Republican presidential candidate Nikki Haley is proposing a significant change to the healthcare industry that could result in lower prices.
While making her pitch to voters during a June 4 townhall on CNN, Haley said that if elected, her administration would consider eliminating certificate of need (CON) regulations from the healthcare industry.
CON laws, which have been instituted in 35 states and the District of Columbia, limit the number of hospitals, outpatient facilities and long-term care facilities that can operate within a given area.
Supporters of CON laws say they keep costs low by avoiding unnecessary duplicative services, which could lead to price inflation for things like unused services or equipment. Opponents of CON laws say they benefit hospitals and the medical industry by keeping competition out, which lowers competitive pressure, lowers the quality of the service provided, and keeps profits higher.
“We have to get rid of those. Those basically say there’s no competition in healthcare,” Haley told the audience.
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“So a hospital can say, I don’t want any other hospital near me for ‘X’ number of miles, because it will lower the quality,” she explained. “No. When I was growing up in our family business, my mom used to always say the best thing that could happen to us is if our competitor went across the street because our quality would go up, our prices would go down and our service would be better. That’s what we need in hospitals as well.”
Though she has seen a recent spike in popularity among Republicans, Haley is currently polling at 4.5 percent in the race for the GOP 2024 nomination — roughly 49 points behind former President Donald Trump, who remains the clear frontrunner.
In states with CON laws in place, a medical facility seeking to offer a new service or expand must prove to regulators that the community needs it. Certificates are required for everything from beds to dialysis clinics and drug abuse therapies, Matthew Mitchell, a Mercatus Center senior research fellow and director of its Equal Liberty Initiative, wrote in a 2021 op-ed.
“Providers can wait months or years,” Mitchell continued, noting that the process can cost hundreds of thousands of dollars in fees and compliance costs.
“Our priorities are all wrong,” Haley said. “Why are the insurance companies making all this money, yet, the professionals we need to give the care are not getting any. It’s twisted and it’s messed up, and it’s why we have to start fixing it and answer it the way it needs to be answered.”
Hannah Cox, founder of BASED Politics who has worked as a policy advocate and lobbyist pushing to eliminate CON laws, says that these regulations were put in place specifically to keep profits higher for the healthcare industry.
“You know, a lot of times you see a law put into place that was put in place with good intentions and just not by somebody who doesn’t fully understand economics or public policy and doesn’t understand some of the negative repercussions that might come as an effect of that policy,” Cox told Timcast in an interview. “Certificate of Need laws were not that. They were put in place with the exact intention to limit competition in the healthcare market and keep prices artificially high, which is something that’s really very common in our healthcare sector dating all the way back to the early 1900s where you had groups like the American Medical Association and others beginning to form.
“And they’ve always existed to try to limit the number of slots for doctors in medical schools to try to limit the number of hospitals in a given area,” she continued. “That’s always been something that existed to try to keep prices artificially high, because you don’t have to know very deep [economics] to know this, but you have more supply that brings the cost down and demand stays equal. And, so that’s a huge reason for why our healthcare system has gotten so crazy expensive over the past 120 or so years.”
Cox worked with Americans For Prosperity to repeal CON regulation in South Carolina, where Haley served as governor from 2011 to 2017.
On May 17, Governor Henry McMaster signed into law a repeal of most of the state’s CON rules for healthcare facilities and services. A CON will still be required for long-term care facilities and a CON for hospitals will not be required after a period of three years.