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What’s New

Narrow Delaware beach highway under threat from climate change

From: WHYY

High water sits on Rt. 1 near Conquest Rd. south of Dewey Beach

Even on sunny days, southern Delaware’s Route 1 has been overtopped with water from tidal flooding between Dewey Beach and Fenwick Island. Tropical storms and even nor’easters also threaten to cut off access to the highway that runs along a thin strip of land between the ocean and the bay.

That’s why the state launched a study with help from consulting firm AECOM to determine how to make the road more resistant to flooding threats.

“The SR1 corridor between Dewey Beach and the Maryland state line is particularly vulnerable, with effects coming from both the ocean as well as the bay,” said Nicole Majeski, state transportation secretary. “This planning study will allow the department to develop short- and long-term solutions to help protect this important roadway for both the safety of the traveling public and the economic stability of the state.”

Keeping the roadway open and available to travelers is especially important as the highway is a primary evacuation route for Bethany Beach, South Bethany, Fenwick Island, and Ocean City, Maryland.

As part of the study, the state is asking frequent users of the road to fill out a survey about their travels and weigh in on what priorities are most important when considering protecting the highway. A final technical report on the study will be published early next year. By the end of 2023, the state will submit grant applications for future projects to address these issues.

“One of our goals at DelDOT is to examine the impacts climate change and sea level rise are having on our transportation infrastructure and incorporate resilient and sustainable mitigation measures in the planning, design, construction, and maintenance of our projects as the lowest lying state,” she said.

Majeski testified before the U.S. Senate Committee on Environment and Public Works on Wednesday in a hearing about how states are putting the infrastructure law that passed Congress last year to work.

“As the lowest lying state, Delaware is seeing firsthand the effects of climate change and sea level rise,” she told the committee. “We estimate that $1 billion worth of our existing infrastructure is vulnerable to the impacts of climate change.”

She pointed to Gov. John Carney’s climate action plan introduced last year as part of the way the state is working to both reduce its contributions to climate change and prepare for its impact.

COSTS OF WIND AND SOLAR

From: Ethan Allen

Longtime environmentalist Michael Shellenberger said in an October 1 lecture in Sydney, Australia that one of the “most misleading ways wind and solar sales people sell their technology” is to claim the electricity produced by wind and solar is cheaper.”

 However, the paradox about wind and solar energy is when deployed at scale, they actually make electricity production more expensive,”

There are basically two reasons,” he said. “It requires more machines, more backup power generators, more transmission systems, and more people to manage the chaos of an electrical grid with a large amount of unreliable weather-dependent, variable, intermittent energy.”  

Shellenberger  said “Solar and wind produce too much energy when you don’t need them, and not enough energy when you do, and both of those impose costs on the electrical grid.”  He pointed to a prediction by German economist Leon Hirth, that the economic value of wind and solar [electricity] significantly decreases as they take up a larger percentage of the electricity mix on a grid.”

In a paper for Energy Policy in 2013, Hirth estimated, when:

1) Wind power generation is 30% of the electricity mix on a grid, its value decreases by 40%; and

2) Solar power generation is 15% of the electricity mix on a grid, its value decreases by 50%.

He noted that it would cost the US $750 billion dollars to create enough storage to back up the entire country’s electricity grid for just four hours.

Hurricane Ian Shows the Limits of Green Energy Policy

From: John Locke

Green energy policy is all the rage with Washington DC and Europe, but it’s storms like Hurricane Ian that can show the limits of its usefulness. As North Carolina endures the bracing winds and rains of the deadly storm, will the power of Ian reveal the flaws in pursuing renewable power like wind and solar over gas, coal and nuclear?

Hurricane Ian has devastated Florida and is now churning its way through the Carolinas. Though it’s been downgraded into a tropical storm, it’s strength and power will still be felt throughout the coast and far inland.

Gov. Roy Cooper declared a state of emergency on Thursday, and most of the Wake County schools closed for the day on Friday out of an abundance of caution.

Duke Energy is already addressing outages impacting about 40,000 North Carolinians, and other electricity providers are also scrambling to get the power back on throughout the state.

Southport, a city a little south of Wilmington, is also dealing with a storm surge and WRAL is reporting that there is “basically no beach left” in Wrightsville.

The impact from the tropical storm is far from over, but the path of the storm and its impact raises some serious questions about the future use of green energy in North Carolina.

Ironically, the storm is skirting by an area that Gov. Cooper has chosen for a future wind turbine farm. In an agreement with a North Carolinian and French company, the state will allow the development of a wind turbine farm 20 miles off the state’s southeastern coast near Wilmington in an area deemed an “empty ocean,” as apparently wildlife only matters when a company is building a pipeline and not a wind turbine farm.

There will eventually be an untold number of 800 foot or taller turbines dotting the coastline helping to power potentially 500,000 homes, or will it?

Looking at the disaster Hurricane Ian has wrought onto Florida, South and North Carolina, it’s unclear how wind turbines based in the ocean would help the state in any sense during a major storm.

From just a practically standpoint, the winds are probably too powerful for the blades to function, so in the event of a hurricane they would likely be turned off. And if the storm is damaging enough, how are power company officials going to address broken blades or other issues when ports and boats have been destroyed?

A blade that falls in the water cannot be returned to function on the turbine, nor can it apparently be recycled.

In a report earlier this week, Locke’s Jon Sanders pointed out a paper that analyzed the impact of hurricanes on the suggested coastal wind turbine farms, which determined nearly half would be wiped out within a 20-year period.

