Can health spending be reined in through supply restraints? An evaluation of certificate-of-need laws
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Most US states use certificate-of-need (CON) programs in an attempt to slow the growth of health care spending. The objective of this study is to evaluate how CON in fact affects health care spending.
Subjects and methods
With 1980–2009 state-level data on spending from the National Health Expenditure Accounts, this article uses fixed-effects regressions to evaluate how the presence and scope of state CON laws affect these spending outcomes.
This article estimates that CON laws lead to a statistically significant 3.1% increase in total spending and finds that this increase is primarily driven by spending on physicians.
Rather than decreasing health care spending as intended, it appears that CON laws actually increase it. To the extent that policy makers wish to restrain health care spending, they may wish to repeal these laws.
KeywordsHealth care spending Certificate of need Health care supply Regulation
Thanks to Eleanor Lewin, Michael Kotrous, Anna Chorniy, Mohamad Elbarasse, Matt Mitchell, Tom Hamami, Harry David, participants in the Creighton Business Economic Environment and Policy seminar, the Association of Private Enterprise Education and the American Society of Health Economists 2016 meetings and the International Health Economics Association 2017 for helpful comments. Thanks to the Mercatus Center for financial support and helpful comments.
Compliance with ethical standards
Conflicts of interest
The authors have no conflicts of interest to declare.
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