Testimony: Eliminating CON to increase access, cut healthcare costs
Testimony in Support of LD 1541, “An Act to Amend the Laws Relating to the Certificate of Need,” and LD 1554, “An Act to Repeal Certificate of Need Requirements for Health Care Providers”
Good morning Senator Bailey, Representative Perry and the distinguished members of the Committee on Health Coverage, Insurance, and Financial Services, my name is Nick Murray and I serve as policy analyst for Maine Policy Institute, a nonpartisan, non-profit organization that advocates for individual liberty and economic freedom in Maine. Thank you for the opportunity to testify in support of LD 1541 and LD 1554.
Certificate of Need (CON), first enacted in Maine in 1978, requires health care entities to obtain government approval—and navigate a lengthy and expensive process of bureaucratic review—before making large expenditures to expand services, build new facilities, or purchase additional equipment. These laws, which have been rejected by the federal government and 15 other states, limit competition in the health care system and drive up costs by restricting the supply of available care.
A 2013 Maine Policy Institute analysis compared the 10 states with the fewest hospital beds per 1,000 residents to the 10 states with the most and found expenses per inpatient day are $878 more in states with fewer hospital beds.
Some proponents argue that CON is necessary in order to constrain the growth in prices that health providers might charge for various services. The fact is, if hospitals thought increasing prices for any reason would make them more money, they would do it—with or without a CON. They don’t need to build out extra beds, offer more services, or buy more expensive equipment in order to rationalize it.
The Certificate of Need process allows established providers to hide behind this faulty logic and use state regulation to protect their position in the industry. It restricts competition, capacity, and ultimately, health care options for consumers.
The Federal Trade Commission and the Antitrust Division of The Department of Justice agreed in a 2016 statement, noting that “CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers.”
A study by the Mercatus Center published July 2020 showed that CON reform leads to more satisfaction and access to care, especially in rural areas. Researchers found, both before and after controlling for social risk factors such as race, education, and poverty status, that in counties with CON laws, “healthcare expenses per Medicare beneficiary are higher, as are utilization rates of ambulance services, emergency departments, and readmissions.”
In 2016, Mercatus Center researchers also found that hospitals in non-CON states have significantly lower mortality rates for pneumonia, heart failure, and heart attack. These hospitals also have lower readmission rates for heart failure and heart attack, plus their patients are more likely to report a pleasant hospital experience.
A study published in the New England Journal of Medicine during the 1980s, when many more states had CON laws than today, noted that hospitals in states with the most stringent CON review procedures had significantly higher mortality rates, ranging from 6% to 10% higher.
During the 15-month state of emergency, Governor Mills allowed the Division of Licensing (DLC) to implement an expedited CON process. According to a manager at DLC, this allowed 11 applications to sail through the office, each within a week, instead of the usual 3-4 months. When public health and care capacity is front of mind in healthcare regulation, we inherently understand that clearing away these unnecessary barriers is the most prudent choice.
Inertia is a strong force in public policy, but we must not let it get in the way of common sense reform. The status quo should never hold the benefit of the doubt. If a policy does not serve its intended purpose—or if it does, but its effects are counterproductive to its stated goals—it must be repealed.
Please deem LD 1541 and LD 1554 “Ought to Pass” and finally scrap this outdated and anti-competitive law which only serves to restrict the supply of care. Thank you for your time and consideration.