Sally Pipes

The end of the COVID-19 public health emergency last month marked the end of several government waivers that helped expand access to care during the pandemic.

Many of those waivers deserve to be made permanent. Paramount among them is the suspension of “certificate-of-need” laws that require health care providers to obtain permission from state officials before expanding facilities or building new ones.

Certificates of need emerged at the state level in the 1960s as part of a misguided attempt to control health care spending. States most often use them to regulate the construction or expansion of long-term care facilities, outpatient facilities, and hospitals. They require health care providers to demonstrate that a community “needs” the new or expanded facilities they propose to build.

But “need” in the political world is subjective. A request for a certificate of need unleashes a wave of lobbying from incumbent providers to stop the entry of competitors. Every day that incumbents delay competition is an extra day of higher prices, less choice, and lower-quality care for patients.

According to a study from the Mercatus Center, states with certificate-of-need laws have 30% fewer hospitals and 131 fewer hospital beds per 100,000 people. The laws also reduce the number of hospitals with MRI machines by one to two hospitals per 500,000 people.

Some of the worst outcomes from certificate-of-need laws are harder to quantify. The submission of a proposal in a certificate-of-need state is typically a lengthy process, in some cases requiring a 60-day waiting period or application fees running hundreds of thousands of dollars. One study found that patients in states with such laws were more likely to resort to seeking medical care outside of the United States.

Consider an example from Connecticut. A leading-edge therapy provider for cancer patients, Danbury Proton, waited without result for three years for a certificate of need to open a center in Danbury — even as two hospital networks managed to open such a center 45 miles away, with which the Danbury center could have competed.

With multiple providers competing for patients’ business, the price of cancer care in the region would almost certainly have declined.

Ultimately, certificates of need result in a market where patients have fewer choices. And less competition means higher prices.

Thirty-eight states have certificate-of-need laws on the books. Twenty-four of them suspended those laws or enabled emergency provisions to blunt their impact during the pandemic.

They clearly recognized that certificates of need hinder access to care. They mustn’t forget that lesson as we put COVID-19 behind us.

Both Republican- and Democrat-controlled state legislatures have sought to reform or eliminate certificate-of-need laws in recent years. In 2021, special commissions were opened to evaluate the effectiveness of certificate-of-need programs in Connecticut, Massachusetts and Delaware. Likewise that year, bills to repeal or almost entirely roll back such programs were introduced in 10 states, including Alabama, Alaska, Kentucky, Mississippi, Missouri and North Carolina.

Just this May, South Carolina Gov. Henry McMaster signed legislation that repealed state certificate-of-need regulations for most health care facilities.

South Carolina’s fight to bring fair and affordable health care access to communities is one that should be taken up across the country. After all, patients benefit from a system in which health care providers have more, rather than less, competition.

Sally C. Pipes is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020).