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Certificate-of-Need Regulations Protect Incumbents and Hurt Consumers



(p. A11) An important but overlooked debate is unfolding in several states: When governments restrict market forces in health care, who benefits? Legislative majorities in 36 states believe that consumers benefit, because restrictions help control health-care costs. But new research confirms what should be common sense: Preventing qualified health-care providers from freely plying their trade results in less access to care.

Most states enforce market restrictions through certificate-of-need programs, which mandate a lengthy, expensive application process before a health-care provider can open or expand a facility. The story goes: If hospitals or physicians could choose what services to provide, competition for patients would force providers to overinvest in equipment such as MRI machines--and the cost could be passed on to patients through higher medical bills.


. . .


These restrictions have largely failed to reduce costs, but they certainly reduce services. A 2011 study in the Journal of Health Care Finance found that certificate-of-need laws resulted in 48% fewer hospitals and 12% fewer hospital beds.



For the full commentary, see:

THOMAS STRATMANN and MATTHEW BAKER. "Certifiably Needless Health-Care Meddling." The Wall Street Journal (Tues., Jan. 12, 2016): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Jan. 11, 2016.)


The "new research" mentioned by Stratman in the passage quoted above, is:

Stratmann, Thomas, and Matthew C. Baker. "Are Certificate-of-Need Laws Barriers to Entry?: How They Affect Access to MRI, CT, and Pet Scans." Mercatus Working Paper, Jan. 2016.






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