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Mississippi’s CON Laws are holding...

Mississippi’s CON Laws are holding the state back

By: Matthew Mitchell - January 19, 2023

If Mississippians want better access to higher quality and lower cost care, it’s clear that full CON repeal is the best path.

If you are doctor in Dallas and you want to open a facility to treat end-stage renal failure, you don’t need to prove to a regulator that your community needs the service. Similarly, an addiction specialist in Wichita is free to open a substance abuse center if she thinks it would make a dent in the opioid epidemic. 

Not so in Mississippi.

Medical professionals in the Magnolia state who hope to offer these, and 17 other services must first obtain a Certificate of Need (or CON) from the State Health Officer. To do that they will have to prove to the regulator’s satisfaction that the service in question is needed. The process can take months and can cost tens of thousands of dollars in fees and much more in compliance cost. Existing providers are allowed to oppose the applications of their would-be competitors and the regulator may deny an application if he or she thinks that the new service will duplicate an existing one. What the statute calls “duplication” customers would call “competition.” 

Matthew Mitchell

CON laws were once encouraged by the federal government. In the 1970s federal lawmakers threatened to withhold funding from any state that failed to adopt a CON regime. Their hope was that the regulation would reduce health care costs. By the mid-1980s it had become clear that CON laws were not achieving their goals and Congress eliminated the mandate. Several states repealed their CON laws while others have significantly pared their programs back. Today, 4-in-10 Americans live in a state without these rules.  

For the last several decades, economists and health experts have been studying patients’ experiences in these non-CON states, comparing them with the experiences of patients in states like Mississippi that have held on to their CON programs. Researchers have also studied what happens in states like Pennsylvania that do away with these rules. I’ve spent nearly a decade studying this research and the evidence is clear that CON laws simply don’t work. 

Certificates of need are supposed to limit spending. But standard economics tells us that by throttling supply and monopolizing local health care, CON laws are more likely to push costs up than down. And indeed, that is exactly what researchers have found. One study found that reimbursements for coronary artery bypass grafts fell 2.8 in Ohio and 8.8 percent in Pennsylvania when CON was repealed. Another found that, compared with CON states, health spending per capita was 4 percent lower in repealing states 5 years after repeal. 

Though the CON process does not typically address quality, some have also claimed that it can improve outcomes by channeling more procedures through more experienced providers. This is plausible. But it also makes sense that the laws might undermine quality by limiting competition. The empirical evidence suggests that, on balance, CON laws do more to impair quality than enhance it. Patients in CON states experience higher mortality rates following heart attack, heart failure, and pneumonia and are less likely to give their hospitals top ratings. Others find that in CON states, nursing home patients are more likely to be restrained, home health agency clients are less likely to see improvements in mobility, and surgeries are more likely to be performed by lower-quality surgeons. 

To add insult to injury, CON laws clearly reduce access to care. The typical patient in a CON state has access to fewer hospitals, hospice care facilities, dialysis clinics, cancer treatment facilities, psychiatric care facilities, and substance abuse centers. Patients in states with CON laws must travel longer distances for care, are more likely to leave their state for care, and must wait longer for care. They were also more likely to have been denied beds during the COVID-19 pandemic. And whereas CON programs do not seem to increase charity care, they do exacerbate Black-White disparities in the provision of care.

Mississippi requires a CON for more services and technologies than most CON states. And while states like Florida and Montana have been eliminating CON requirements in recent years, reform efforts in Mississippi have gone nowhere. Perhaps this year will be different.

At least three CON reform bills have been filed so far. One would eliminate the CON requirement for chemical dependency services. Another would eliminate the requirement for end-stage renal disease facilities. And one would eliminate the requirement for ambulatory surgery centers, home health, and end stage renal disease. These would be steps in the right direction.

But if Mississippians want better access to higher quality and lower cost care, it’s clear that full CON repeal is the best path. 

About the Author(s)
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Matthew Mitchell

Matthew D. Mitchell is a Senior Research Fellow at the Knee Center for the Study of Occupational Regulation at West Virginia University. He is also a Senior Fellow at the Centre for Economic Freedom at the Fraser Institute and an Affiliated Senior Scholar at the Mercatus Center at George Mason University. In his writing and research, he specializes in economic freedom, public choice economics, and the economics of regulatory barriers to entry. His research has been featured in numerous national media outlets, including the New York Times, the Wall Street Journal, the Washington Post, National Public Radio, and C-SPAN. Mitchell received his PhD and MA in economics from George Mason University and his BA in political science and BS in economics from Arizona State University. He is also an affiliated senior scholar at the Mercatus Center at George Mason University.
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