North Carolina Is Growing, But Their Health Care Market Isn’t

Wake County, North Carolina is growing at a rapid pace. As the population expands, so too does the need for services of all kinds. One might reasonably expect that the health care market could respond the same way any other sector does: invest in the community, expand capacity, and compete to serve more customers. But unelected state bureaucrats just rejected much of the expansion proposed by Wake County health care providers. 

Under North Carolina’s certificate of need (CON) law, health care providers must get state permission before they can build new facilities or expand their current operations. Across multiple applications, providers requested 644 new hospital beds, but the state government approved only 267 beds. The other 377 requested beds were denied, including those tied to a new hospital. While the state approved a partial expansion, it is unlikely to be enough to meet the growing demand. In a rapidly growing county, limiting new beds means reduced capacity, longer waits, and fewer options for families seeking care close to home. In other words, despite Wake County’s rapid growth, state regulators rejected the projects because they exceeded what state planners determined was “needed.” 

Proponents of CON laws often argue the regulations prevent unnecessary or duplicative services, thereby keeping health care spending down. However, by requiring health care providers to receive approval before expanding their operations (a process which can take months to years to complete), the market is hindered from responding to an increase in demand for care in real time. The state’s health care capacity is instead dictated by regulators using arbitrary need determinations, rather than by providers investing and competing to meet patient demand.   

Wake County, and North Carolina broadly, serve as clear examples of the consequences of this approach. Research indicates that CON programs in the state led to about 12,900 fewer hospital beds. Given that North Carolina has among the strictest CON laws in the nation, it’s no surprise the state struggles with access to care, particularly in rural communities which are predominately categorized as health provider shortage areas. 

A recent story from Eastern North Carolina further highlights these access challenges. When Martin General Hospital — the only hospital in Martin County — suddenly closed, residents of the rural county lost their nearest emergency care provider. As a result, many people, including those who struggle with chronic conditions like diabetes and cancer, now face long drives for life-saving care. The loss of this provider shows how strained access already is in much of North Carolina and why restricting new capacity under CON only exacerbates the problem, making it harder for communities to recover.  

Critics rightly point out that state planning fails to reflect real-world demand in Wake County, one of North Carolina’s fastest-growing counties. Brian Balfour of the John Locke Foundation noted that “providers are far more in tune with the health care needs of the community than a committee of state regulators.” He added that patients are facing unnecessarily long emergency room wait times and difficulty accessing care, in large part due to CON. 

Not only do CON laws limit capacity, they also alter the incentives of the entire health care market. When new projects require government permission, incumbent providers are effectively shielded from competition, leaving patients with fewer choices. Federal officials have warned for years that these policies restrict competition and ultimately harm consumers. 

Overall, these laws restrict access by artificially limiting supply. If a region is growing, the sensible way to avoid overcrowding and long wait times is to expand capacity in the form of beds, staff, facilities, and services. When the state instead restricts supply, patients are deprived of the health care they need.  

Supporters of CON laws often argue that the regulations lower costs by preventing excess capacity. But basic economic theory tells us differently: limiting supply in the face of rising demand only pushes prices higher. A growing body of research confirms the harmful effects of CON laws, suggesting these policies increase costs, reduce access, increase wait times, and lower the quality of care. 

The federal government repealed its CON mandate 40 years ago, and many states have rolled back or entirely repealed their regulations since then. North Carolina, however, still relies on CON restrictions to the detriment of their residents. 

If the goal is more access and lower costs, the solution is straightforward: repeal CON laws and stop treating the provision of health care like a privilege that must be rationed. Wake County’s story shows the repercussions of these restrictions: when the government dictates how much health care is needed, patients suffer the consequences of a health care system with less competition, fewer options, and higher costs.  

Nicholas Huff is a policy intern at Americans for Prosperity.