Federal agencies target CON laws in Trump administration plan for healthcare reform — 4 insights

The Trump administration released a proposal centered on offering quality healthcare at affordable prices, suggesting changes to certificate-of-need laws to promote choice and increase competition.

HHS, the U.S. Treasury and the Department of Labor jointly developed the report, which offered public policy recommendations in four broad areas:

  • Healthcare workforce and labor markets
  • Healthcare provider markets
  • Healthcare insurance markets
  • Consumer-driven healthcare

The departments homed in on CON laws, suggesting states either repeal or significantly scale back the laws to promote development and competition.

Here's what you should know:

1. The agencies drafted three recommendations pertaining to CON laws:

  • States should repeal them entirely or significantly scale them back. The agencies said a scaled-back CON law would not grant CON competitors a chance to weigh in on the CON application.
  • The Federal Trade Commission should make a series of policy recommendations, based on research on CON law benefits and disadvantages.
  • States should discontinue the use of Certificates of Public Advantage to "shield anti-competitive provider collaborations and mergers from antitrust scrutiny."

2. The FTC and the Justice Department's Antitrust Division both have previously said states should repeal or retrench their CON laws.

3. To date, 15 states have eliminated their CON programs entirely. Most states maintain some sort of a CON program with backing by CON proponents. Proponents argue CON laws control costs and improve quality healthcare services. The three departments refuted these claims, saying, "CON laws have failed to produce cost savings, higher quality healthcare or greater access to care, whether in underserved communities or in underserved areas."

4. Reducing CON laws could increase competition, driving higher quality care. With more entities allowed to enter a market, providers are incentivized to become more efficient. Hospitals that faced more competition developed and implemented better management practices, according to a 2015 study in The Review of Economic Studies, which was cited in the report.

The report said, "There is no compelling evidence suggesting that CON laws improve quality or access, inefficiently or otherwise."

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