Senate Finance this week will take up SB 26, repealing the state’s Certificate of Need program for health care facilities.
Sponsor Sen. David Wilson of Wasilla introduced the bill in January 2021, and it received an extra committee referral by Senate President Peter Micciche in February of 2022.
Certificate of Need is a program that gives the state ultimate control over what health facilities can be built. If a clinic wants to add an extra exam room or x-ray machine, for example, it must first get permission from the State of Alaska and receive a certificate that limits what can be built or bought.
The state maintains it needs the authority over health care construction, “because of the large amount of money the state expends for Medicaid.” Further, the State states that “Demographic projections suggest that Alaskan health care services will expand to meet the needs of a growing population including a much larger senior population. Therefore, circumstances mandate that new and expanded services be planned properly to get the highest quality and most appropriate services possible at the best price.”
But the Certificate of Need program is anti-competition; Sen. Wilson’s bill allows for a three-year phase-out timeframe before the repeal would become effective.
Certificates of Need programs were mandated by the federal government in 1974. Due to their anti-competitive nature and the driving up of health care costs, Congress repealed the mandate in 1987. Since then, 12 states have fully repealed their CON laws, and 35 states continue to operate some version of a CON program. Three states do not have any such law.
States without a full CON program include Arizona, California, Colorado, Idaho, Kansas, Minnesota, New Hampshire, New Mexico, North Dakota, Pennsylvania, South Dakota, Texas, Utah, Wisconsin, and Wyoming. Florida only maintains a CON program for children’s hospitals and hospice facilities.
“Four decades of data and studies show CON laws have not controlled costs, improved quality and outcomes, or increased access to healthcare for the poor or underserved. CON laws have established healthcare monopolies, which has resulted in barriers to new or expanded medical facilities and limited healthcare choices for consumers,” Sen. Wilson wrote. “Repealing our certificate of need program would benefit Alaskans by fostering free market competition in the healthcare markets.”
Americans for Prosperity Alaska has made the repeal of Certificate of Need its top legislative priority. Bernadette Wilson, state director for AFP-Alaska, told the Must Read Alaska Show that she’ll head to Juneau for the Senate Finance Committee hearing this week. AFP sent a letter to Senate Finance requesting time on the agenda.
“After instituting this requirement, the federal government found that CON laws failed to achieve the desired effect of reducing health care costs, but rather, had other adverse effects on the US health care system. As a result, the federal government quickly removed this requirement, and has consistently recommended that states end their CON programs,” Bernadette Wilson wrote to the committee.
“In fact, the Federal Trade Commission (under the Trump, Obama, and Bush administrations) has urged states to end CON laws, citing the fact that they are anticompetitive and fail to provide any meaningful benefit or protection to health care consumers. This includes a letter sent by the FTC to the Alaska Senate in 2019 regarding the same legislative language contained in SB 26,” she wrote.
Wilson said Alaska would have 11 additional hospitals, including 8 additional rural hospitals, if not for CON restrictions. “This additional capacity would have been of great help throughout the COVID-19 pandemic, which has seen hospitals running over capacity and unable to provide a full range of medical procedures to patients.”
The bill has bipartisan support, but faces opposition from the powerful hospital lobby.
