A couple of years ago, Drew Klein of Americans for Prosperity discussed the importance of repealing Certificate of Need laws in Iowa.
Essentially, under the current system, if an entrepreneur wants to build a health care facility, they have to ask the state for permission first. There is a Health Facilities Council that determines whether there is a need in the community for another health care facility.
“When I show up to testify about the need for that health care facility, all of my potential competitors will get to show up and tell the facility counselors that there’s not a need — that they’re meeting everybody’s need in the community and that there should be no more competition in that space,” Klein said. “It’s not simply if I want to build a building and set up a whole new practice, but this is if I have an existing independent physician’s practice and I want to buy a piece of equipment that one of my competitors has, I have to go in front of the council before they’ll let me buy the machine I want to buy for my existing business. This is literally the equivalent of Burger King having to get McDonald’s permission to open up across the street. It’s absolutely absurd.”
Klein said removing Certificate of Need laws could help address the cost of health care.
“Competition works,” he said. “Competition drives down prices and improves quality in every industry that it has ever been tried in. But we’re not allowing it to function in health care because hospital CEOs have convinced that, especially in rural areas, if you do that then they will shut down the emergency room in this rural section of the state.
“Unfortunately there are states that don’t have Certificate of Need laws like Nebraska, and they still have emergency rooms in rural Nebraska,” Klein said. “There is no correlation between Certificate of Need laws and access to health care. In fact, to the extent that there is correlation, eliminating Certificate of Need actually increases access to health care.”
