By Victoria Sinclair, Guest Columnist
It is time for the Iowa Legislature to apply its free-market principles to healthcare regulations and end CON laws in our state.
States often accept federal dollars with strings attached. Unfortunately, old habits die hard. Even when federal law changes and the strings are cut, programs created by those laws have a pesky habit of sticking around and are rarely repealed by state lawmakers. This comes at a greater cost to consumers, taxpayers, or both.
That dynamic sets the stage for Iowa’s current certificate of need (CON) law—a requirement to obtain a CON from the government prior to opening or expanding a medical facility in the state. Iowa’s CON law was enacted in 1977, following the passage of the National Health Planning and Resources Development Act (NHPRDA) by Congress. The intent of this legislation was to address rising healthcare costs, thought to be spurred by an oversupply of healthcare offerings. The NHPRDA required states to enact CON laws or they would lose their federal Medicare and Medicaid reimbursements, and by 1982, every state besides Louisiana had passed a CON law.
The outcome of the NHPRDA was the opposite of its intent at passage, resulting in higher healthcare costs and less access to healthcare. In fact, Congress repealed the NHPRDA in 1986 because the law had not generated the desired effect. Over the course of CON’s federal life (1974-1986) healthcare spending grew more than two and a half times as fast as the rate of inflation.
Once Congress abandoned the CON experiment, fourteen states immediately repealed their own CON laws. Others have taken action in the decades since, including South Carolina and West Virginia earlier this year. Unfortunately, many states still have CON laws on the books today, including Iowa.
Legislation scaling back or repealing Iowa’s CON law has been considered many times by the Iowa legislature, including during the 2023 legislative session. The most recent Iowa CON legislation, SF 506, did not propose to eliminate the CON process, but it would scale back CON requirements by removing birth centers and mental health facilities from the CON process and increasing the expenditure threshold for needing a CON. This legislation advanced out of the Iowa Senate on a 29-21 vote in March, but the bill did not receive a subcommittee in the Iowa House in 2023.
Basic economics tells us that limiting supply with no change in demand will result in higher prices and that is what has played out with CON laws. According to a 2020 study by the Kaiser Family Foundation, healthcare costs today are 11 percent higher in states with CON laws than in states without. Iowa’s CON law is driving up healthcare costs and reducing healthcare access. Today’s lingering CON requirements do nothing except limit competition for established healthcare providers at the expense of consumers. It is time for the Iowa Legislature to apply its free-market principles to healthcare regulations and end CON laws in our state.
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