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AFP-WV: Setting the record straight on HB 4013, Certificate of Need Repeal

Feb 2, 2022 by AFP

Opponents of repealing West Virginia’s outdated Certificate of Need (CON) laws have continued to mislead lawmakers through hyperbole, conjecture, and arbitrary speculation about the impact that repealing CON would have on West Virginia’s health care landscape. Big Medical special interests benefit from the state’s currently rigged CON system. Their defense of CON is solely based on keeping this regulatory barrier, from which they benefit, in place in a wrongheaded attempt to protect their financial interests at the expense of every West Virginian. With HB 4013, lawmakers have the opportunity to stand up to these special interests by adopting the repeal of CON laws—a proven solution that will unequivocally benefit West Virginians and our state’s health care system.

The fact is, from volumes of research and ample real-world application, we know with abundant clarity what repealing CON means for the residents of the Mountain State: more access to better quality health care at a more affordable.

The CEO of the American Medical Association’s recent letter to the South Carolina State Senate (which, this week, passed a similar CON repeal bill from their chamber) is a well-articulated explanation of the role that special interests play in CON policy debates and represents a powerful rationale for the sincere need to repeal CON laws in every state:

“To be clear, CON represents a failed public policy. It may have made sense when most reimbursement was cost-based, and health care market participants would be paid for increasing supply regardless of demand and the actual need of patients. Today, however, managed care forces providers and physicians to be efficient. CON invites obstructionist behavior and is incompatible with the evolution of competitive health care markets. In the changed and now competitive environment, the continued existence of CON, despite overwhelming evidence of its ineffectiveness as a cost control device, suggests that ‘something other than public interest is being sought.’ Physicians are frustrated by CON programs that tend to be influenced heavily by political relationships, such as a provider’s clout, organizational size, or overall wealth and resources, rather than policy objectives. Ultimately, the CON laws undercut consumer choice, stifle innovation, and waken markets’ ability to contain health care costs. The AMA strongly urges South Carolina to conclude that CON does not work and consequently to enact S 290 and repeal CON.” (You can find the full letter attached)

In a 2018 report penned directly to President Trump, U.S. Department of Health and Human Services Secretary Alex Azar, U.S. Department of the Treasury Steve Mnuchin, and U.S. Department of Labor Secretary Alexander Acosta strongly urged states to repeal their CON laws:

“States initially adopted CON laws to further laudable policy goals, including cost control and access to care. The evidence to date, however, suggests that CON laws are frequently costly barriers to entry for healthcare providers rather than successful tools for controlling costs or improving healthcare quality. Based on that evidence and their enforcement experience, the two federal antitrust agencies–the FTC and the Antitrust Division of the Justice Department—have long suggested that states should repeal or retrench their CON laws… CON proponents have argued that CON laws support policy goals relating to healthcare quality and access. However, CON laws would be an indirect—and likely inefficient— way to achieve these goals. Moreover, the evidence suggests CON laws are ineffective. There is no compelling evidence suggesting that CON laws improve quality or access, inefficiently or otherwise.” (https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf, Page 50-56)

The former president’s cabinet members go on to say that CON laws have not improved health care quality or access, impose costs, including loss of beneficial competition, and can foster competition problems missed by benefit/cost analysis.

But the plea for states to end their CON laws isn’t restricted to only republican administrations. President Barack Obama’s administration said, “There been a lengthy, bipartisan consensus at the FTC that state CON laws should be repealed. The FTC has tirelessly advocated for the repeal of these laws for many years, with strong support from Commissioners of both parties.” (Citation below)

Again, the evidence for repealing CON is absolutely clear. There is an overwhelming and empirically emphatic consensus from policy experts from across the political spectrum that state lawmakers are right to repeal CON laws. Given this unmitigated agreement, and despite the self-interested fearmongering and disingenuous talking points of special interests, we urge lawmakers to boldly come together to reject the failed status quo by swiftly passing HB 4013.