Certificate-of-Need Laws and Delaware Health Services
Why does Delaware still allow a virtual monopoly in health care that drives up everyone medical bills?
Delaware has certificate-of-need (CON) laws, which require that health care providers show a need in the community for new devices, certain technologies, or expand or establish a practice.
Instead, research finds that CON laws are associated with higher health care spending per capita and higher physician spending per capita. In Delaware, CON laws create a barrier to entry into the market, inhibit expansion, and fail to provide adequate health care services in some areas.
Delaware has seen these consequences of CON laws in health care. The First State has the highest average monthly insurance premium and one of the lowest percentages of medical residents retained.
Additionally, Delaware spends more per-capita on healthcare than every nearby state excluding New York, and ranks 7thoverall for state health spending. For health care spending for patients over 65, Delaware ranks 5thhighest, 6thhighest for state government spending.
This isn’t the only negative impact these laws have had on our state. The presence of a CON program tends to be associated with fewer rural hospitals. We recently saw a battle in Sussex County regarding an expansion of services, since currently only three hospitals service 1,196 square miles of the rural county. The request to expand was denied.
Proponents of CON laws argue that they help to reduce health care costs and increase access. Contrary to typical supply and demand, they also argue that a shorter supply of health care services in the market results in a reduction of average prices.
A report by the Mercatus Center estimates a savings of $270 on total healthcare per capita without CON law, and an increase in access to hospitals and ambulatory surgical centers. They also estimate an increase in local services without these restrictions, helping residents access healthcare and keeping spending local.
Delaware has utilized the CON process since 1978. Forty-one years later, we may need to re-evaluate and better serve our residents.