When Covid-19 exposed the country’s dangerous lack of hospital beds, lawmakers used the taxpayer credit card to try to spend their way out of the problem. But that isn’t all they did. Two dozen states also suspended certificate-of-need regulations, which artificially suppress hospital bed capacity. Now that the crisis is over, states should repeal these rules permanently.
Certificate-of-need regulations require hospitals and healthcare providers to obtain government approval before they can build new facilities, expand existing facilities or purchase certain types of equipment—even beds. It would be more accurate to call them “permission to care” regulations, as they arbitrarily prevent patients from accessing life-enhancing innovations.
North Carolina has some of the nation’s top medical schools and ample resources, but our research has found the state’s stringent certificate-of-need regulations prevented at least $1.5 billion in medical innovation from 2012 to 2022. North Carolina health systems and companies seeking to expand face an application process riddled with cronyism. People employed by or affiliated with existing healthcare providers and medical institutions make up 60% of the State Health Coordinating Council, which determines the state’s need for healthcare facilities and services. It would be like forcing 7-Eleven to get permission from Wawa and Circle K before being allowed to open a new store.
The problems arising from permission-to-care schemes long predate the pandemic. A 2016 Mercatus study found that states with certificate-of-need regulations have fewer hospital beds and facilities per capita than states that have embraced the free market.
In 1974 Congress mandated that states pass certificate-of-need laws as a condition for receiving federal health dollars. Since that mandate was lifted in 1987, 12 states have completely repealed their laws. Those states are empowering those closest to the community to address local needs without interference from state regulators or politically connected competitors protecting regional monopolies. Other states have adopted piecemeal reforms to ease the burdens placed on those working to improve patient care. In 2021 North Carolina raised the capital minimums that trigger certificate-of-need review, allowing for smaller-scale expansion plans to move forward without regulatory approval.
Other states should follow suit. Underinvestment in the nation’s health infrastructure will remain a problem until lawmakers end government micromanagement of healthcare. Innovators and entrepreneurs must be free to serve patients in urgent need of affordable and accessible care.
Perhaps the most perplexing sin of the public-health establishment is that it abandoned an essential commitment to science. For instance, why did public-health authorities ignore clear scientific data that COVID infection-acquired immunity is stronger than vaccine-acquired immunity? Vaccine mandates forced many frontline workers — heroes who contracted COVID early in the pandemic while doing essential work — to choose between their careers and a vaccine that provides less protection than the natural immunity they already had. University presidents forced young male students, including those with excellent immunity from a prior COVID infection, to accept an elevated risk of myocarditis as the price of a college education.