Some argue that even if healthcare costs are higher in states with CON laws, it is necessary to protect hospitals, especially safety-net hospitals, from closing. This rationale contradicts the cost-efficiency rationale for CON laws, which posits that CON is needed to limit healthcare spending. Instead, the cross-subsidy rationale admits that CON laws are likely to lead to more spending—and higher profits for incumbent providers—but then contends that these profits will be diverted to care for the needy.

We found no studies that supported this theory. Ten tests assess the effect of CON laws on underserved populations. Eight of those tests associate CON laws with diminished care for underserved populations, while two tests find neutral or insignificant effects. No tests associate CON with positive effects on underserved populations. The findings of these tests include:

  • Substance abuse centers in states with CON laws are less likely to accept Medicaid patients, 1  
  • Uninsured patients are more likely to pay out of pocket in states with CON laws, 2  
  • A large black-white disparity in the availability of coronary angiographies disappeared when the procedure was exempted from CON requirements, 3  and
  • There is no evidence of cross-subsidization and no evidence that CON laws increase charity care. 4

In fact, two studies suggest safety-net hospitals might be more stable in states without CON laws:

  • Safety-net hospitals in states without CON laws had higher margins than safety-net hospitals in states with CON laws, 5  and
  • Denied CON applications could have harmed the financial stability of safety net hospitals (though this was not a direct test of CON). 6

Together, the majority of the literature finds that CON laws are cost neutral or negatively impact cost. And there is no evidence that CON positively impacts charity care.