Back in 1986, Congress withdrew federal support for states’ certificate-of-need programs. At that time, evidence was already mounting that these health care policies didn’t work as intended. Today, the evidence is even stronger, yet Alaska still has them in place.
CON laws are little more than expensive and time-consuming barriers to care. They require health care providers who wish to open or expand a facility to first prove to a regulatory body that the community needs the service. During this lengthy process, the provider can spend thousands and even hundreds of thousands of dollars in preparation costs and consultation fees. Most controversially, CON laws allow those who are already in business to challenge the candidacy of would-be competitors.
As a medical doctor and an economist, we know that CON fails patients, and that is what we said in our respective testimonies to the Alaska Senate Labor and Commerce Committee on April 21. Dozens of studies conducted by researchers across the political spectrum during the past several decades have confirmed what the federal government found years ago.
Since the federal government repealed its support, 15 states—representing about 40 percent of the U.S. population—have repealed their own CON laws. In Alaska, the program remains quite extensive.
If an Alaskan health care provider wants to change equipment, services, facilities, hospital beds or nonhospital beds, they must get permission. If a new provider wants to open a clinic, it might first cost up to $75,000 in application fees, plus tens of thousands more in consultation fees. Then they will need to wait months for a decision—with no guarantee that their request will be granted. CON laws do manage to protect incumbent providers from competition, which is one reason large hospital systems often support them.
CON supporters worry about a “duplication of services.” But what they call duplication, we call expansion, innovation, and options for patients. Competition drives quality improvements, cost reduction, and safety.
Because CON laws limit competition, they permit regional health care monopolies. This is especially problematic for Alaska’s rural communities. Not only are there fewer hospitals and ambulatory surgery centers per capita in CON states than in non-CON states, but there are also fewer rural services. Patients in CON states also have to drive longer distances to obtain care and are more likely to leave their counties for it. If that’s not bad enough, there are greater racial disparities in the provision of care in CON states.
More competition can also lead to better quality health care. By disempowering doctors, CON laws make it more difficult to provide the highest-quality care at affordable prices, especially in smaller communities. Think about it: If there is only a single hospital nearby, what can a doctor do for patients who aren’t getting what they need?
This helps explain why health outcomes, including patient satisfaction levels and even mortality following certain procedures, are statistically significantly worse in CON states relative to non-CON states.
During the pandemic, 24 states—including Alaska—recognized that CON laws were an impediment to care and suspended some portion of the law or enabled emergency provision. Even so, CON states were more likely to experience shortages of hospital beds than non-CON states, because procurement and planning takes years, not weeks.
State legislatures across the country are looking into repealing, modifying, or limiting their CON programs. If Alaska permitted more competition in the health care field, doctors would be empowered to do more for their patients, and the state would be better prepared for the next health care challenge.
• Dr. Darcy Nikol Bryan, MD is a senior affiliated scholar with the Mercatus Center at George Mason University and a practicing obstetrician gynecologist. Matthew D. Mitchell is a Mercatus senior research fellow. Both recently testified before an Alaska senate committee about the state’s certificate-of-need program.