When it comes to solar panels, the jury is still out on whether that technology, which North Carolina is also pursuing, would be able to withstand the winds of a strong hurricane.

Chariot Energy, a solar panel farm company, admits that most solar panels are probably unable to sustain the winds and avoid the damage that can be brought by a major hurricane. Given that these energy devices are located on roofs or on the ground, debris can be a serious problem, except in some exceptional circumstances. So even if the system can survive the winds, debris could damage and render it unusable.

Green energy may be seen as the future, but it’s unclear if it can yet withstand some of mother nature’s most powerful forces.

For more about the potentially negative impact of the proposed wind turbine farms, read the John Locke Foundation’s report Big Blow: Offshore Wind Power’s Devastating Costs and Impacts on North Carolina.

America Needs Florida’s Secret to Success: Work

From: Foundation for Government Accountability

America works when people work. It’s that simple. When people don’t work it causes many problems – from high inflation to supply chain issues and shortages to stress from people overworked and businesses understaffed to government dependency and hopelessness. Today, amidst increased economic anxiety and decreased faith in our federal institutions’ competence to solve big problems, our elected leaders must act with urgency with proven reforms.

Now, the public is seeing bold action based on proven results. Senator Rick Scott recently unveiled legislation called the Let’s Get to Work Act—the most serious and bold welfare reform proposal in 30 years. It represents a turning point.

The Left continues to insist that we can spend our way out of problems like inflation and worker shortages. Of course, the government largely created those problems by spending money.

But history teaches us that the best way to get America working again is to get Americans back to work. To do that, Congress needs to work more too. That means more proven reform, not more government spending.

We both travel the country explaining to state policymakers how limited their options are for welfare reform under current federal law. States can’t have work requirements in either food stamps or public housing right now, even if they want to. They’re handcuffed, operating auto-pilot hand-out programs that depress their workforces and keep people in poverty.

And the architect of this new plan, Senator Scott, knows it. And he knows how to fix it.

In 2016, when he was the Governor of Florida, Rick Scott built stronger work requirements within these constraints and required all able-bodied adults between 18-49 years old without dependents on food stamps to work, train, or volunteer part-time. After that reform took effect, enrollment in that population declined by 94 percent as able-bodied Floridians went back to work in more than 1,000 different industries and earned higher incomes.

Results that clear and positive are rare in public policy. And it played a big role in making Florida the economic envy it is today.

This new, federal bill builds on those efforts by reinstating the ability of states to implement those work requirements—currently suspended by the Biden administration. It also expands the same requirements to adults between 50-59 and parents of school-age children.

Finally, the plan would build a more universal work requirement by spreading their success to able-bodied adults who receive public housing benefits.

This does more than allow all 50 states—from California to Florida—to design their own policies to build self-sufficiency in low-income households. It gets to the very source of so many of our current problems around inflation, government spending, and a pervasive, crushing dependency that is holding our workforce—and country—back.

Maybe even more importantly, it strengthens our safety net protecting the truly needy. In public housing, for example, the absence of a work requirement for the able-bodied means seniors and individuals with disabilities get stuck on waiting lists behind Americans who can and should be getting back to work and out of public housing.

In Florida, for example, the average Floridian has to wait four years to receive housing assistance in Tallahassee and nine years in Miami. Nine years! Clearly public housing is broken.

Of course, it takes more than good policy to take this big leap forward in welfare reform. It takes strong leadership in Congress. To rebuild faith in our political institutions and leadership, Congress needs to get back to work, too.

And this is exactly the kind of timely, realistic, and transformative project in which a functioning Congress would engage deliberately and thoughtfully. Senator Scott deserves strong praise for showing us what Congress should be doing.

The modern welfare state has encouraged the growth of a welfare industrial complex—an array of organizations that benefit from and defend the status quo.

Inevitably, they will label this proposal as heartless. But there is no heart in stretching a safety net meant for the truly needy beyond sustainability. It is not compassionate to keep someone able-bodied and work-ready in poverty and dependent.

The status quo is indefensible.

Of course, no single piece of legislation will restore our American ethic of work, eliminate inflation or the federal deficit, repair the public’s faith in Congress’s ability to work as it should, or make our welfare programs the hand up they should be.

But this legislation is a massive and vital step in that direction.

5 Outrageous Examples of Government Waste That Highlight the Need for Accountability

From: Goldwater Institute

Wasteful spending runs rampant throughout the ranks of government, from the federal level in Washington, D.C., down to state and local governments and school districts. But public records laws empower citizens to find out what their government is up to and expose reckless spending. Thanks to the Goldwater Institute’s new Open My Government guide, citizens can learn how to use these laws to hold public officials accountable.

Here are five outrageous examples of government waste that underscore the need for citizen oversight:

