Certificate of Need Laws Left Us Vulnerable to COVID

By Aaron Rice
October 21, 2021

“Flatten the curve” is a phrase that Americans who lived through the COVID-19 pandemic will never forget. Its arrival in our collective lexicon marked the moment that our daily lives were dramatically changed for months on end. As COVID patients overwhelmed our hospitals, the goal was to lessen the strain by slowing transmission of the virus to levels that hospitals could handle. Those efforts were not enough, so we were forced to face the virus without enough hospital beds and medical personal to treat the sickest among us. 

As we appear to be pulling out of the most recent Delta variant, it’s worth asking: why did it take so little to overwhelm Mississippi’s healthcare system to begin with?   

Like most public policy issues, there isn’t just one answer to that question. But there is one answer that stands out as the most obvious and easily fixable one: our state’s “Certificate of Need” (CON) laws.   

After all of the efforts to conserve and increase the number of hospital beds – going so far as to set up temporary tent hospitals – would you believe that Mississippi went into the pandemic with a policy of intentionally limiting the number of hospital beds in our state? Shockingly, we did. 

Even more shocking are the problems that CON laws were originally designed to solve: a facepalm-worthy fear of too much investment in the healthcare sector. The idea was that competition might lead health care businesses to build too many facilities, and that those facilities would be too large and too fancy, and then patients would receive subpar care and be overcharged for that care to cover the extravagance. Never mind that in every other industry competition increases quality, lowers prices, and spurs innovation.  

Just describing the way that CON laws actually work makes it easy to see what is really behind them: protecting established businesses from competition with newcomers. First, a would-be healthcare startup (or even an existing hospital that just wants to add more hospital beds or medical equipment) must complete an application to try to prove to the state government that there is a need for the new facility, beds, equipment, or services.  The fees for filing that application can be as high as $25,000, while the cost of paying the lawyers and consultants needed far exceed that amount. The application can take months to complete and years to go through the approval process. 

Once the application has been filed, the applicant’s competitors get to take them to court in an effort to prove that the new facility, beds, equipment, or services are not needed, and that the current market participants have patients taken care of just fine, thank you very much.   

After all of that time, money, and effort, the application can easily be denied, making all of it a waste. It’s not exactly a business-friendly system, to say the least.   

So how did having CON laws work out for Mississippi during the pandemic? According to the Reason Foundation, states with CON laws have exceeded 70 percent of their ICU capacity for an average of 14.99 days per month during the pandemic, while states without CON laws have done so for only 8.65 days per month. Cutting the length of our hospital bed shortages nearly in half during the pandemic likely would have saved lives and spared us from a lot of economic pain.   

Mississippi’s CON laws made the pandemic more difficult, but they will continue to lower the quality of our health care, increase the cost of health care, and reduce our access to care well beyond the pandemic. This legislative session, Mississippi should join the twelve other states that have repealed their CON laws and be done with it.   

Aaron Rice is the Director of the Mississippi Justice Institute, a nonprofit, constitutional litigation center and the legal arm of the Mississippi Center for Public Policy. 


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