COVID-19 Calls into Question the Need for Certificate of Need Laws

In this Sunday, March 11, 2018, photo, Barber Eric Muhammad, owner of A New You Barbershop, left, jokes with regular customer Marc M. Sims before measuring his blood pressure in Inglewood, Calif. Black male customers at dozens of Los Angeles area barbershops reduced one of their biggest health risks through a novel project that paired barbers and pharmacists to test and treat customers. (AP Photo/Damian Dovarganes)


COVID-19 Calls into Question the Need for Certificate of Need Laws

COVID-19 has created a health pandemic and turned our lives upside down. For many people, this disease is not a high health risk. However, for the most vulnerable members of our society, the sick and elderly, it is crucial that adequate measures are taken by the American people to limit the spread of the virus.

As hospitals and medical care centers gear up for the surge in patients that will occur in the weeks and months ahead, there is recognition that lack of supplies, including inpatient beds, limits the threshold for the number of patients the medical community can handle.

This type of inefficiency in the marketplace has a direct link to centralized planning gone awry. In the 1970s, the federal government implemented Certificate of Need laws to mitigate spending and regulate the market to limit overdevelopment. Yet, these laws were later repealed as the regulatory body found the laws drove up costs and lowered quality exponentially.

Currently, 38 states still enact certificate of need (CON) laws. Similar to the defunct federal laws, these measures consist of state government mandates that require certificate of need for spending, including facility construction and modification, new medical procedures offered, and the number of inpatient care beds at facilities.


According to research by the Kaiser Family Foundation, health care costs are nearly 11 percent higher in states with CON laws than those without. Needless to say, the intent of CON laws to lower health care costs has not occurred. Even worse, these misguided laws have resulted in higher costs and inadequate health care facilities that can’t meet the needs of patients.

The problem with allowing state governments to enforce such policies is that it causes inadequacy in times of crisis. In the case of COVID-19, CON laws are a direct link to the impenetrable market monopoly that many states employ within their health care systems. To be frank, these monopolies are the cause of shortages because they arbitrarily limit economic competition in the health care marketplace.

CON laws are overbearing, outdated solutions to current problems that require innovation and competition of the private sector. States should assess the necessity of CON laws, especially in times of crisis that point to the failures of an overreaching government, resulting in a severe lack of inpatient care facilities. The repeal of CON laws entirely would be the ultimate solution, but if that is not done, it is necessary that any new CON laws be based on financial, or market-oriented factors at minimum.

It is concerning to think that government mandates may result in more deaths merely because our health system can’t adequately care for patients. In times of crisis, a little fear may be a good thing to analyze the current laws in place and adjust regulations accordingly. Hopefully, social distancing and following guidance will allow the curve of COVID-19 to flatten and patients to stand a chance by slowing the spread.


But this should be a wakeup call for the need to evaluate CON laws in over three-quarters of the states. CON laws are costly, and do not put patients’ needs first. In reality, as we will likely see all too soon, CON laws create an anticompetitive market that limits resources when people need them most.

Christina Herrin ([email protected]is the director of The Heartland Institute’s Free to Choose Medicine project.


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