  1. The city of San Francisco “wasted” over $20,000 on a trash can. Following a four-year-long research and development process, city officials stationed 26 new trash cans—15 custom-made prototypes and 11 off-the-shelf cans—around the city this past summer before picking a winner. But why did the city even bother with the custom-made models—which ranged in price from $11,000 to $20,900 each—when the off-the-shelf cans only cost between $630 and $2,800 apiece?
  2. Between 2003 and 2017, the Washington Metropolitan Area Transit Authority spent at least $416,789 maintaining a self-cleaning toilet. That’s an exorbitant amount of money, but it gets worse: as of 2019, when this wasteful spending came to light, the toilet hadn’t even worked for the past two years.
  3. In 2008, California taxpayers agreed to spend $9 billion on a high-speed rail project that would run from San Francisco to Los Angeles, cost $33 billion in total, and be operational by 2020. Fourteen years of delay and mismanagement later, new estimates project it will cost $105 billion, and the first phase of the rail won’t even be finished until 2029.
  4. In 2019, the Illinois legislature allocated $98 million to a project that would research and implement a way to reduce the noise trains make when they stop. Illinois taxpayers were forced to pay this bill—a fraction of what the Illinois Policy Institute said was “nearly $4 billion in discretionary funds set aside for politicians’ pork projects”—after two former clients of the Illinois House Speaker complained about the sound.
  5. In 2016, Pima County, Arizona officials agreed to loan $15 million to a company that wanted to send tourists to the stratosphere in specially modified weather balloons, with the conditions that World View Enterprises would make monthly repayments and employ a certain number of people. But as of last year, the company had never met its employment targets and hadn’t even been able to make its payments. The Goldwater Institute has led the way in challenging this illegal expenditure, since it violates the Gift Clause of Arizona’s Constitution, which forbids counties from lending or giving taxpayer money to private businesses.

Power to collect and allocate tax dollars is an essential government function; however, without careful oversight, all levels of government are prone to wasteful spending. That’s why concerned citizens, watchdog groups, and journalists have all worked to bring accountability by uncovering extravagant expenditures.

The federal Freedom of Information Act (FOIA) and state public records laws allow citizens to keep their government accountable by filing public records requests. These laws are an invaluable tool that provide individuals access to bills and receipts showing how their tax dollars are being spent.

Wasteful spending is just one aspect of government operations that needs oversight. Public records requests have also been used to open the books on public school curriculums and reveal electronic communications between government personnel. The public’s business should be open to the public, which means citizens have a right to arm themselves with the knowledge they need to shine a light on what their government is up to. As the Supreme Court wrote in 1978, “An informed citizenry [is] vital to the functioning of a democratic society, needed to check against corruption and to hold the governors accountable to the governed.”

The Goldwater Institute created Open My Government to help citizens successfully submit public records requests. It offers a step-by-step, state-by-state guide that outlines best practices for drafting well-defined requests for public information that are tailored to each state’s unique public records law. And for those who are met with resistance, Goldwater’s American Freedom Network of pro bono attorneys is standing by ready to help citizens in any state access the information they’re entitled to.

Why is Delaware’s FOIA Process still stuck in the ’70s?

From: Caesar Rodney Institute

In 1977, the Delaware General Assembly adopted Delaware’s Freedom of Information Act (FOIA), stating in the Delaware Code that:

“[I]t is vital in a democratic society that public business be performed in an open and public manner so that our citizens shall have the opportunity to observe the performance of public officials and to monitor the decisions that are made by such officials in formulating and executing public policy; and further, it is vital that citizens have easy access to public records in order that the society remain free and democratic.” (Source: 29 Del. C. § 10001)

I was in high school in 1977 and remembered calling my friends on our landline phone and running the long cord into the closet so I could have some privacy (all phones were landlines back then!). Forty-five years later, the technological world and the state government have changed immensely. Yet, the FOIA process has remained largely unchanged since the 1970s.

In other words, today, thirty years into the internet era, a FOIA request STILL must be made in writing to the appropriate public body – just like in 1977, with the caveat that the form can now be found online. The following is from the AG’s website:

“A FOIA request must be made in writing to the appropriate public body. The State of Delaware has a FOIA request form that may be electronically submitted through an online portal to various state entities.”

Delaware’s Cumbersome FOIA Process

Of course, the written submission is just the start of the process

After submitting a written request, the FOIA government agency can simply delay responding by stating that the request is “voluminous” – a term NOT defined in the Delaware Code. The agency also can claim that the request was not in “sufficient detail,” further delaying or canceling the request. In addition, the agency can ask for significant monetary compensation for “copying charges,” thereby limiting access to public information, especially in historically disenfranchised communities.

In short, there is limited remedy for citizens to gain access to public information from an expansive government bureaucracy. It is so bad that an effort was made in the recent Delaware General Assembly with the introduction of Senate Bill 155 to codify the rights of Delaware citizens to sue the Government in the Delaware Superior Court.

However, with court and attorney fees regularly running in excess of $30,000, this solution seems completely impractical for a Delaware parent who simply wants to know their child’s middle school curriculum.

Solutions Right in Front of Us

Fortunately, in 2022 there are technological solutions right in front of us, but that would require changing Delaware’s government focus from a reactive FOIA program to a forward-looking FOIA program.

Every document created today is created digitally (on the computer), and even documents received by the State as hardcopy can be scanned into a digital format to be on the computer.

The state of Delaware simply needs to post (make available) all public information on its website so that search engine crawlers can index the pages for web searches.

To do this, the State needs:

  • A definition of public information – and this already exists in code;
  • Someone in each department to be in charge of this process – and this already exists in the “FOIA Coordinators”; and
  • An information technology infrastructure to handle the documents – and the State has the $60 million Department of Technology and Information and a website!

With the pieces in place, Delaware’s government should change its paradigm from defensively reacting to requests for public information to progressively ensuring that the words written in 1977 — “citizens shall have the opportunity to observe the performance of public officials and to monitor the[ir] decisions…” – are meaningful.

The “FOIA Coordinator” role should be changed to focus on loading ALL public information onto the State’s website for indexing by search engine crawlers so that the documents are searchable by any citizen at any time, thereby greatly reducing the need for written FOIA requests while creating an open government for every Delawarean.

