States Should Eliminate Certificate of Need Laws to Improve Healthcare Competition and Quality
Source: Christopher Jacobs. "Health Care Would Improve If States Nuked This Hospital Red Tape." May 5, 2026. thefederalist.com
The Gist
The author argues that states should get rid of laws that require hospitals and other healthcare facilities to get government permission before opening. These laws protect existing hospitals from competition, which makes healthcare more expensive and lower quality for everyone.
Conclusion
All states should eliminate their certificate of need (CON) programs to improve healthcare access, reduce costs, and increase quality
Premises
- Certificate of need laws require healthcare facilities to obtain government permission before opening or expanding, allowing competitors to lobby against new entrants
- Research shows CON programs raise costs, limit access to care, and lead to deteriorations in quality
- CON laws entrench incumbent hospitals by eliminating potential competition that could reduce costs and improve quality
- Tennessee successfully eliminated CON requirements for new hospitals with broad bipartisan support (84-11 in House, 28-1 in Senate)
- The Trump administration is incentivizing states to repeal CON laws through Rural Health Transformation Grants that award extra points for CON repeal
- The original federal mandate requiring CON programs was repealed in 1987, indicating even Congress recognized their problems
Assumptions
- Market competition in healthcare leads to better outcomes than government regulation
- Incumbent hospitals use CON laws primarily to protect their market position rather than improve care
- Government boards are not effective arbiters of healthcare facility need
- The theoretical basis for CON laws (supply-induced demand) is flawed or outweighed by negative effects
- Tennessee's approach can be successfully replicated in other states