Certificate of Need Laws: Why Should You Care?

October 6, 2020 Updated: October 7, 2020

Commentary

Currently, 35 states are bound by certificate of need (CON) laws. In their current manifestation, CON laws regulate a host of health care services and facility expansions, requiring any entity yearning to enter the health care marketplace to provide proof that there is need for the expansion within the community.

CON laws are unique to health care. These types of laws don’t exist in almost any other industry. By contrast, there’s almost unfettered entry into the marketplace in retail, hospitality, entertainment, etc.

Health care is a transformative industry that is multifaceted. With good intent, these laws were designed and implemented to make health care more accessible. Yet, good intent doesn’t make for good laws. Instead, CON laws have hindered growth and stifled competition in the medical marketplace.

Kentucky is one of 35 states still operating under these archaic laws. CON laws are the epitome of crony capitalism, enacting almost insurmountable barriers for newcomers, aka the little guy, to enter the health care marketplace that is currently dominated by the big boys.

For example, in the case of Dipendra Tiwari, a Nepali immigrant and Kentucky resident, CON laws have done much more harm than good. He is facing an uphill battle against CON laws in his attempt to start a home health care agency focused on the small community of Nepali immigrants residing in Louisville.

However, as is the case with Tiwari, government overreach of this magnitude, in the form of CON laws, is limiting options for patients and stifling much-needed innovation.

Under Kentucky law, Tiwari is required to “show need” before he is granted approval to begin operating his small startup. As such, CON laws threaten a key tenet this country was founded upon: individual liberty.

Throughout the United States, CON laws undermine patient choice, deter potential entrepreneurs, and discourage market entrants. Even worse, these draconian rules increase health care costs and reduce access to health care services.

Fortunately, Tiwari isn’t fighting against CON laws on his own. Tiwari has joined forces with the Institute for Justice to defeat the dreaded CON laws that plague the Bluegrass State.

According to the Institute for Justice, the application process to apply for a certificate of need requires a $1,000 filing fee, a 20-page application packet, and a 50-day waiting period.

Then, the real “fun” begins. Once the paperwork has been filed and the fee paid, those pursuing a CON license are granted a hearing before a panel of government bureaucrats.

Oh, and just in case you are wondering, not a single startup has been granted a certificate of need approval in the Bluegrass State in more than six years.

When unelected government bureaucrats determine winners and losers in this nature, everyone loses. CON laws are a perfect example of centralized planning gone awry. The only true determination of need lies within the market, where the forces of supply and demand are much more efficient and fairer.

As cronyism and anticompetitive practices—which are inherent to CON laws—have ravaged markets in all industries, the health care sector is clearly no exception. The negative effects of government overreach are seen in high prices and outdated hospitals and technologies.

Unleashing the forces of the free market would level the playing field within the health care market while providing more choices to patients. For patients seeking specialized care, or in Tiwari’s case, an attempt to provide for minority communities, the government seems to forget that the smallest minority on earth is the individual. And limiting the freedom of one limits freedom for all.

In a time when the political and social dichotomy in this country couldn’t be greater, this is an issue that both political parties should be able to agree on. The American dream is the idea that opportunity is available to all Americans. If you stand for CON laws, you are threatening the very existence of the once-prized land of opportunity.

Christina Herrin (cherrin@heartland.org) is the government relations manager of health policy at The Heartland Institute, a nonpartisan, free-market think tank headquartered in Arlington Heights, Illinois.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.