(Note: There would remain some issues, like internal email exchanges, but by eliminating the broad requests for information, targeted requests become much easier to handle on a case-by-case basis. The AG notes that email requests can be handled by each public body “using reasonable efforts by its own staff.”)

Summary

In the Delaware Attorney General’s training of “FOIA Coordinators,” she lays out the purposes of FOIA:

  • Promote governmental transparency and accountability
  • Inform citizens
  • Make it possible for citizens to observe and monitor the performance of public officials

However, a process created in 1977, when government was smaller, and technology did not exist, no longer achieves these purposes. Despite numerous attempts at tweaking the system, as recently as 2021, FOIA laws are NOT achieving their objectives.

With trust in the government at all-time lows, the Carney Administration and the Delaware state legislature should make it a priority that ALL public information be available and searchable online by default to all Delawareans.

As former U.S. President Barack Obama said in his 2009 address to the nation, Delaware should follow:

“My Administration is committed to creating an unprecedented level of openness in Government. We will work together to ensure the public trust and establish a system of transparency, public participation, and collaboration. Openness will strengthen our democracy and promote efficiency and effectiveness in Government.”

– Barack Obama

New Medicare plan riles state retirees

From: Cape Gazette

Lawsuit aims to block changes

A recent change in Medicare coverage for state retirees has many reconsidering their options as a lawsuit seeks to stop any changes.

Rehoboth Beach resident Gina Scanlon, a former Cape Henlopen School District employee who taught school for 39 years, said she received information in June on the state’s new Medicare plan for state retirees, calling it a nightmare.

“It’s more paperwork,” she said. “A nurse or doctor will have to approve treatment, which could delay treatment. There’s a possibility that someone’s health could be impeded because of the wait.”

In September, Scanlon said, she attended a meeting in Georgetown where state officials touted its new Medicare plan with Highmark Blue Cross Blue Shield – the Freedom Blue PPO Medicare Advantage Plan – also known as the Highmark Advantage Plan.

After the meeting, she said, she realized that some out-of-state doctors, such as those with the Johns Hopkins healthcare system, might not accept Delaware’s new Medicare insurance.

Scanlon said she plans to go with the new plan, instead of opting out, which would mean she would lose prescription benefits.

“I wish they would have asked us whether we would be interested in reducing benefits or other options before deciding on the new plan,” Scanlon said. “The worst thing about this is it was so underhanded and sneaky.”

Others agree.

The new Medicare plan for state retirees is at the center of a 111-page lawsuit filed Sept. 25 in New Castle Superior Court by RiseDelaware Inc., former state Sen. Karen Peterson and Department of Justice retiree Thomas Penoza. RiseDelaware is a nonprofit established “to act as a sentinel on issues involving state healthcare benefits provided for Medicare-eligible Delaware retirees.” Retiring legislator John Kowalko is listed as a director.

“This lawsuit is brought in response to defendants’ spectacular failure to comply with these statutory requirements,” states the lawsuit, which lists defendants Delaware Department of Human Resources Secretary Claire DeMatteis, Office of Management and Budget Secretary Cerron Cade, the Department of Human Resources, the State Employee Benefits Committee and the Division of Statewide Benefits.

“Indeed, defendants have decided to adopt a new regulation that deprives tens of thousands of state retirees over 65 years old of critical healthcare benefits without providing them the required notice, information or opportunity to be heard,” the lawsuit states.

Under state law, the state must provide its roughly 30,000 state retirees with a Medicare supplemental plan, which the state previously provided through a Highmark BCBS plan known as the Medicfill Medicare Supplement Plan.

Under the Medicfill plan, the lawsuit states, retirees were not limited to a specific network of doctors, and they were not required to obtain prior authorization from the insurance company before receiving treatments ordered by their doctors.

Now, the lawsuit states, new rules require doctors and hospitals to abstain from administering tests and treatments unless the insurance company authorizes them.

A State Employee Benefits Committee, chaired by DeMatteis and co-chaired by Cade, met for months to develop the new Medicare plan. While doing so, the lawsuit states, the committee failed to hold public hearings or allow public comment, and did not file notice of the regulation – all in violation of state law.

The lawsuit is asking a judge to rule that the committee violated state law by adopting the new Medicare plan, and to stop the state from implementing it.

“Defendants are like a jet plane racing down the runway with its wings yet to be attached,” the lawsuit states. “Confusingly, they say they have not yet executed a contract that will implement the change to Medicare Advantage.”

Peterson said she has not heard anything from the state, and does not expect to now that the matter is in litigation. She said RiseDelaware plans to hold a rally Wednesday, Oct. 12 on the steps of Legislative Hall.

DeMatteis and Cade declined to comment on the lawsuit.

A GoFundMe account has been created to pay for RiseDelaware’s legal fees and costs, with about $40,000 raised of its $150,000 goal as of Oct. 4.

Delaware’s Healthcare: Profit Over People?

Delaware is missing the mark by a large margin regarding affordable healthcare. Currently, Delaware ranks 5th in the country at healthcare cost per capita at $12,899 and is ranked as the 20th most expensive for health insurance premium costs at $6600 per year. There are several factors that contribute to health care costs, however emerging evidence suggests one large contributing factor is the trend towards reducing competition via the growth of large health institutions who squelch competition in the marketplace.

