Phasing Out Certificate-of-Need Laws: A Menu of Options

Abstract

Certificate-of-need (CON) laws in healthcare are currently found in 36 states and the District of Columbia. These laws require those aspiring to offer certain medical services, acquire certain devices, or open or expand particular medical facilities to first obtain authorization from a regulatory authority. Four decades of research show that CON laws are associated with limited access, diminished quality, and higher costs of care. The most promising CON reform, therefore, is complete repeal, a strategy that has been successfully pursued by 15 states comprising nearly 40 percent of the US population. Complete reform, however, is politically difficult, given the outsized influence of incumbent providers, who have an interest in maintaining the current system. In this policy brief we therefore offer a menu of alternative reforms that can limit the anticompetitive effects of CON laws and illuminate a path toward more comprehensive reform in the future.