Medicaid expansion officially launched on Dec. 1, expanding government-funded coverage to North Carolinians earning up to $20,000 annually and families of four who earn up to $41,000 annually.
As people are recruited into the state’s Medicaid expansion program over the next month, it is important to remember that the healthcare system will continue to be strained under the weight of government regulations. Patients and valued healthcare workers bear that burden. The need to reform Certificate of Need laws that regulate the healthcare industry is a key point that was overlooked in this largest entitlement expansion in state history, and it must be addressed through public policy discussions in 2024.
What is Certificate of need?
CON laws require providers to demonstrate community need for a medical service before getting permission from the state to offer it. It goes back to the 1970s. A federal mandate required states to adopt laws that required medical practices to show need for a service, under the argument that the laws would keep practices from overextending themselves with expensive equipment and facilities, and then failing as a business. Fifteen states have abandoned the regulations since the mandate was repealed in the 1980s. In those non-CON states, studies have shown that after repeal, prices go down and access to care goes up.
Of the 35 states that still have CON laws on the books, North Carolina’s 27 separate CON requirements make it the second-most CON-regulated state in the nation.
the public policy weeds
Conservatives have been arguing for years to lift CON regulations and allow a free-market approach to open access to care and bring down prices. However, powerful interest groups like the NC Healthcare Association, representing hospitals, have resisted changes to CON laws, arguing that a new crop of private medical businesses could draw too many privately insured patients. They claim it could collapse the financially fragile rural hospitals that depend on income from serving those with private insurance.
It is a policy debate to which most North Carolinians are not tuned in. In an October poll, just 29% of respondents had even heard of CON laws, and nearly 55% were unsure whether they helped or harmed the healthcare system. However, reading the crosstabs of the poll is illuminating; those who knew what CON was favored reforming it by a 4:1 margin. This means that, once again, education is key to understanding the market environment that is keeping prices high and access low.
Often we don’t know about policies like Certificate of Need until life circumstances thrust us into the pain of personal experience. For example, kidney dialysis is one of the medical services that was abandoned in the negotiations for CON reform in Medicaid expansion. Critics have railed on this issue across the country for years because most kidney dialysis is offered by just two companies; DaVita, based in Denver; and Fresenius Medical Care, which is headquartered in Germany. The “duopoly” controls 80% of the dialysis business in the United States, including in North Carolina. Nearly all of the state’s 189 dialysis centers are run by one of the two companies, and with state CON laws as they are, creating competition in that healthcare service is nearly impossible.
According to 2021 data from the American Kidney Fund, there are more than 26,000 North Carolinians living with end-stage renal disease, commonly called kidney failure. More than 19,000 of them rely on dialysis to live. Without dialysis, end-stage patients have an average life expectancy of about 10 days.
As North Carolina’s healthcare system changes with Medicaid expansion, policymakers need to be open to real discussion on CON reform, well before it is at a crisis point for millions of patients.