MONTANA’S CERTIFICATE OF NEED LAWS DRIVE HEALTH CARE PRICES HIGHER, COST LIVES
With some Montana counties at or near their hospital capacity amid the COVID-19 pandemic, a little-known state government program called “certificate of need” could be making the shortage worse.
In-home health care can reduce hospitalizations while getting people the care they need during the COVID-19 pandemic, but in Montana a new home health business cannot open unless the state determines the business is needed and gives permission.
Under Montana’s “certificate of need” program, the government gets to determine if a new health care business is “needed” in a process that lasts at least six months and charges a fee of $500, or 0.3% of the intended expenditure. The effect is to limit competition that could give residents more choices and lower costs.
For example, in 2019 Montana denied new applications for home health businesses in Yellowstone County, despite the government’s own estimate of 795 patients in the county with an “unmet need” for home health care. Those new services could have opened up beds at hospitals and increased access to care during the pandemic.
In addition to home health, Montana requires certification for outpatient surgery centers, nursing homes and even drug rehabilitation facilities.
Certificate of need programs were pushed by the federal government in 1974, but by the mid-1980s the program was declared a failure and Congress withdrew it.
While 15 states dropped their certification programs, they remain in Montana and 34 other states. Existing health care facilities benefit from keeping out new competitors, so the programs remain stubbornly in place.
Research by the Mercatus Center at George Mason University shows abolishing certificate of need laws could help reduce health care costs, potentially saving each Montanan $214 per year.
A recent paper even found Montana could be increasing its COVID-19 death rate by continuing to enforce the certification laws.
An effort in the 2019 legislature to repeal Montana’s certification program was vetoed by Gov. Steve Bullock, who said the certification laws “prevent the creation of excess capacity in health care facilities.” In other words, the laws reduce competition that could increase access and decrease costs.
With health care capacity at critical levels for many Montana counties, state lawmakers should repeal harmful and anti-competitive certificate of need laws.