about $630 million. But suddenly the commission reduced the reported bed need by ten-fold at the urging of existing nursing homes. About 80% of the total value of the construction applications was ultimately withdrawn.

Click here to read the full report.

For media inquiries, please contact Geoff Holtzman, gholtzman@afphq.org