Since 2012, the percentage of physicians nationwide who work in physician offices has changed from 60.1% to 26.1% as of 2022. This trend increased more rapidly because of the COVID-19 Pandemic. Between 2019-2021 physician employment in hospitals or other corporate entities increased 19%. During that same time, there was a 38% increase in hospital or corporate ownership of physician practices. Many states have limitations on the corporate practice of medicine. This limitation can serve to limit the conflicts of interest that often result in interference of a provider’s judgment due to outside influences (CPOM). Unfortunately, Delaware is not a Corporate Practice of Medicine state thereby facilitating corporate ownership of medical providers. In such ownership situations, providers’ judgment may be clouded by leadership that does not hold patient care as their primary driver for decision making. Often larger hospital and corporate institutions justify their consolidation as a means of reducing costs in health care. However, the evidence seems to point towards the contrary.

Provider consolidation and the resulting in-house referral systems which develop are driving costs of healthcare upward. Several studies have shown a clear link between physician consolidation and increased healthcare costs. The Journal of Health Economics indicates physician charges increased by 14.1% following acquisition. Vertical integration in health care has been proposed as a means of reducing cost. However, it can result in in kickbacks for inappropriate referrals thereby driving up costs.  The Health Care Cost Institute found that the average price for a given service was always higher when performed in a hospital outpatient versus a private office setting.

Provider consolidation is accompanied by promises that the acquisition will allow the entities to work on innovative and improved models of care and with higher patient satisfaction and enhanced clinical outcomes. However, elimination of competition among providers creates incentives to hike prices and removes incentives to create value for patients. Consolidation tends to reduce the quality of care delivered due to disincentive from eliminating competition.

Privately owned physical therapy practices in Delaware are becoming subject to this tidal wave of change. This year Physical Therapists encountered a legislative challenge (SB 245) of their practice act from orthopedic surgeons. Their intent is to remove the prohibition of a physical therapist working in referral for profit employment and partnership circumstances. They purport that orthopedic surgeons owning physical therapy practices will result in newly formed entities that can provide better collaborative care and more innovative models of care thereby reducing costs, enhancing patient satisfaction, and improving patient outcomes. If enacted, SB 245  will result in larger institutions with conflicts of interest owning and controlling most of the outpatient physical therapy in Delaware. The result will be the extinction of privately owned physical therapy practices which will adversely impact the quality of care of this most critical component of the health care system. In many cases, physical therapists determined the functional outcome of individuals who sustain serious injury or surgery. The examining board of physical therapists and athletic trainers got it right in 1983 by inserting language which prohibits physical therapists from working in referral for profit situations due to the conflict of interest that arises. The intent of this provision was to eliminate the clouded judgment that occurs when financial incentives are the foundation for a medical referral.

Rather than focusing on and expanding anti-competitive strategies that only serve to fatten the wallets of those at the top of those entities at the expense of patients, Delaware should focus on creating strategies that facilitate healthy competition among providers thereby eliminating financial incentive for referrals. Replacing financial incentive for medical referrals with a motive that is seeking out the best interest of the patient will result in reduce costs, higher quality care and greater patient satisfaction and trust.

From: Mercatus Center

Certificate-of-Need Laws: How They Affect Healthcare Access, Quality, and Cost

What years of study reveals about the effectiveness of CON programs

Certificate-of-need (CON) laws require healthcare providers to seek permission from state regulators before they offer new services, expand facilities, or invest in technology. While the original hope was that CON laws would restrain healthcare costs, increase healthcare quality, and improve access to care for poor and underserved communities, a large body of academic research suggests that CON laws have instead limited access, degraded quality, and increased cost.

Despite this poor track record, CON laws remain in 35 states and the District of Columbia, keeping millions of Americans from getting the care they need.

Given the evidence from academic research and the experience of states which have undertaken reform, state policymakers who wish to increase patient access to high-quality, lower-cost care would be well advised to eliminate their entire CON programs. Reforming CON laws also represents a valuable step policymakers can take to improve the responsiveness of their healthcare systems in times of crisis. See below for research related to CON laws and the COVID-19 pandemic.

Which States Have Certificate-of-Need Laws?

As of May 2021, 35 states and the District of Columbia required providers to obtain a CON before offering at least one healthcare service. Two additional states, Minnesota and Wisconsin, set numerical caps on certain services such as the total number of hospital beds and nursing home beds. Other states require a CON for ground and air ambulance services, though these laws are often found in transportation statutes, and their effects on health outcomes are not as well studied. Hawaii has the highest number of CON restrictions (28) of any state, with North Carolina (27) and the District of Columbia (25) following close behind. Eleven states have removed all CON laws or caps: California, Colorado, Idaho, Kansas, New Hampshire, North Dakota, Pennsylvania, South Dakota, Texas, Utah, and Wyoming.

Options For Reforming Certificate-of-Need Laws

Many legislators see CON repeal as a common-sense way of improving healthcare in their states. While research shows full repeal is best, there are still ways to make meaningful reform happen even when full repeal is not feasible. Click on one of the reform options below to learn more about it.

If you’d like to schedule a consultation with one of our scholars on CON reform, email our outreach team.

What the Research Says about Certificate-Of-Need Laws

Click on a topic below to learn more about CON laws. You can also visit our 2020 update on the state of CON laws across the country.

 

A Brief History of CON laws

New York was the first state to institute a CON program in 1964, followed by Rhode Island, Maryland, California, and 22 other states over the next 10 years. In 1974, Congress passed the National Health Planning and Resources Development Act, requiring states to implement CON requirements in order to receive funding through certain federal programs. Louisiana was the only state not to implement a CON program during this time. But in 1986—as evidence mounteed that CON laws were failing to control healthcare costs or improve quality or access—the federal government repealed the CON mandate, and many states immediately began retiring their CON programs. Since then, 15 states have done away with their CON regulations. A majority of states still maintain CON programs, however, and vestiges of the National Health Planning and Resources Development Act can be seen in the justifications that state legislatures offer in support of these regulations, despite evidence they are ineffective. Learn more about how CON laws have changed over the past several decades.

