The purpose of a Certificate of Need (CON) law is to regulate (limit) health care supply unless a need is determined by a state government agency or board. When CON laws were introduced in the 1970s, it was hoped that they would be able to control the cost of health care by preventing health care facilities from unnecessary and potentially costly expansions. In the 38 states that still have CON laws on the books, this essentially means health care facilities must obtain government approval to build, expand, get new equipment, or offer additional services.
Over time CON laws have seemingly failed in their original purpose to lower health care costs. What they have been particularly effective in doing though, is limiting the supply of health care facilities and services. The reduced competition results in health care costs increasing. In the process people suffer as they are faced with greater difficulties in obtaining access to needed care.
This dynamic is especially a problem when it comes to mental health in Iowa. Voters and lawmakers across the state, regardless of party, have been on a quest to deliver more access to mental health services. As an example of CON laws inhibiting progress, in 2015 Strategic Behavioral Health (SBH) proposed to build a facility in the Quad Cities because they believed a need existed for their services in Eastern Iowa. Due to CON laws, SBH was required to receive approval before they could build a new facility.
Two established hospitals (Genesis Health System and UnityPoint Health-Trinity) opposed SBH based on the argument that their respective facilities were already meeting the mental health care needed in that region, or at least they were in the process of meeting those needs. The Iowa State Health Facilities Council, a five-member board that decides whether to issue a CON, was deadlocked. It wasn’t until 2018 that SBH was finally allowed to begin building their facility.
Outdated CON laws are the direct opposite of free-market solutions; more competition in health care is essential for lowering costs and delivering services. The SBH example demonstrates that the private sector will respond to a health care need — in this case mental health — as long as government does not stand in their way.