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Guest Column: What Will Be Done With South Carolina’s Controversial Health Care Law?

“States like South Carolina stand to gain greater access to higher-quality and lower-cost health care without CON laws.”

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by MATTHEW D. MITCHELL || As South Carolina’s legislative calendar draws to a close, the state’s House members must decide what to do with the controversial certificate-of-need (or CON) program.

The program requires health care providers hoping to open or expand services to first prove to regulators, through an often expensive and contentious process, that their communities need the service. Thirty-five states (plus DC) have CON programs, though states have been paring them back in recent years. In South Carolina, a CON is required for all kinds of important services, from hospital beds and hospice care to psychiatric services and drug abuse facilities. The Senate passed S. 290 in January, eliminating the CON requirement for all health care services but nursing homes. Now the House is on the clock. 

Hospital executives and policymakers often worry about what would happen if their CON requirements were repealed. They need not worry. And they need not speculate. All they need to do is look to the experiences of Americans in non-CON states. As I recently explained in testimony before the House Ad Hoc Committee on CON, these experiences have been documented in 93 peer-reviewed academic studies.

This large body of research compares outcomes in CON states with those in non-CON states. The papers also track outcomes over time to see what happens in states that repeal or pare back their CON laws. These studies control for possibly confounding factors such as local economic, demographic, and health conditions.

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This research makes it abundantly clear that patients in states like South Carolina stand to gain greater access to higher-quality and lower-cost health care without CON laws.

Three numbers from this research stand out:

Zero. Among the 31 relevant studies, zero find clear evidence that CON regulations limit health care spending. About 60 percent find that the regulations are clearly associated with more spending (per service or per patient). For example, reimbursement costs for coronary artery bypass grafts fell 2.8 percent in Ohio and 8.8 percent in Pennsylvania following repeal. Hospital charges are 5.5 percent lower in states five years after repeal. And states that eliminate CON experience a 5 percent reduction in real per capita health care spending.

Seventy-three percent. Fully 73 percent of analyses show that CON laws limit patients’ access to care. The typical patient in a CON state has access to fewer hospitals, hospice care facilities, dialysis clinics, cancer treatment facilities, home health agencies, psychiatric care facilities, drug and substance abuse centers, open-heart surgery programs, revascularization programs, and percutaneous coronary intervention programs.

Four times. As for the quality of health care, four times as many studies find that CON laws undermine it versus enhance it. Among other problems in the typical CON state, patients experience higher mortality rates following heart attack, heart failure, and pneumonia. They have higher readmission rates, are more likely to die from post-surgery complications, and are less likely to give their hospitals top ratings.

Some readers may be familiar with the late Supreme Court Justice Louis Brandeis’s argument that states “serve as a laboratory” experimenting with novel economic and social policies for the good of the country as a whole. He wrote this in an opinion on a certificate-of-need case. After decades of the CON experiment, the results are in. Four-in-ten Americans live in states without these laws, and their experience shows that the policy simply does not achieve its goals. 

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ABOUT THE AUTHOR …

(Via: Mercatus Center)

Matthew D. Mitchell is a senior research fellow with the Mercatus Center at George Mason University. He recently testified before South Carolina’s legislature about the effects of certificate-of-need laws.

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