Do CON Programs Ensure an Adequate Supply of Healthcare Resources?

No. CON regulation explicitly limits the establishment and expansion of healthcare facilities and is associated with fewer hospitals, ambulatory surgical centers, dialysis clinics, and hospice care facilities. It is also associated with fewer hospital beds and decreased access to medical imaging technologies. Residents of CON states are more likely than residents of non-CON states to travel further to obtain medical services and CON laws favor incumbent hospitals in the market for services.

Sources: Ford and Kaserman (1993); Carlson et al. (2010); Stratmann and Russ (2014); Stratmann and Baker (2017); Stratmann and Koopman (2016)

Do CON Programs Ensure Access to Healthcare for Rural Communities?

No. CON programs are associated with fewer hospitals overall, but also with fewer rural hospitals, rural hospital substitutes, and rural hospice care. Residents of CON states must drive further to obtain care than residents of non-CON states.

Sources: Cutler, Huckman, and Kolstad (2010); Carlson et al. (2010); Stratmann and Koopman (2016)

Do CON Programs Promote High-Quality Healthcare?

Mostly likely not. While early research was mixed, more recent research suggests that deaths from treatable complications following surgery and mortality rates from heart failure, pneumonia, and heart attacks are all significantly higher among hospitals in CON states than hospitals in non-CON states. Also, in states with especially comprehensive CON programs, patients are less likely to rate hospitals highly.

Sources: Stratmann and Wille

(2016)

Do CON Programs Ensure Charity Care for Those Unable to Pay or for Otherwise Underserved Communities?

No. There is no difference in the provision of charity care between states with CON programs and states without them, and CON regulation is associated with greater racial disparities in access to care.

Sources: DeLia et al. (2009); Stratmann and Russ (2014)

Do CON Programs Encourage Appropriate Levels of Hospital Substitutes and Healthcare Alternatives?

No. CON regulations have a disproportionate effect on nonhospital providers of medical imaging services and are associated with 14 percent fewer total ambulatory surgical centers.

Sources: Stratmann and Baker (2017); Stratmann and Koopman (2016)

Do CON Programs Restrain the Cost of Healthcare Services?

No. By limiting supply, CON regulations increase per-unit healthcare costs. Even though CON regulations might reduce overall healthcare spending by reducing the quantity of services that patients consume, the balance of evidence suggests that CON laws actually increase total healthcare spending.

Sources: Bailey (2016); Mitchell

(2016)

Comprehensive Review of the Literature

A comprehensive review of peer-reviewed research by economists and government agencies on the effects of CON laws on quality, cost, and access, published by the Palmetto Promise Institute.

South Carolina’s Certificate Of Need Program: A Comprehensive Review Of The Literature, by Matthew D. Mitchell — March 2022

Mercatus Peer Reviewed Research on CON Laws

A full list of Mercatus peer-reviewed research can be found below. You can also visit our update 2020 Research Update, including links to the latest state data

Research on Access

Barriers to Entry in the Healthcare Markets, by Thomas Stratmann and Matthew C. Baker — August 29, 2017

Entry Regulation and Rural Healthcare: Certificate-of-Need Laws, Ambulatory Surgical Centers, and Community Hospitals, by Thomas Stratmann and Christopher Koopman — February 18, 2016

Are Certificate-of-Need Laws Barriers to Entry? How They Affect Access to MRI, CT, and PET Scans, by Thomas Stratmann and Matthew C. Baker — January 12, 2016

Do Certificate-of-Need Laws Increase Indigent Care? by Thomas Stratmann and Jake Russ — July 15, 2014

Research on Quality

Examining Certificate-of-Need Laws in the Context of the Rural health Crisis, by Thomas Stratmann and Matthew C. Baker — July 29, 2020

Certificate-of-Need Laws and Hospital Quality, by Thomas Stratman and David Wille — September 27, 2016

Research on Cost

Do Certificate-of-Need Laws Limit Spending? by Matthew D. Mitchell — September 29, 2016

Can Health Spending Be Reined In through Supply Constraints? An Evaluation of Certificate-of-Need Laws, by James Bailey — August 1, 2016

Research on the Political Economy of CON Laws

The Effect of Interest Group Pressure on Favorable Regulatory Decisions, by Thomas Stratmann and Steven Monaghan — August 29, 2017

Mercatus Policy Briefs on CON Laws

On COVID-19

Raising the Bar: ICU Beds and Certificates of Need, by Matthew D. Mitchell, Thomas Stratmann, and James Bailey — April 29, 2020

A Fresh Start: How to Address Regulations Suspended during the Coronavirus Crisis, by Matthew D. Mitchell, Patrick McLaughlin, and Adam Thierer — April 15, 2020

First, Do No Harm: Three Ways That Policymakers Can Make It Easier for Healthcare Professionals to Do Their Jobs, by Matthew D. Mitchell — March 25, 2020

On Community Hospitals and Ambulatory Surgery Centers

Data Visualization: The Impact of Certificate-of-Need Laws on Community Hospitals and Ambulatory Surgery Centers, by Thomas Stratmann and Christopher Koopman — March 15, 2016

On Imaging Services

Data Visualization: Impact of Certificate-of-Need Laws on the Provision of Medical Imaging Services, by Thomas Stratmann and Matthew C. Baker — February 24, 2016

On Access to Care

Data Visualization: How State CON Laws Restrict Access to Healthcare, by Christopher Koopman, Thomas Stratmann, and Mohamad Elbarasse — May 13, 2015

Three Prescriptions for States to Improve Healthcare, by Matthew Mitchell, Anna Mills, and Dana Williams — January 15, 2015

Testimonies

Mercatus scholars regularly provide testimony at the state and federal level. If you’d like to invite a Mercatus scholar to provide testimony, please email our outreach team.

