Often perceived as a single national framework, health policy in the United States is more accurately understood as a patchwork of federal oversight, state-level regulations, and private-sector investments that produce highly localized health care markets. Among the most consequential policies are state-administered certificate of need (CON) programs, which limit the supply of health care providers. In new research, Health Care Policy Analyst Nicolas Montenegro provides an overview of CON programs, introduces a new index to measure regulatory restrictiveness, and considers available literature regarding the impact of these regulations on health care markets.

Key Points:

• CON or equivalent programs are among the most significant health policy interventions, requiring both prospective and incumbent providers to obtain government approval before undertaking certain activities and investments, ranging from the construction of new facilities to the acquisition of medical equipment.
• Variation in CON program design means no two programs exert identical regulatory control; to provide the context necessary for deliberative assessments of their true impact in each state, this research develops a “restrictiveness index” that measures the intensity of both administrative and competitive barriers present in health care markets.
• Although the literature on the impact of state CON programs is mixed, the weight of empirical evidence suggests the regulations reduce patient access, lower clinical quality for some procedures, and increase the average cost of delivering care, producing net harms for patients; policymakers should use the findings from this research in conjunction with state demographics when considering continued implementation or reform of CON programs more broadly.

Read the analysis.