Providing access to affordable and high-quality healthcare to as many Americans as possible is one of the great challenges of our generation. In that pursuit, Georgia policymakers should not abandon free market principles. Certificate of Need (CON) laws in states like Georgia prevent new healthcare providers from entering the market to offer competition and should be repealed.
These CON laws were initially imposed on all states by the federal government in the mid-1970’s on the ill-informed assumption that limiting the number of healthcare providers would control the cost of Medicare. Federal policymakers have since realized their error and repealed the federal mandates of CON laws. Yet, 35 states including Georgia have failed to repeal these laws.
Economists are proving what consumers already know – that healthcare costs continue to rise and threaten the financial security of American families despite CON laws and perhaps because of them.
Economic theory upholds that as the number of healthcare providers are restricted by CON laws, the prices for healthcare services rise. Evidence proves the hypothesis.
A 2016 study published by the Mercatus Center at George Mason University in Virginia found that CON laws raise total healthcare spending. The study states, “Contrary to their intended purpose, CON laws raise overall healthcare spending by 3.1 percent—5.0 percent for physician care. As for type of provider, while CON has little effect on Medicaid spending, it increases overall Medicare spending by 6.9 percent.”
The same study also found that repealing CON laws decreases total healthcare spending.
Defenders of CON laws claim the laws ensure quality of care and access to indigent care. Untrue. The Mercatus Center found patients admitted to hospitals in states with CON laws experience lower quality of care and higher death rates. A separate study found no difference in access to indigent care in states with CON laws. The total body of peer-reviewed evidence shows that CON laws restrict free markets and liberty with no consequential benefit.
To Georgia policymakers, regardless of party affiliation, it should be compelling that both the Reagan and Obama administrations supported elimination of CON laws for virtually the same reason. If the Reagan and Obama administration were both against CON laws, they must be bad.
Continuing CON laws in Georgia would be a big mistake. If Georgia policymakers continue the current CON laws, healthcare costs and health insurance premiums will likely be higher for consumers and employers.
A better alternative would be for Georgia policymakers to repeal CON laws. Doing so would be an important first step toward market-based health reform regardless of what legislative actions Congress may take regarding the Affordable Care Act. By embracing market-based solutions, Georgia policymakers can help consumers gain greater access to healthcare services while engendering a business environment conducive to economic development and growth. That all means more jobs and more tax revenue to the state.
It is time for Georgia to take this one small step toward free markets and repeal CON laws.
Travis Klavohn is a Board Member with the Marietta-based Georgia Tea Party