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Other Helpful Links and Resources

11 IDEAS TO IMPROVE HEALTHCARE PRICE TRANSPARENCY IN YOUR STATE

From: State Policy Network

Patients need more pricing information to make the best care decision with their provider. It is not about just finding the lowest-cost option, but also the best-value option that is affordable, high quality, and convenient. Patients want and deserve more certainty and predictability, and healthcare price transparency is one area where states can make this reality possible for patients.

First Generation Price Transparency in Healthcare: Build on Federal Price Transparency Progress

1. Codify federal insurer rule.

To safeguard healthcare price transparency advancements made at the federal level and prevent them from another federal administration pulling back on these improvements, similar provisions requiring insurers to post real prices for patients to compare rates on a tool should be codified into state law. Requiring insurers to post real prices for patients at the state level will ensure that patients enjoy these protections regardless of what happens in Washington.

States with model healthcare price transparency laws:

  • Texas passed the closest version to this reform this last session in Section 1662.051 of their state law.
  • Alaska, Tennessee, Massachusetts and Minnesota also have some requirements on their books for insurers to provide price estimates but are not as comprehensive as the federal rules.
  • Nebraska has a voluntary program.
  • Maine has a requirement for small business insurers.
  • Montana has explanation of coverage by insurers for services over $500.

2. Codify federal hospital rule.

To hedge the risk that a federal administration will pull back the 2019 hospital price transparency rule at the request of special interests and to the detriment of patients, similar provisions requiring hospitals to post a machine-readable file of real prices for all items and services should be codified into state law. This would allow patients to compare prices for services like MRIs, outpatient procedures, exams, and more between multiple hospitals.

States with model healthcare price transparency regulations:

  • Providers in Alaska, Maine, Minnesota, and Vermont all have to provide price estimates upon request, including those in a hospital, but most are by request and don’t require posting of prices on a website like the federal rule.
  • In Florida, hospitals must provide price estimates within seven days of the request.
  • Massachusetts has had a robust price transparency law since 2012.
  • Nebraska has a voluntary program.
  • Montana has a floor of price disclosure for services over $500.
  • Rhode Island requires price disclosure for those without insurance or for those with a deductible of $5,000 or more.

Second Generation Price Transparency in Healthcare: Improving the Availability of Prices

3. Robust advanced explanation of benefits (AEOB).

Knowing the prices ahead of time can remove anxiety for patients. Congress took the first step toward this goal by passing something called an Advanced Explanation of Benefits as part of the No Surprises Act. An AEOB requires providers to coordinate with insurers to send patients their estimated out-of-pocket costs ahead of time. This information is helpful, but big hospital systems often manipulate plan designs in negotiation to make themselves look more affordable to patients from an out-of-pocket standpoint, but charge higher rates for the service.

In response, states should build on the AEOB concept and require additional information to be included such as the estimated negotiated rate, the range of rates paid for the same procedure by the insurer in the past, average rates, and information on how a patient could compare prices between care options. This information provides patients with details on where to seek their care and context around pricing.

Which states have AEOB requirements? A few states as listed above have insurer price transparency laws; however, this reform would further protect patients by making price transparency automatic and require more information be provided to patients.

4. Healthcare price transparency at all locations.

The new federal hospital rule only requires hospitals to disclose prices. Patients need to know prices at many care settings to know their options, not just prices at hospitals. States should require or incentivize price disclosure at all state-licensed facilities and practices for which care could be shopped.

Like the hospital rule, this price disclosure should also include the cash or out-of-pocket price. It has been reported that cash prices can be significantly lower than insured rates, and some patients may want to pay that rate instead of using their insurance. Transparency here will also deter exorbitant cash prices that surprise patients.

States with healthcare price transparency regulations beyond hospitals:

  • Providers in Alaska, Maine, Minnesota all have to provide price estimates upon request.
  • Massachusetts has had a robust price transparency law since 2012.
  • California requires disclosure only to uninsured patients.
  • Montana has a floor of price disclosure for services over $500.
  • South Dakota requires healthcare providers—including licensed healthcare facilities, physicians, dentists, and psychologists—to disclose all fees and charges for services or procedures when requested.

5. Ensure implementation of price transparency in healthcare.

Knowing the price of care upfront is the only way to achieve a fully functional marketplace in health care that consistently delivers better quality, more affordable care. States can ensure that patients and small businesses gain full access to transparent pricing by vigorously enforcing transparency requirements.

To signal the importance of price transparency requirements, a state could link compliance to receiving or maintaining the license by which hospitals, provider groups of a certain size, and insurers are able to operate. The state could also decide to link noncompliance with to the state’s recognition of the company’s nonprofit status. This recognition conveys a huge tax advantage—a benefit companies would risk losing if they do not comply with price transparency requirements. Additionally, states could consider linking noncompliance to long-term participation in state employee health plans. At a minimum, noncompliance should trigger a significant financial penalty.

States with model healthcare price transparency requirements:

  • South Dakota links price disclosure when requested to possible disciplinary action by the licensing agency.

