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Blog > Issues > Economic Liberty > States that suspended Certificate of Need laws saved lives

States that suspended Certificate of Need laws saved lives

August 19, 2020 I By MORIAH LAWRENCE AND ANGELA C. ERICKSON

During the global pandemic, healthcare providers have expanded their ability to care for additional patients by adding beds and ventilators and expanding facilities. But laws in some states prevent providers from taking steps needed to expand care options. Now we have a clear accounting of the costs of these laws: A new working paper by economists at the the University of Cincinnati, Auburn University, and Southern Illinois University, titled Certificate-of-Need Laws and Healthcare Utilization During the COVID-19 Pandemic, found that these Certificate of Need (CON) laws increase mortality rates for COVID-19 patients and others.

In short, CON laws are causing people to die.

What are CON laws? These state laws require healthcare providers to prove that their service is “needed” before they’re allowed to offer services to customers. In a process that takes months or even years, bureaucrats allow existing companies to weigh in on whether additional competition will harm them. Bureaucrats are so concerned with the potential harm to the existing companies’ bottom lines that this process ultimately creates a “Competitor’s Veto.”

Though these laws may protect profits for hospitals, they don’t protect the most important figure in the healthcare relationship—the patient. Patients in states with CON laws are at greater risk of being denied the care they need. Thankfully, 24 states suspended CON laws as a response to the pandemic, allowing hospitals to respond more effectively to a spike in demand for care. The new working paper by Agnitra Roy Choudhury, Alicia Plemmons, and Sriparna Ghosh found that in states with high hospital bed utilization, suspending CON laws resulted in:

  • 100 lives saved for every 100,000 residents, for all causes of death
    • 40 lives saved from COVID-19
    • 57 lives saved from natural causes

And in states with high intensive care unit bed utilization, suspending CON laws resulted in:

  • 28 lives saved for every 100,000 residents, for all causes of death
    • 11 lives saved from COVID-19
    • 15 lives saved from natural causes

Unfortunately, states like Arizona, Delaware, Nevada, Oregon, and West Virginia still have these laws on the books while their hospital beds are being heavily utilized. Refusing to terminate CON laws has resulted in a larger health crisis.

Even worse, we knew of these problems even before the COVID-19 pandemic emerged. In 2016, a Mercatus Center report detailed how death rates for patients suffering from pneumonia, heart failure, or heart attack were higher at hospitals in states with CON laws than in states with none. The new working paper confirms that earlier finding and shows how CON laws can pose an even greater threat in a challenging pandemic environment.

We already knew that CON laws were anti-competitive—but the COVID-19 pandemic has highlighted how they restrict the ability of medical facilities to respond rapidly to a pandemic and prevent physicians from providing necessary medical services. Worse yet, these laws place decisions that should be made by physicians in consultation with patients and their families into the hands of politicians and bureaucrats.

With hundreds of preventable deaths that can be traced back to these CON laws, we now see the cost of that dysfunctional dynamic. Thankfully, 23 states have suspended these laws during the pandemic. It’s time for politicians to take that lesson to heart and permanently repeal CON laws. By allowing medical providers to purchase the equipment or expand their services without spending months or years to get approval, we allow our healthcare providers to do what they do best—save lives.

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