What Are Certificate of Need Laws Really For?
Certificate of need laws were supposed to keep health care costs down by preventing duplicative hospital spending, but in practice they let established hospitals veto new clinics, imaging centers, and surgical suites before those facilities can open their doors. The result is a government-backed cartel. If you have ever wondered why an MRI costs three times more in one state than another, the answer often starts with a certificate-of-need board.
Thirty-five states and the District of Columbia still enforce some form of CON law, according to the Mercatus Center at George Mason University. That means most Americans live under a regime where a competitor must prove to a state board that a new service is "needed" before it can compete. The incumbent provider gets a seat at the table. Sometimes it gets a veto. Imagine if Walmart could block a new grocery store from opening in your town. That is roughly how CON laws work in health care.
The stated goal was cost control. The actual outcome is the opposite. When competitors cannot enter a market, prices rise and innovation stalls. A 2023 staff report from the Federal Trade Commission found that CON laws are associated with higher prices, reduced access, and lower quality. The report was not a partisan hit piece. It came from the nation's top antitrust agency, which has no ideological stake in hospital profit margins. Its conclusion was straightforward: these laws shield existing hospitals from competition at the expense of patients.
How CON Laws Hurt Patients and Small Practices
Research from Mercatus shows that states with CON laws have about 30 percent fewer hospitals per capita than states without them, and they also have fewer ambulatory surgical centers and reduced access to advanced imaging. That is not an accident. It is the predictable result of allowing current market players to block new ones. Less competition means longer drives, longer waits, and higher bills for working families.
The damage is not abstract. National health spending reached roughly $4.9 trillion in 2023, according to the Centers for Medicare and Medicaid Services. Hospital care accounts for the largest share of that spending. When hospitals face no pressure to cut waste or improve efficiency, they do not. They merge, they buy physician practices, and they raise prices. The American Medical Association reports that physician-owned private practices fell from 60 percent of the market in 2000 to just 46.7 percent in 2022. Independent doctors are being absorbed by hospital systems that use CON laws to protect their turf.
Small-business owners in medicine feel this directly. A doctor who wants to open an outpatient surgery center can spend months or years navigating a CON application. Legal fees, consultant fees, and delays pile up while the hospital across town expands without scrutiny. Entrepreneurs with better ideas and lower prices are shut out before they can hire a single nurse. The National Federation of Independent Business has long opposed CON laws because they raise barriers to entry for small medical practices. That is not regulation. That is regulatory capture, and patients pay the premium.
Virginia is one of the states that still enforces a broad CON program. Independent providers there have repeatedly challenged decisions that favored established hospital chains. Patients in rural parts of the state often drive an hour or more for imaging that a rejected clinic could have provided down the road. The boardroom wins. The waiting room loses.
The Path to Affordable, Competitive Medicine
Repealing certificate of need laws should be a bipartisan no-brainer, because states like Florida and North Carolina have already rolled back CON requirements and patients benefit when providers must compete for their business. Prices fall, access expands, and quality improves because bad actors can no longer hide behind a state board. Competition is the oldest cost-control program in the market, and it works better than any five-year regulatory plan.
Congress should also step in. States that maintain CON laws should not receive federal health dollars without scrutiny. Medicare and Medicaid money should follow patients, not protected monopolies. When Washington subsidizes a system that blocks new entrants, it becomes an accomplice in the cartel. That has to end.
Health care does not have to be a zero-sum game between patients and providers. A truly patient-centered system would welcome new clinics, new technologies, and new business models. It would let a nurse practitioner open a low-cost urgent care without begging a hospital for permission. It would let an imaging center compete on price. And it would remind regulators that their job is to protect consumers, not to protect the incumbents who lobby them.
Libertarians and conservatives should make CON repeal a flagship issue. It combines free markets, federalism, and consumer protection into one clean argument. The left should join them, unless it has decided that protecting hospital profits matters more than affordable care. Patients are watching. So are the entrepreneurs ready to serve them.
Alexis Parr writes on health care, regulation, and the freedom to build.
