Certificate of Need Laws: Why It’s Time for Repeal

Certificate of need (CON) is a program that requires hospitals, nursing homes, and usually other medical facilities such as ambulatory surgery centers and diagnostic imaging facilities to have the explicit approval of the state before they can operate. It became a national policy during the Nixon administration and was repealed during the Reagan administration. There is virtually no rigorous empirical evidence that the program has been effective in reducing hospital or healthcare costs and some evidence that it increases costs. This was true in the heyday of the program and is still true in more recent evaluations. Yet, CON continues to exist for hospitals in Alabama and 25 other states and effectively limits hospital construction and renovation. Government command-and-control has failed; it is time to let the free market work.

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