CON laws are bad for Michigan’s health – Mackinac Center

Certificate of Need laws come with higher costs and “fail to serve their purpose,” according to a new comprehensive study.

These laws, which require medical providers to obtain government approval to expand certain services, restricted access to health care in 80 percent of case studies. Although advocates claim that CON laws ensure access to health care, only 7 percent of studies indicated a positive association.

In a new, comprehensive review of economic research, Matthew Mitchell of West Virginia University examined 128 academic papers on the impact of CON laws. “The accumulated evidence is overwhelming that CON laws fail to achieve their purpose,” Mitchell concluded.

The scope of the study casts doubt on the claims of supporters of the CON law. In states with such laws, hospitals that want to add more beds must first get approval from a government committee. Many committee members represent the interests of existing medical providers, and CON laws can be used to limit competition in the industry.

“The goal of Michigan’s CON program is to protect health care customers from excessive or substandard health care services and the associated costs,” according to the Michigan Health and Hospital Association, an advocacy group that advocates for hospitals and other medical providers. According to the association, Michigan’s CON program “ensures that only needed services are developed in Michigan,” helping to ensure “high-quality, accessible, and cost-effective care for patients in our state.”

Mitchell identified about 450 statistical tests of the effectiveness of CON laws in “reducing spending, improving access, improving quality, and promoting care for underserved populations.” The paper delves into each of the four categories championed by CON advocates to see what economic research says about the observed effects of these laws.

There are several ways to measure the impact of CON laws on spending. Mitchell analyzed three different methods. Regardless of the measure, more research shows that CON laws are associated with increased spending than with cost reductions. This is consistent with standard economic theory because the program artificially reduces the supply of health care services, meaning the cost of those services will be higher.

Mitchell evaluated 83 tests from dozens of studies on the impact of CON laws on accessibility. Almost 80% of the studies found that CON laws reduce the availability of medical services. Only 7% found a positive relationship, and the remaining results were statistically insignificant.

Certificate of Need laws also do not improve the quality of service. In over 100 quality tests, almost half found that CON laws reduce the quality of service. Only 15% of the studies found that CON laws improve quality. But for every one of these studies, there were three others that suggested the opposite.

The most significant finding concerns underserved populations, such as rural areas with fewer doctors and medical personnel. 14 of 17 tests found that CON laws reduce care for underserved populations, three tests found no effect, and none found a positive effect.

The Michigan Health and Hospital Association points out on its website that some studies show benefits from CON laws. That’s true. But those studies far outnumber the studies that find negative effects – in some cases three or four times as many. The weight of evidence shows that CON laws have an overall negative impact on health.

In the early days of the Covid-19 pandemic, Governor Gretchen Whitmer suspended some of Michigan’s CON laws as an emergency measure. If these policies truly helped improve health outcomes, they would arguably have been strengthened, not abandoned, during times of crisis. As a careful meta-analysis of economic research on their impact shows, CON laws are not necessary to improve health outcomes. They are more likely to have the opposite effect. To improve access and quality of health care in Michigan, a simple solution would be to repeal the state’s CON laws, as other states have done.

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