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Written by Heather LeMire, the state director for Americans for Prosperity – Kentucky; and Thomas Kimbrell, an analyst with Americans for Prosperity.
As we approach the end of the 2024 legislative session, the General Assembly has passed only three bills. Meanwhile, three bills that could significantly increase Kentuckians’ access to health care while lowering costs sit idle in the House Health Services Committee.
House bills 202, 203, and 204 would make much-needed reforms to Kentucky’s certificate of need (CON) law, which requires health care providers to obtain approval from the state before adding or expanding health care facilities, services, or equipment. Rather than appeal to patients, providers must petition the government’s central planners for permission to care.
Legislators passed the CON law 53 years ago, believing they could control rising health care costs by preventing providers from offering redundant services in the same proximate area. Paradoxically, the Cabinet for Health and Family Services states the CON process “prevents the proliferation of health care facilities, health services and major medical equipment that increase the cost of quality health care in the commonwealth.”
A “proliferation” of health care in Kentucky would mean increased access to critical care like hospital beds, psychiatric treatment centers, and the MRI machines that detect cancer and other maladies. A large and growing body of research shows that compared to states with CON laws, states without CON are associated with lower health care spending, more medical facilities, and superior patient outcomes.
However, Kentucky’s CON regime persists to protect politically proficient providers from competition. The process empowers health care providers to oppose others’ CON applications. The Institute for Justice finds that since 2019, nearly 3/5 of CON applications that receive opposition are denied.
These CON disputes can take years to resolve and cost hundreds of thousands of dollars, delaying deployment of new health care provisions and diverting resources from patient care. Miles of red tape and the threat of opposition prevent many more providers from applying to offer services they otherwise would. In this way, existing providers can limit new providers from offering competing services.
Kentucky has one of the nation’s most expansive CON regimes. The Institute for Justice counts 45 CON separate requirements and 40 exceptions regulating health care facilities, services, and equipment. Kentucky’s CON scheme is a labyrinth of red tape and convoluted carveouts that deter health care investment.
At least a dozen states have repealed their CON programs entirely. Other states, including Kentucky’s neighbors, have passed legislation to ease CON’s regulatory burden. In 2021, Tennessee passed a reform bill exempting many services from CON. Last year, West Virginia eliminated CON requirements for birthing centers and hospital services. To the north, Ohio and Indiana only maintain CON requirements for nursing homes.
Research shows that patients in states with CON travel farther for care and are much more likely to be treated in another state. Indeed, many Kentuckians travel across state lines to seek care. Speaking of, the Sixth Circuit Court of Appeals recently ruled part of Kentucky’s CON law unconstitutional. Specifically, the court said regulators could not stop an ambulance service based in Aberdeen, Ohio from transporting patients in Kentucky to medical facilities in Ohio. CON laws are more concerned with who gets to transport patients to the hospital than they are with how quickly they can treat patients.
House Bill 202 would raise the capital thresholds that trigger the CON requirement, allowing providers to establish smaller facilities and purchase medical equipment without having first to obtain a CON. House Bill 203 would eliminate CON requirements for providers to treat some of Kentucky’s most vulnerable patients, including expecting mothers and people seeking mental health and psychiatric care, and rehabilitation services. House Bill 204 would help streamline the CON process and make it more difficult for competing providers to oppose other’s CON applications.
Last year, the General Assembly formed a legislative task force to study reforming the CON program. After six months, the task force issued a disappointing one-sentence recommendation in December for “further study.” Now is not the time to kick the can down the road. Decades of research show CON does not work. Delaying reform means higher costs and less access to health care for patients in the Bluegrass state.