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South Carolina leads the nation in health care solutions

Jun 30, 2023 by Charlie Katebi

Last month, South Carolina took an important step to lower costs, expand access, and ensure every patient in the state has a personal option for health care. In May, the state’s legislature approved a groundbreaking measure to repeal most of the state’s burdensome Certificate of Need Laws.

Certificate of Need laws require health care providers to obtain a government permission slip called a Certificate of Need to build new facilities and add new services. In order to receive this permission slip, the provider must prove to a government board that the new facility will meet their community’s health care needs.

Established health care providers routinely exploit CON programs to block and delay competing health care providers from opening new facilities and offering new services to serve patients. Most CON board members represent health care interest groups who have a financial interest in rejecting competing facilities. Health care incumbents also exploit CON programs by lobbying the board to reject applications competitors submit to add new facilities and services.

These barriers dramatically decrease access to essential health care facilities. The Mercatus Center estimates that CON laws reduce the availability of ambulatory surgery centers by 14%  and decrease the supply of hospitals by 30%.

CON laws also reduce the availability of services and equipment health care facilities offer patients. These laws decrease the number of MRI scans, CT scans, and PET scans by 34% to 65%. Furthermore, they reduce the number of acute care beds in hospitals by 36% , and
decrease the availability of dialysis clinics and hospice care.

A report from Americans for Prosperity Foundation found South Carolina’s CON laws imposed enormous barriers on health care providers and patients. Between January 2018 and February 2021, over $455 million in health care investments were denied, withdrawn, or stuck in an appeals process.

CON laws also increase health care costs by giving incumbent providers greater negotiating power to raise prices. On average, states with CON laws have 5% higher per-capita health care costs than states without CON laws. When CON laws allow a single hospital to provide medical services in an area, patients pay 15% higher prices for medical care.

Thankfully, South Carolina’s legislature overwhelmingly voted to repeal the state’s harmful CON laws. On May 17, Gov. Henry McMaster  signed Senate Bill 164 into law. This proposal repeals CON restrictions on all health care facilities and services except for long-term care facilities.

This groundbreaking reform would dramatically increase health care access in South Carolina. An analysis from the Mercatus Center estimates that ending CON would lead to 34 new hospitals and 12 new surgery centers opening in the states. Most importantly, Mercatus forecasts ten of these facilities would open in rural areas that faced the greatest health care needs.

South Carolina’s reforms hold important lessons for states around the country. Thirty-four other states and the district of Columbia enforce CON laws. And like South Carolina, these state’s CON laws promote hospital monopolies, drive up costs, and deny patients important choices to access quality health care. Lawmakers around the country should repeal these burdensome laws and deliver families a personal option.