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Certificate of Need Laws Kill People, Study Finds

A new study of state certificate-of-need (CON) laws conducted in the midst of the current COVID-19 pandemic suggests that “mortality rates are higher in states with CON laws relative to states without any CON laws.”

The study also finds when CON states suspended their laws in response to the public health threat (reformative states), deaths rates dropped not just for COVID-19 but other ailments such as septicemia, diabetes, chronic lower respiratory disease (CLRD), influenza or pneumonia, and Alzheimer’s Disease as well.

The study, “Certificate-of-Need Laws and Healthcare Utilization During COVID-19 Pandemic,” published by SSRN on August 7 and authored by economists Sriparna Ghosh (University of Cincinnati Blue Ash), Agnitra Choudhury (Auburn University at Montgomery), and Alicia Plemmons (Southern Illinois University Edwardsville).

As the pandemic continues to take its toll worldwide, the situation in the United States is unique, because CON laws in 36 states and the District of Columbia artificially restrict the expansion of medical facilities, equipment (including hospital beds), and services without government approval.

Understated Deaths

Although the Centers for Disease Control and Prevention created a fury when it reported 94 percent of COVID-19 deaths involved another disease, the authors say CON laws make it particularly difficult to determine the actual cause of death.

“We believe the true impact of COVID on U.S. mortality is understated and fails to account for additional non-COVID lives that have been lost due to resource constraints,” the authors write.

State CON laws are rooted in a 1974 federal statute, the National Health Planning and Resources Development Act, that was designed to prevent an oversupply of medical resources and improve access to healthcare facilities by low-income people.

“Unfortunately,” the study adds, “these laws were not designed to prepare for health care demand surges such as what we have seen with the recent pandemic.”

Using data gathered from mid-March through the end of June 2020, the authors set out to determine if CON laws, and their subsequent relaxation in some states, affected the volume of deaths in COVID and non-COVID-related illnesses. The authors combined mortality data collected from the CDC with state-level hospital and intensive care unit (ICU) bed utilization data to create a balanced panel dataset for the three and one-half months under investigation. The authors acquired data from 1.5 million death records, of which 132,366 involved COVID-19.

The study found that when comparing states that have reformed their CON laws with states that have not, mortality in states with a high hospital or ICU bed utilization for non-COVID related illnesses was “substantial and significant.” It noted that reforming states saw a decrease of lives lost to natural death (15 per 100,000 residents weekly). For septicemia, diabetes, CLRD, influenza or pneumonia, and Alzheimer’s Disease, the decline in lives lost came to 2 lives per 100,000 residents weekly.

Additionally, the researchers found that, in states with high ICU bed utilization that subsequently reformed their CON laws in order to increase acquisitions of medical equipment, 11 lives per 100,000 residents were saved weekly from COVID.

Managed Supply Fails Under Pressure

Produced in the midst of a pandemic, the study was able to focus on how CON laws limit access to beds, respirators, ambulatory services, and CT/MRI imaging—resources crucial to the care of COVID and non-COVID patients. The investigation also sheds light on how scarce resources are distributed during a time of increased demand by patients, that scarcity resulting from CON laws.

“Inefficient and burdensome regulations are costing American lives,” Ghosh, told Health Care News. “We hope through this research that we are demonstrating the evidence to policymakers that these laws need to be reformed if we have any chance of mitigating the disastrous effects a pandemic can have in the future. We can avoid these extra deaths through sensible policy reform that allows health care providers to plan for the unexpected.”

Noting that the virus continues to mutate, the authors state, “this may not be the same disease in one or two years that it is today.”

“COVID-19 has been a relentless event in our nation that will be felt for decades to come, and this may not be the last pandemic in our lifetime,” Ghosh said.  “Through smart policy reform and repealing antiquated laws, we can allow providers to stockpile crucial equipment they need for unexpected surges in demand for health care, minimizing additional lives lost through stressed markets and inefficient purchasing systems that require government permission to proceed.”

The study confirms what a growing number are beginning to see, says Robert Graboyes, a senior fellow at the Mercatus Center at George Mason University.

“CON laws were a misguided idea from their inception, and have wreaked havoc on American health care and American taxpayers for nearly half a century,” Grayboyes told Health Care News. “The new paper by Ghosh, Choudhury, and Plemmons argues that CON laws aren’t just expensive and inefficient, but – but at least during events like the COVID-19 pandemic – these laws can literally kill people. In the same vein, another new study – this one by my Mercatus colleagues Thomas Stratmann and Mathew C. Baker – argues that CON laws have compromised health care in rural states.”

Bonner R. Cohen, Ph.D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.

Internet info:

Sriparna Ghosh, Agnitra Roy Choudhury, Alicia Plemmons, “Certificate-of-Need Laws and Health Care Utilization During COVID-19 Pandemic,” SSRN, August 7, 2020:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3663547

Bonner R Cohen
Bonner R Cohen
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.


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