Health Care

To Help Fix American Mental-Health Care, Reform Certificate-of-Need Laws

The simplest way to eliminate the nation’s dire shortage of inpatient mental-health beds is to remove the chief obstacle to new facilities’ construction.

After every school shooting, every new report on suicides or drug overdoses, every tragedy in which someone with a troubled mind commits a horrible act, we hear the same refrain: “If you need help, get help.”

But what happens when help is not available?

The overwhelming likelihood is that those with severe mental-health issues will instead wind up in jail, chained to a hospital bed, or wandering the halls of emergency rooms for hours, days, and sometimes weeks without getting the help they need. It’s a fate faced by thousands of people in mental-health crises every day, because of America’s severe shortage of inpatient mental-health beds.

The dearth of mental-health-treatment options that exists in many places around the country is driven by the greed, or at least the economic selfishness, of established medical providers who are able to prevent competitors from moving in on their turf, regardless of how dire the shortage. To do so, they use what are called Certificate-of-Need (CON) laws, which generally require would-be providers of health-related services to get approval from a state regulatory board before building or expanding a facility or service.

Indeed, my new Goldwater Institute report finds that the primary beneficiaries of the CON laws currently on the books in 38 states are existing providers of health services, who use them to block or delay construction of new facilities by would-be competitors. From Iowa to Oregon to Tennessee and beyond, private companies are being prevented from building new mental-health facilities financed entirely by their own money. Even though these facilities are clearly very much needed, in more than two-thirds of states existing providers and state bureaucrats turn a cold shoulder and a blind eye to that need so that they may preserve their own power.

The consequences are tragic. People in severe mental-health meltdowns are held in emergency rooms for days without receiving care. Sheriff’s deputies routinely drive for hours to transport dangerous mental patients to distant facilities that have just one available bed. Pregnant women seeking to shake their opioid addictions are forced to drive for hours every day to receive treatment in the nearest methadone clinic. Yet existing medical providers routinely oppose competitors’ applications for a certificate of need, typically arguing that the shortage of inpatient beds is not a problem, or that if it is a problem, they are the ones to fix it.

The idea behind CON laws is that medical costs can be controlled by limiting the supply of services and facilities to only what is needed, as determined by a state board or agency. But soon after such laws came into vogue in the 1970s, it became clear that the national experiment in cost control was a failure. By eliminating competition, CON laws drive up costs, lower quality, and limit the availability of needed services, according to a series of assessments from the U.S. Federal Trade Commission and Department of Justice. Academic studies and even the American Medical Association confirm as much. As the AMA succinctly puts it: “CON laws represent a failed public policy.”

Every time mental health plays a role in a tragedy, there is societal hand-wringing over what ought to be done to fix mental-health care in America. But it is just that: a lot of hand-wringing, followed by inaction. Reform of CON laws would be an important first step toward a mental-health-care system that works for patients, giving them better access to higher-quality, cost-effective treatment.


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