South Carolina is one of the 35 states that still enforce antiquated Certificate of Need (CON) laws. In general, CON laws limit the expansion of medical facilities and new health care equipment, unless they are approved by bureaucrats.
Although CON laws are well-intentioned public policy with the goal of lowering health care costs, they often result in negative outcomes. The adverse effects of these laws put lives at risk and cause unneeded financial stress on patients.
CON laws are the definition of central planning gone wrong. According to a Mercatus Center report, South Carolina could reduce total health care costs by $200 per person if these laws were repealed. Not only would costs be reduced, but lives could be saved. A similar study showed that states with CON laws have a 5.5 percent higher mortality rate than those without.
One of the most flawed aspects of CON laws is the anti-competitive practices that are incentivized via these laws. They limit competition by keeping new facilities and health care providers from entering the marketplace. This invites cronyism into the health care industry. The negative effects of hindering competition directly impact the cost and quality of care the consumer receives, as well.
CON laws in South Carolina impact rural communities hardest by increasing drive times to seek care, increasing wait times to receive care, and leading toward higher health care costs.
Additionally, residents living in rural communities have higher levels of Medicare spending per person, hospital readmission rates, ambulance utilization, and emergency room utilization. The rural health care crisis is one the nation has been tackling for decades. Repealing CON laws would be a good first step in improving health care access and delivery for rural America.
Horry County, South Carolina is currently experiencing the unintended consequences of CON laws. Three health care providers are seeking to expand services in this growing community to develop three new hospitals with a total of 84 new beds countywide.
Unfortunately, with CON laws still on the books, these three health care proposals are still up in the ai, pending a decision by the Palmetto State’s CON board. The government should not determine the needs of the people, only a free market can do that.
If not repealing these outdated laws all together, states should consider rolling back the burdensome regulations and limiting the scope in which these laws operate. The free market is better at determining supply and demand in all sectors, including health care. The government simply cannot match the efficiency of markets, no matter how hard they try. Yet, 35 states, including South Carolina, still enforce these obsolete laws.
Reducing barriers to entry, in the form of CON laws, and allowing the free market to determine the number of health care facilities and equipment, will lower health care costs for the consumer and create greater access to care across the board.
Christina Herrin ([email protected]) is the government relations manager of Health Policy at The Heartland Institute, a non-partisan, free-market think tank headquartered in Arlington Heights, Illinois.