Mississippi Has a Soviet-Style Healthcare Law

By Mississippi Center for Public Policy
January 31, 2022

One of the most irritating problems in Mississippi’s healthcare sector is the Certificate of Need (CON). A CON is a legal document required before proposed acquisitions, expansions, or creations of healthcare facilities are allowed. They can be issued by a government regulatory agency with authority over an area to affirm that the plan is “required to fulfill the needs of a community.” If it doesn’t, then the entity applying will not be allowed to continue their business. Does that not sound like central planning (i.e., the Soviet Union)?

While socialism is not equivalent to a planned economy, a key aspect of the ideology involves the replacement of a market system with some form of central planning in order to achieve coordination of the economy. The goal of such a system would be to achieve conscious control over the economy to prevent surplus, inflation, rising prices, etc. While this sounds like a nice idea, of course, we know this doesn’t work. The same can be said for CON laws.

Several factors spurred the U.S. Government (which later backtracked and got out of the CON business, as they saw it didn’t work) and states to require CONs in the healthcare industry. Chief among these was the concern that the excessive establishment of healthcare facilities would cause competitors in an oversaturated field to cover the costs of a diluted patient pool by unnecessarily diagnosing procedures and hospital stays, thereby overcharging. The problem is that you cannot – just like an economy – predict markets for goods and services. People should be free to operate a healthcare facility (and any other business, for that matter) and people should be able to freely choose if they want to use that healthcare facility, or not. It's just that simple and just that moral.

Numerous studies have shown that CON laws do not live up to their original goals, but instead – just as Soviet planning led to low-quality products and other negative outcomes – decrease access to healthcare, increase costs for consumers, and limit competition.

In 2016, the Federal Trade Commission and the U.S. Department of Justice issued a joint statement, concluding, “CON laws, when first enacted, had the laudable goals of reducing healthcare costs and improving access to care. However, after considerable experience, it is now apparent that CON laws can prevent the efficient functioning of healthcare markets in several ways that may undermine those goals. First, CON laws create barriers to entry and expansion, limit consumer choice, and stifle innovation. Second, incumbent firms seeking to thwart or delay entry or expansion by new or existing competitors may use CON laws to achieve that end. Third, CON laws can deny consumers the benefit of an effective remedy following the consummation of an anticompetitive merger. Finally, the evidence to date does not suggest that CON laws have generally succeeded in controlling costs or improving quality.”

At the Mississippi Center for Public Policy, we are fighting against this socialist-like mandate by advocating for the repeal of the state's Certificate of Need law, as well as the 40-year-old moratorium set on the issuance of new certificates for home health agencies, which the Mississippi Justice Institute has recently made great progress on. Especially, at a time when we need more healthcare providers than ever, we should make it easier for them to operate and easier for patients to receive care.

As the 2022 Mississippi Legislative Session continues, you can keep up with measures to expand healthcare in a truly free market way by watching our Legislative Tracker.

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