With the ink dry on Medicaid expansion in North Carolina, the impact of expanding the government entitlement program to hundreds of thousands of people is coming into focus. Lawmakers drafted the expansion bill to be contingent on Gov. Roy Cooper signing the state budget. It would take a dramatic turn of events for Cooper to reject the legislature’s budget with Medicaid expansion on the line, but I’ve learned to never say never.
The expansion bill reforms four of the state’s 27 certificate-of-need, or CON, laws that regulate the healthcare industry. CON requires providers to demonstrate community need for a medical service before requesting permission from the state to offer it. Two of those four reforms in the bill would apply only to fewer than 15 of the state’s most populated counties, and three years from now.
It sounds “wonky,” but CON regulations impact how many healthcare providers are in your town, and what services they are allowed to provide. Add more than half a million people to Medicaid, and that four-week wait for an appointment could double or triple. Reforming CON laws means the difference in health outcomes, just by being able to see a provider.
CON goes back to the 1970s. A federal mandate required states to adopt the regs, arguing that they keep medical practices from failing by stopping them from financially overextending themselves with expensive equipment and facilities. The mandate was repealed in the 1980s. Some states have abandoned the regulations. Among the 35 that still have CON, North Carolina is the second-most regulated in the nation.
Calls to lift CON regulations have surrounded the Medicaid expansion debate for years, with critics arguing that a free-market approach opens up access to care and brings down prices. However, powerful interest groups have resisted. Among other arguments, there is concern that repeal could launch a new crop of private medical businesses, drawing too many privately insured patients away from hospitals and collapsing the financially fragile rural hospitals that depend on private insurance income.
On a positive note, as twin mental health and drug epidemics rage, the Medicaid expansion bill does eliminate burdensome certificate-of-need requirements for behavioral health hospital beds and chemical dependency beds. For counties with more than 125,000 people, the deal also proposes lifting CON laws for purchases of magnetic resonance imaging and opening ambulatory surgery centers. The second two repeals would kick in three years from now, maybe more. Only 15 counties have more than 125,000 people, so 85 counties would benefit from only two of the four CON repeals.
Dialysis is among the many life-saving treatments that were left behind in the rush to get Medicaid reform out the door. According to 2021 data from the American Kidney Fund, there are more than 26,000 North Carolinians living with end-stage renal disease, or kidney failure. More than 19,000 of them rely on dialysis to live. Nearly all of the state’s 189 dialysis centers are run by one of just two companies that provide this lifeline for so many. CON law protects that “duopoly.”
According to a study from The Mercatus Center at George Mason University, which examined outcomes analysis in certificate-of-need laws in different states, the laws actually drive prices up. They also found that health outcomes fall in states with CON laws because patients have less access to medical facilities and are more likely to be denied a bed in the local hospital. When compared with patients in non-CON states, patients in CON states like North Carolina, have higher mortality rates following heart attack, heart failure, and pneumonia.
“They can look to the experiences of Americans in non-CON states to see what is likely to happen,” said study author Matthew Mitchell of the Mercatus Center. “These experiences, documented in dozens of careful studies, strongly suggest that patients in a state like North Carolina would gain greater access to higher-quality and lower-cost care if CON laws were to be eliminated.”
Other states have repealed archaic CON laws. It’s time North Carolina did too.