Certificate of Need Laws and their Impact on Healthcare

Certificate of Need laws were introduced in the mid-70s as an attempt to curb rising healthcare costs. These laws require organizations or individuals to obtain approval from a state commission to set up medical practices or facilities. The idea was that restricting the development of healthcare services would reduce utilization and decrease costs. However, this approach did not consider that most people had insurance, which insulated them from price increases. As a result, demand continued to rise, prices increased further, and the policies did not achieve their intended goals. While lawmakers in Washington eventually realized the flaws and repealed the federal incentive for these laws, almost every state enacted them, benefiting entrenched incumbents who had influence over the commission's decisions.