House unanimous in repeal of health care certificate of need mandate

May 2, 2023

PPI Senior Fellow Dr. Oran Smith is quoted in this Center Square article by T.A. DeFeo.

(The Center Square) – The South Carolina House of Representatives unanimously has voted to repeal certificate of need regulations for health care facilities.

The legislation would immediately eliminate the CON requirement for most health care facilities. House lawmakers will give the measure a third vote on Wednesday before returning it to the Senate, which approved the certificate of need repeal 30-6 in February.

It places a three-year sunset of the certificate of need for hospitals except in eight counties without a hospital – Bamberg, Barnwell, Lee, Fairfield, Marlboro, McCormick, Saluda and Calhoun counties. In those counties, the measure would immediately repeal the mandate, Americans for Prosperity-South Carolina State Director Candace Carroll said.

“The South Carolina House has just passed total repeal of certificate of need 118-0,” Oran P. Smith, senior fellow at the Palmetto Promise Institute, wrote in an email to The Center Square. “If the Senate concurs with the House amendments, soon health care providers in the Palmetto State will be able to offer care without permission from the state or their competitors. Thank you Speaker Murrell Smith for your leadership and to the SC Senate for getting the CON repeal effort rolling in 2020.”

States passed certificate of need requirements in the 1970s following congressional action to allow the federal government to withhold money from states that did not establish a program. Many states retained their requirements even after Congress nixed the incentives about a decade later.

In a phone interview with The Center Square, Carroll called the passage a “watershed moment” for the Palmetto State.

“This is the first time in a single legislative session that both chambers have voted to do something on certificate of need,” Carroll said. “I hope, honestly, that it helps to set a model for states like Georgia and North Carolina.

“If the bill passes the Senate in this version and gets to the governor’s desk … it will be the most transformative CON repeal, CON reform piece of legislation that has passed in the country since 2015. Still a lot of work to be done, but we are over a major hurdle today to have that tremendous unanimous vote on the House floor.”

According to a 2021 analysis by the Mercatus Center at George Mason University, eliminating certificate of need laws could increase the number of hospitals in South Carolina from 82 to 116 and lead to the opening of nine rural hospitals.

A similar push in neighboring Georgia failed during this year’s legislative session. However, a Georgia Senate committee will explore whether the state should amend its requirement.

“Certificate of need regulations are costly and time-consuming,” Matthew D. Mitchell, a senior research fellow at the Knee Center for the Study of Occupational Regulation at West Virginia University, said in a statement.

“While CON laws were intended to restrain spending, the evidence is clear that they don’t work as advertised and increase the cost of health care,” Mitchell added. “At the same time, they limit access to care – especially among vulnerable populations – and undermine quality.”