In Iowa, Certificate of Need laws generally regulate when health care providers are allowed to build a new facility or expand an existing one, make major expenditures/purchases, or add new services. According to the Institute for Justice, the process determines “whether someone is allowed to open a new facility; it is explicitly designed to make sure new facilities are not allowed to take customers away from established health care facilities.” They further describe the process as being nothing more than granting “certificates of monopoly” and that it “has absolutely nothing to do with public health or safety.”
The CON application process can be timely and costly. It also allows competitors to essentially “referee” who may enter into the marketplace. Imagine if Hy-Vee or Fareway were able to object to new community grocery stores by claiming they already provide all necessary services. In just that way, CON laws protect larger organizations that want to keep their grip on a customer base.
The repeal of Iowa’s CON laws would increase opportunity for providers and expand health care access for Iowans, while driving down unnecessarily excessive costs. Governor Kim Reynolds is proposing to “eliminate the CON requirement for outpatient behavioral health” services. Eliminating CON for outpatient behavioral health (HF 2676) is a proactive policy in providing more mental health care services for patients.
Senator Kara Warme, who chairs the Health and Human Services Committee, has proposed an even broader measure that would substantially reform Iowa’s CON laws. The measure (SF 2459) narrows CON requirements to a much smaller set of circumstances. Going forward, providers would be required to obtain a certificate only for major projects, such as large-scale construction exceeding higher cost thresholds, significant capital expenditures above those limits, facility relocations, permanent changes in bed capacity, and a narrow category of highly specialized services. Many common triggers—such as adding or discontinuing routine services or replacing major equipment—would be eliminated entirely.
Just as important, the bill reforms the process itself. The bill removes the requirement to notify payers and other current or former CON applicants, though it retains the notice requirement for existing area providers, so a mechanism for other providers to block competition remains. It also repeals the letter-of-intent requirement that added time and expense before an application could even be filed, shortens allowable review delays, and allows applicants to revise a rejected application once without paying an additional fee.
Dr. Jeffrey Singer, a Senior Fellow at the Cato Institute, wrote that SSB 3084 “is a good step in the right direction by streamlining Iowa’s current certificate of need process, I urge lawmakers to consider a more fundamental policy reform: repealing certificate of need laws altogether, as neighboring states like Minnesota, South Dakota, and Kansas have done.”
As a rural state, Iowa would benefit from having more access to health care in terms of availability and affordability. “Iowa does not require new physicians to ask competitors for permission before practicing, and health care has benefited from that openness. Allowing new health care facilities to open more freely would benefit Iowans in the same way—by increasing access, expanding choice, and promoting competition on price and quality,” argues Dr. Singer.
Governor Reynolds and Senator Warme are correct to reform CON laws and eliminate some of the regulatory barriers for health care. CON laws are outdated and only reward the existing providers who want to control their market. “Unlike many other industries, Iowa requires new health care facilities, including lower-cost alternatives such as ambulatory surgery centers, to seek permission from incumbent providers before opening or expanding,” noted Dr. Singer.
Certificate of Need policy may appear technical, but it has real consequences for access, affordability, and innovation in Iowa’s health care system. By narrowing its scope, lawmakers can reduce unnecessary barriers. Thoughtful reforms like these would ensure that providers can respond more quickly and efficiently to the health care demands of patients across the state.
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