March 13, 2024

Senator Greg Dolazol,

421-B State Capitol
Atlanta, GA 30334

Senator Greg Dolazol,

On behalf of Heartland Impact, I am writing today to share Heartland’s support for reforms to Georgia’s Certificate of Need (CON) laws. Heartland Impact supports a Yes vote on 24 LC 33 9707S.

Heartland Impact is the advocacy and outreach affiliate of The Heartland Institute, a nearly 40-year-old public policy research organization based in Arlington Heights, Illinois. Both are independent, national, nonprofit organizations working to discover, develop, and promote free-market solutions to social and economic problems. Heartland Impact specializes in providing state lawmakers with the policy and advocacy resources to advance free-market policies towards broad-based economic prosperity.

Thank you for your thorough evaluation of Georgia’s CON experience and specifically, the nine recommendations to improve access and lower cost through CON reform in your Study Committee’s excellent work. That effort led to historic reforms to substantially improve on HB1339 and in so doing, improve access to care in Georgia. Specific improvements including:

• Provisions to reopen closed hospitals without CON impediments
• Lowering financial barriers to CON exemptions
• Exemption for a new hospital at Morehouse School of Medicine

These and other proposals from the senate set the groundwork for a productive conference committee.

Make no mistake, eliminating CON entirely will improve access and lower cost for all Georgians. A 2020 study by BMC Health Services Research showed more mixed results across 90 national studies determined that CON, “costs as well as adverse effects on health spending, exceed those benefits by an estimated $302 million a year. On average, the cost-benefit ratio is 1.08, meaning costs exceed benefits by 8%. Consequently, the weight of the evidence suggests that CON creates more costs than benefits.”

Thank you again for your efforts. Heartland Impact looks forward to assisting your efforts in any way to eliminating harmful regulatory barriers to care.

Sincerely,

Matt Dean

 24 LC 33 9707S Certificate of Need (CON) Regulation Reform

Heartland Impact Supports a YES vote on passage of this bill

WHAT THIS BILL DOES

This legislation improves Georgian’s access to care by reducing onerous Certificate of Need requirements imposed on healthcare facilities.

BACKGRIOUND

Certificate of Need laws were put in place as part of Nixon-era price control efforts. Under CON, states manage the approval processes of hospitals, surgical centers, birth centers and diagnostic imaging centers in an effort to reduce duplication of services and create more uniform access to technology and providers. Currently new or expanded use of any of these services requires costly and time consuming

For the past twenty years, skepticism has progressively turned into legislation to reform, unwind and repeal certificate of need laws. Studies have consistently shown that states with certificate of need laws have more expensive healthcare that is less available for people in rural areas. Reformers concluded that the CON legislation, aimed at preventing a “medical arms race” was causing the disparities it was supposed to prevent.

OPPOSITION TO THIS BILL

Supporters of Certificate of Need approval requirements include some Hospital associations. Concerns include:

• “Cherry-picking” less complex, better insured patients and leaving behind the poorer, more rural and underinsured patients.
• Patient safety in non-hospital settings for birth, surgery, diagnostic imaging and procedures such as catheterization.

A NATIONAL TREND TOWARD ELIMINATING CON

Not long after CON laws were instituted, legislators began to wonder whether the bureaucracies created to control the supply of care were making healthcare harder to find and more expensive to buy. A 2016 a comprehensive study by the Mercatus Center at George Mason University found that in the twelve CON systems studied, only one showed reduced cost, four showed no difference, and seven showed increased costs. Since that study came to light, a cascade of states have loosened or eliminated their CON laws. As of Jan. 1, 2024, 12 states have fully repealed their CON programs or not renewed them. In 2023, South Carolina passed a near full repeal of their CON laws in one of the sweeping reforms to date.

WHY THIS BILL SHOULD PASS

The Georgia Senate Study Committee, charged with the task of reforming the state’s CON laws concluded that

• “the CON laws prevent the citizens of Georgia from benefitting from healthcare delivery, especially in rural communities.”
• “Repealing Georgia’s CON requirements would eliminate the anticompetitive effects of, and abusive practices under this law.”
• Nine-of-twelve members of the committee supported a complete repeal.