West Virginia is only the latest state to take the step of eliminating restrictive barriers to health care, and Iowa should be the next.
Policymakers in Iowa can increase access to health care and improve affordability by eliminating excessive restrictions on the expansion and introduction of facilities. Specifically, Iowa’s Certificate of Need (CON) laws limit patient access and provider competition.
The purpose of a CON law is to regulate (that is, choke) health care supply unless a state government agency or board determines more to be needed. While 36 states currently have some form of CON law, state governments are beginning to wise up. Most recently, West Virginia — which, like Iowa, is a rural state — passed legislation repealing several provisions of its version of the policy.
West Virginia’s Republican governor, Jim Justice, signed SB 613 to repeal CONs for hospital services and birthing centers. The law “removes CON requirements for all hospital services including inpatient services, out-patient services, emergency room services, surgical services, diagnostic and imaging services, and laboratory services provided on a hospital’s campus, and removes the CON requirement for birthing centers.”
Supporters of the repeal argue “the certificate process is expensive, creates more barriers to care and prevents needed competition, while unfairly propping up incumbents’ revenues.” According to the Cardinal Institute for West Virginia Policy, the state’s CON laws are responsible for blocking an estimated 2,424 hospital beds, 25 hospitals and ambulatory surgery centers, close to seven MRI machines, and at least 16 CT scan machines.
West Virginia Delegate Heather Tully, a Republican from the rural Nicholas County, is supportive of the repeal because she believes it will expand health care access in rural areas. She referenced her hometown hospital, which is interested in expanding its cancer treatment services.
Among other changes, West Virginia’s legislation eliminates the CON requirement if a “health care provider spends less than $100 million on a facility or medical equipment acquisitions, expansions or improvements.” Additionally, “a doctor’s office owned by a hospital located within 250 yards of the hospital’s main building would also be exempt from obtaining a CON for certain procedures.” Another provision exempts “birthing centers that are built or acquired, or a private practice with at least seven office locations that wants to obtain a magnetic resonance imaging machine, regardless of cost.”
West Virginia’s increased opportunity for birthing centers resonates in Iowa, which has likewise seen a decline in maternity care, especially in rural areas. The reform of CONs in West Virginia will result in greater access to maternity care. The same is true for other medical services, such as mental health care.
“Research has shown, time and again, that CON laws limit supply, increase cost, and decrease the quality of health care across the country,” said Jessi Troyan, Director of Policy & Research for the Cardinal Institute.
In Iowa, CON laws regulate “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 healthcare facilities,” according to the Institute for Justice. This is nothing more than granting “certificates of monopoly” and “has absolutely nothing to do with public health or safety.”
The CON application process can take 60–90 days, and fees can range from $600 to $21,000. During the application process, any competitor can submit arguments to deny a CON and block potential competition. 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 access for Iowans, while driving down unnecessarily high costs. West Virginia is only the latest state to take the step of eliminating restrictive barriers to health care, and Iowa should be the next.