Vermont just took a step toward better healthcare—other states should follow
Access to healthcare is a nationwide problem. Lack of access might be attributed to too few facilities, too few providers, or unaffordable prices. States are finally waking up and acknowledging that decades-old policies may be exacerbating these problems. One of these bad policies is known as certificate of need (CON) laws.
CON laws function like mandatory permission slips to open or expand healthcare facilities or services.
As I wrote in the Vermont Daily Chronicle:
CON laws require healthcare providers to navigate a labyrinth of bureaucratic red tape before expanding healthcare in Vermont. It applies to new facilities, expanding existing facilities, purchasing new technologies that improve patient care, or even simply increasing the number of available beds. If a healthcare provider wishes to offer new services in a particular market, they must first apply to the state and prove a “need” for their services.
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Worse, existing competitors can intervene in the application process and object to the state approving a CON application. This is a touted feature of CON laws, not a bug.
When existing healthcare providers object to a new CON application, it often stops the application altogether. This “competitor’s veto” allows existing providers to monopolize the healthcare market, leaving patients with fewer options in the name of total control.
Not every state has a CON law, making it easy for economists to compare outcomes. Unsurprisingly, states that have already repealed their CON laws have more facilities per capita, more rural facilities per capita, lower costs, and higher-quality healthcare.
To their credit, states are finally acknowledging that today’s healthcare problems are due, in part, to policies that have existed for decades. The only way to fundamentally improve the healthcare system is to remove these barriers to entry.
Governor Scott signed H.96 in Vermont to increase the expenditure thresholds that trigger the CON application process. Before the reform, if a healthcare facility cost more than $1.5 million to open, it needed a CON. H.96 increases that threshold to $10 million. It also increases the equipment threshold from $1 million to $5 million and the threshold for existing facilities to offer new services from $500,000 to $3 million. This is welcome news for Vermonters who want more options for care.
Vermont is not alone. Kentucky and Iowa repealed CON for birth centers, and DC repealed CON for primary care and telehealth while increasing some of its expenditure thresholds.
Reforms are pending in other states, including Rhode Island, where Governor McKee’s budget proposal would significantly raise expenditure thresholds, and North Carolina, where a full CON repeal bill moved out of the Senate.
As healthcare becomes increasingly harder to access and unaffordable, states should stop creating new programs hoping to see improvements in healthcare. Instead, they should focus on undoing these outdated, harmful laws that prevent patients and their providers from deciding what care is best for them.
