Delaware’s Certificate of Public Review: A Prescription for Higher Healthcare Costs
By: Jane Brady, Chair, A Better Delaware
A new legislative session is about to begin, and as we look at the proposals, we have made over the last several years, one that stands out in today’s marketplace for health care and costs is eliminating the Certificate of Need, amended later to be called the Certificate of Public Review in Delaware. Perhaps the new name Delaware has adopted is more appropriate, as there was never any real correlation between the certificate and the need for affordable and accessible health care. The requirements in the law adversely affect access to, and the cost and quality of, the patient care you receive.
What do these laws do? Known, generally, as a Certificate of Need in the few states that retain them, these laws require healthcare providers to get permission from the state before adding or expanding the type of services they offer or before acquiring expensive equipment, building new facilities, or expanding existing ones.
How did we decide to adopt such a law? Upon passage of an Act of Congress, certificate of need laws were passed by 49 of the 50 states in the early 1980s. But, in an unusual move (as Congress rarely ever undoes what it did do), Congress repealed the law just a few years later, in 1986. Why? It quickly became clear the objectives were not being met. In fact, over the intervening years, study after study has shown that these laws are impeding access and increasing costs. The Kaiser Family Foundation did a study that found that states that have certificate of need requirements had 11% higher healthcare costs than states that did not have it. An additional study by George Mason University found that there were 30% fewer hospitals per 100,000 residents in states that had a certificate of need requirement. Additionally, rural areas, with smaller, localized populations, were more poorly served.
Many states now have repealed the certificate of need statutes. Sadly, despite repeated statements of concern about health care costs in the state, Delaware has yet to take action to eliminate the certificate of need requirements.
And, despite the title Delaware decided to adopt for the law, it is not the public who reviews the request. It The panel includes competitors of the applicant, who, in the real world, have no interest in allowing another facility to provide greater services or purchase equipment to offer procedures they don’t offer.
Certificate of need laws are structurally flawed. They limit competition. They allow the state to pick “winners” and “losers,” with the existing facilities having the political connections and favor to “win.” The certificate of need restricts who can participate in competing for your healthcare choices and as a result, there is no incentive to be innovative or even cost-conscious when they appeal to you as you make your health care choices. When businesses compete for you to choose their services, they will try and find the most cost-effective way to give you a product that you want, when you want it. Without competition, there is no need to be responsive to your demand for a specific service or to be more cost-effective. You get what they have decided to provide at the price they decide to charge.
Importantly, access includes timeliness. Recently, CMS, the company that manages Medicare and Medicaid nationally, conducted a study of emergency room wait times in all 50 states and the District of Columbia. Delaware ranked 47 out of 51, with an average wait time for emergency room services of over three hours. A recent study. In 2024, found an average wait time of 3.5 hours.
It is good governance to eliminate certificate of need laws. Since the laws were passed, the government has taken a much larger role in providing health care. Now, Medicare and Medicaid have changed the economic environment in which healthcare is provided, and costs are highly regulated. In truth, Certificate of Need laws are now essentially outdated for any purpose. Delaware should repeal the laws providing for a Certificate of Public Review, our equivalent of a Certificate of Need, and allow the health care providers of our state compete fairly to provide the public, timely, the quality health care they need and want.
Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.