6. Give state agencies more tools to enforce price transparency.

Designate the state Division or Department of Insurance or Attorney General as the enforcer of healthcare price transparency laws. Allow these agencies to levy state penalties for enforcement, that could be given back to consumers in the form of a rebate (like they are for the medical loss ratio (MLR)) or contribute it towards a state-run reinsurance program. All state Attorneys General have consumer protection responsibilities that could be utilized to prevent price gouging with more price transparency.

Third Generation Price Transparency in Healthcare: The Next Steps to Building a Better Market

7. Reward public employees with right-to-shop shared savings.

Healthcare prices can vary by hundreds or thousands of dollars for the exact same in-network service or procedure. Paying patients share savings incentives when they choose lower-cost care. This motivates patients to seek value and grants high-value providers a tool to attract more patients. States have flexibility in the way they choose to provide such incentives, including but not limited to gift cards, lower premiums or deductibles, or even cash.

Close to a dozen states are currently running a version of shared savings for public employees. Patient shared savings incentive programs have been shown to save millions for taxpayers and state employees in longer-standing programs like one in Kentucky.

States with model shared savings incentive programs: Connecticut, Florida, Kansas, Kentucky, Maine, Texas, New Hampshire, Utah and Virginia.

8. Expand right-to-shop shared savings to individuals and small business market.

States should ask insurers in the individual and small business markets to offer products that reward patients directly with shared savings for picking a lower-cost, high-value option. Shared savings could be focused on lower-cost care in-network. However, to maximize patient savings, it could also apply to lower-cost, out-of-network options.

The shared savings can come in the form of cash, a Health Savings Account (HSA) contribution, or a deductible or premium reduction. To ensure these incentives to save money are properly aligned with how insurers account for medical spending, the federal insurer price transparency rule already allows insurers to count a shared savings payment as medical spending when calculating the MLR.

States with model right-to-shop shared savings:

  • Maine, Tennessee and Virginia require shared savings for at least a portion of their commercial plans.
  • Florida and Nebraska have voluntary programs.

9. Pay cash for high-value care, get credit toward deductibles to build a market.

States should require insurers to provide in-network credit towards any out-of-pocket responsibility if the patient chooses to see an out-of-network provider that delivers a better deal (e.g., provides care below a certain benchmark such as below average in-network rates). In this circumstance, the patient’s choice saved themselves and insurers money.

Providers often will accept a lower cash rate because they avoid costly administrative expenses. Many lower-cost independent providers have been pushed out of network because they are not part of large health systems. Under the status quo, many patients are overpaying for services.

States with model out-of-network provider credits:

  • Ending network discrimination rewards cost-effective providers and would be modeled off existing laws in Maine and Arizona.
  • New Jersey has a state law that allows price estimates for out-of-network procedures.

10Allow smaller companies to see how their healthcare dollars are spent.

Large companies have the clout and resources to see how their health care dollars are spent. By contrast, small companies are in the dark. As a result, most small companies have no idea if they are getting a good deal, if they should change their plan designs to better serve their employees or buy coverage another way.

States with model healthcare spending laws:

  • To bring some light to pricing for smaller businesses, Texas passed a law that allows an employee welfare benefit plan, plan sponsor, or plan administrator to request 36 months of claims that must be shared within 30 days.
  • States may want to add safeguards to ensure data is properly de-identified, and set a floor for the size of company that can access claims.

11. Ban anti-competitive contracting provisions, including gag clauses on price.

Contracts between healthcare providers and insurers often feature clauses that harm patients. By banning the following practices, states can begin to reverse the process of consolidation in American health care and protect patients from overpaying for care.

  • “All-or-nothing” clauses: Well-known, dominant, and high-cost healthcare systems often require insurance companies to include all their affiliated providers in network, regardless of the criteria used to evaluate the cost or quality of care to set a network. Some systems will take this a step further and also require all affiliated providers to be included in the preferred tier or cost-sharing arrangement, regardless of price or quality. This leads to inflated premiums and lowered quality of care.
  • Most-favored-nation” clauses: Dominant insurance companies prohibit providers from giving other insurance companies more favorable rates and conditions, locking in high rates and creating an anticompetitive cartel. Some less-strict clauses require disclosure of other providers’ rates to enhance bargaining power, which in turn drives rates higher.
  • Group boycotts: Groups of healthcare providers who should normally compete with one another sometimes refuse to individually contract with insurers on a basis other than jointly agreed-upon terms—a classic example of anticompetitive behavior that leaves the public worse off.
  • Pricing blackouts: Some contracts explicitly allow hospital operators to block their pricing information on insurers’ online shopping platforms, preventing transparency for patients and limiting competition. Recent federal regulatory actions provide a basis for eliminating this practice.
  • Gag clauses: Certain contracts prohibit or severely limit providers from disclosing prices or costs to patients or others. At times, this prohibits the disclosure that the up-front cash price would be lower than the fee charged if the service were paid for through insurance—harming patients by forcing them to pay more for the same service.
  • Exclusive contracting provisions: These provisions prevent an insurer from contracting with other competitive providers. They force either the purchaser to buy a product only from one seller or the seller to sell only to one purchaser. By shielding providers from competition, these provisions foster cronyism and misaligned incentives in the healthcare sector and should be prohibited.

States with model bans on anti-competitive provisions:

  • Twenty-two states have some kind of prohibition on “most-favored-nation” clauses, but many only apply to a certain segment of the market.
  • There have been recent bills in Colorado and New York on “all-or-nothing” clauses.