CON laws do not help underserved populations

One of the original rationales for certificate of need (CON) laws over 40 years ago was to ensure care for “underserved populations” including those “located in rural or economically depressed areas.”

The Georgia Public Policy Foundation studies this and other intended and actual effects of CON regulations on healthcare in a recent study. Of all the stated policy goals, the aim of aiding underserved populations is especially perplexing. As CON is a supply restriction (those tend to restrict supply), it is unclear how this was supposed to play out.

The Foundation’s study analyzes 10 tests on how CON affects underserved populations, and found that eight of them were associated with diminished care for underserved populations and that two found neutral or insignificant effects. No tests associate CON with better outcomes for underserved populations.

It is possible that the policy’s designers hoped regulators would focus more on well-served communities, which would cause providers to shift resources to underserved communities. 

However, there is no evidence for the hypothesis that CON encourages care for underserved, rural or economically depressed communities. If anything, it seems to make these communities worse off. 

Among the two negligible results, one found that CON had no relationship to uninsured admissions, and the other found that CON had no relationship to uncompensated care.

The studies demonstrated several ways that CON affects underserved populations, particularly compared to states that are not subject to CON regulations. These findings include:

  • Substance abuse centers are less likely to accept Medicaid patients in CON states.
  • The uninsured are more likely to pay out of pocket in CON states.
  • The large black-white disparity in the provision of coronary angiographies disappears when the procedure is exempted from the CON process.
  • Rural populations have less access to care in CON states.

Our study reveals several ways that CON regulations fail to achieve their intended outcomes and often have the opposite effect. Instead of containing spending, CON usually leads to higher spending per service and per capita. Instead of ensuring equitable access, CON is overwhelmingly associated with diminished availability of care. 

The intent to ensure care in underserved areas is no different. In areas where need is most apparent, CON leads to overwhelmingly negative outcomes.

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