COVID-19 SPOTLIGHTS THE PROBLEMS WITH HEALTH CARE 'CERTIFICATES OF NEED'.

• Author: Boehm, Eric
• Position: REGULATION

THE COVID-19 PANDEMIC has spurred major changes in how Americans interact with the health care system--except in places that literally forbid providers from adapting.

That is the situation in Mississippi, which in 1981 enacted a law that arbitrarily and permanently capped the number of licenses for home health agencies, businesses that arrange for nurses and other medical professionals to make house calls. For 40 years, the only way to legally launch a new home health agency in the state has been to purchase a certificate of need (CON) license from an existing agency--an arrangement that guarantees incumbent businesses won't face new competition.

This was a bad way to run a health care market before 2020. Now it looks like a disaster.

Mississippi's CON law means that physical therapist Charles "Butch" Slaughter can't adapt to the changing circumstances created by the pandemic. Slaughter, who has a clinic in Jackson, Mississippi, wants to launch a home health care agency so he can serve his patients directly in their homes. First, however, he will have to win a legal challenge to the 1981 law.

"I can't believe it is illegal for me to start a home health business to help more patients," says Slaughter. "Other companies are already doing this, but it's illegal for anyone else to do it. It makes no sense."

CON laws regulate aspects of the health care industry in 35 states, despite decades of evidence showing that they drive up costs and limit access to care. Most of those CON laws require hospitals and other health care providers to get approval from the state before acquiring new medical equipment or expanding services. Sometimes even something as simple as adding hospital beds can require the government's approval.

These laws have nothing to do with ensuring safety or quality. They solely address whether the market "needs" the service or piece of equipment. At best, CON requirements accomplish nothing more than adding layers of red tape between medical professionals and their patients. At worst, they can be abused by incumbent providers to limit competition, often with tragic consequences.

One of the only hospitals in Virginia with a neonatal intensive care unit (NICU), for example, twisted the CON approval process to block a nearby hospital from getting permission to build a similar facility. Even after an infant died in 2012 at the second hospital under circumstances that may have been...