Legislators Wanting To Roll Back Certificate of Need Laws Have Many Options

Even when voters and legislators agree a longstanding law needs reversed, they are sometimes uncertain how to most smoothly enact change. This can prevent any action whatsoever, leading to unpopular legislation remaining on the books. 

Since the federal government withdrew its certificate of need (CON) mandate almost four decades ago, only 15 states have entirely repealed theirs, despite the relative unpopularity of these laws. They limit competition in health care, and statistics have consistently shown they increase costs and wait times, and decrease satisfaction and healthcare choice. But change always elicits some nervousness. In Kentucky, for example, legislators recently expressed concern about “shock” from a reversal.

Offering alternatives to abrupt termination may help ease fear about taking this plunge, and legislators have several choices. 

Sunsetting

South Carolina voted in May 2023 to repeal all but one of its CON regulations. This was a major overhaul for a state that had 18 CON rules, and it will undoubtedly cause a shift in its healthcare landscape. But instead of stopping the full program overnight, South Carolina decided to set a fairly distant date for the final change in the law. The repealed 17 CON rules officially expire, or “sunset,” at the start of 2027.

Of course, some people would prefer that a law they don’t like end immediately, but others worry about having time to adjust to a big change. By acknowledging these concerns and giving time for anyone to plan for the shift, the former can ease the transition for the latter, without compromising the principle and final outcome. 

Raising Financial Thresholds

CON laws typically have specific numbers that trigger them. For example, a hospital may need a CON if it intends to spend more than $1 million or add more than five beds. These laws are often very restrictive. They can prevent medical businesses from making even a small expansion without going through the exhaustive and expensive CON process, which can take years and vast amounts of money. This prevents many medical practitioners from even trying.

By raising the threshold needed to trigger a CON requirement, states can greatly decrease the actual effect of the law without changing any of the basic rules. This is ideal in a state where voters or legislators are simply unwilling to eliminate the law. It also allows hesitant legislators and voters to see the impact of rolling back these rules. Because this impact tends to be positive, it could lead to more willingness in the future to repeal them.

Setting Up A Review Committee

As noted, South Carolina tried to mediate the immediate impact of its change in legislation. Although most of its CON laws will sunset within four years, it set up the Certificate of Need Study Committee to examine trends, good or bad, in the healthcare experience of patients. 

Any state considering altering CON laws could benefit from this. Hesitant states could examine the trends in services subject to CON laws vs. those that are not. After making a small change in the law, they could examine the outcome. Without studying the local impact on a smaller scale, some people are understandably nervous about making more sweeping changes. Review committees give these people an opportunity to watch the real-world impact of the laws in their area before making wider moves. 

Eliminating The Competitor’s Veto

In 17 states, competitors of the entity seeking CON approval can speak at CON hearings and impact the ability of the potential new business to receive a certificate. They can even sit on CON boards and engage in deals that would violate the Sherman Antitrust Act under other circumstances.

Even someone who supports CON legislation overall may realize how unfair this practice is. Naturally, existing businesses vote to prevent new competition. By removing competitors from the process, states can at least render it less biased and more focused on the needs of patients. 

Thinking Outside The Box
Of course, more than four options exist for people trying to incrementally reverse CON regulations in their state. This list gives some good starting points, but activists and legislators trying to change any law should research more alternatives and even create some of their own. Full CON reversal has proven difficult in many states, but a little creativity can get them there over time. Organizations such as the Institute for Justice and the Pacific Legal Foundation offer resources that can help anyone begin the process, and studying successful reversal stories such as South Carolina’s can spark ideas applicable to other states.