NCPA - National Center for Policy Analysis


June 4, 2008

Florida's popular governor, Charlie Crist, recently forwarded a proposal to increase choice for patients and potentially cut health care costs without spending a single penny out of the state treasury, says David Gratzer, a physician and a senior fellow at the Manhattan Institute.  However, Crist ran into a big obstacle: the hospital lobby.

Gov. Crist has struggled to scrap his state's obsolete Certificate of Need (CON) law, which limits competition among hospitals.  The CON law requires that any organization seeking to build a hospital must apply to a government committee and prove that the facility is needed. 

Unfortunately, says Gratzer, this law is based on faulty reasoning and imposes numerous disadvantages on the Florida health care system:

  • Evidence shows that the CON process doesn't help keep hospital costs down; after a thorough study, the Department of Justice and the Federal Trade Commission concluded CON programs can actually drive up prices.
  • Work done by Duke University professors Christopher Conover and Frank Sloan to review the impact of CON laws on cost found, again, that the laws cause the opposite of their intended results; higher overall cost per hospital bed and higher profit for existing providers.
  • An earlier federal government review claimed that in researching the scholarly journals, there is not a single article that asserts that CON laws succeed in lowering health care costs.
  • Another crucial weakness with the CON law is the cumbersome and very expensive approval process; expenses for applicants can run up to hundreds of thousands of dollars.
  • The most significant effect of CON law is the deprivation of choices to patient; the legal restrictions mean fewer hospital options.

CON laws undermine the competition and innovation that Americans deserve with their health care, says Gratzer. 

Source: David Gratzer, "CONned Out of Health Choices in Florida," Investor's Business Daily, June 3, 2008.  


Browse more articles on Health Issues