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Institute for Justice Urges States to Drop Laws Limiting Medical Availability

Arlington, VA.—This week the Institute for Justice (IJ) took another step in its campaign to rid the nation of so-called certificate of need (CON) laws, which artificially limit doctors, hospital administrators and other medical professionals’ ability to provide services in excess of a governmentally determined “need.” In a series of letters to governors across the country, IJ attorneys are urging states to put patients first by eliminating CON laws. Doing so would not only greatly increase access to healthcare, but also unleash healthcare providers’ ability to pursue innovative services and treatments.

Among the states receiving the letters are:

“Certificate of need laws are a major roadblock to medical care,” said Institute for Justice Attorney Jaimie Cavanaugh. “It shouldn’t have taken a pandemic for states to realize that limiting the ability of doctors and healthcare professionals to provide services is a bad policy, but it did. Thankfully, some states have already waived certain CON laws, but many more remain in place. As we begin to engage with state policy makers, we’re hopeful these laws will quickly become a vestige of the past.”

Certificate of need laws limit healthcare access by forcing medical entrepreneurs to get a government permission slip to offer or expand services. To do that, they must prove that their services are “needed” before they can start their business. For instance, CON laws across the country cover everything from hospitals that want to add additional ICU beds, to doctors who wants to perform outpatient surgeries, to transportation companies that would like to drive patients to routine medical appointments. If the government deems that there are already “enough” providers in a region, often based on the input of those providers, then the CON is denied. Outside a pandemic, CON laws are illogical, but during a pandemic, the administrative burdens imposed by CON laws cross the line from counterproductive to potentially deadly to patients suffering from COVID-19 and those forced to postpone other treatments because of limits on facilities and equipment.

South Carolina and Connecticut, for example, have allowed residents immediate access to healthcare by waiving CON laws for projects necessary to respond to the pandemic. In other states like New Jersey, the Department of Health expanded access to hospital beds and hospice care but failed to increase access to other needed facilities like nursing homes and assisted living facilities. IJ is encouraged to see that states are recognizing that CON laws hamper their ability to quickly respond to the healthcare needs of their residents and hopes it can aid states in crafting solutions to the problems created by CON laws.

“Certificate of need laws only serve one purpose: to protect major healthcare providers from competition,” said Institute for Justice Senior Legislative Counsel Lee McGrath. “It doesn’t take a PhD in economics to realize that artificially limiting the supply of healthcare services will create less access to care, and yet 35 states still have CON laws in place. For instance, research shows that states with CON laws have 131 fewer ICU beds per 100,000 people than states without CON laws. We hope that as states begin the process of recovering from the COVID-19 pandemic, CON laws will be near the top of the list of laws that have no place in a post-COVID society.”

The Institute for Justice is a national nonprofit public interest law firm that has worked to remove and reduce unreasonable licensing restrictions for nearly 30 years, including in medical professions. In 2012 IJ filed its first CON lawsuit in Virginia. Today, IJ has four active medical CON cases. These cases are part of IJ’s larger mission to ensure that all Americans can earn an honest living in the profession of their choosing and that all Americans can choose the type of healthcare that is best for them. These letters identify specific laws governors should suspend and urge them to take immediate action. They are part of IJ’s campaign to ensure that government responds to the current health and economic crisis by reducing red tape for individuals instead of creating more of it.

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