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New York can improve health care by repealing certificate-of-need laws

Many New Yorkers rightly blame Washington, D.C., for rising costs and fewer choices in health care. But outdated state laws and regulations also contribute to this troubling trend, including New York’s decades old certificate-of-need laws. These certificates slow progress in local physicians’ offices and reduce the quality of patients’ care. With state legislators back in session, repealing this unnecessary law should be their top priority.

The certificate-of-need process is the epitome of government red tape. Adopted in 1966, it requires New York health care providers to obtain permission from the Department of Health before adding new medical equipment, opening a new facility, expanding a current practice or even relocating.

In practice, certificate-of-need laws drive up costs and deprive people of more health care choices. It requires reams of paperwork – forcing health care providers to satisfy bureaucrats over their patients. This is all in addition to other licenses and training requirements physicians face. Although 14 states have repealed their own versions of these laws, New Yorkers continue to deal with the negative impact of this red tape.

Just applying for a certificate often costs physicians thousands of dollars and many hours of time that should be reserved for their patients. Approval is hardly guaranteed, and years-long appeals are not uncommon. For example, a Virginia physician spent five years and $175,000 trying to get permission to add one MRI machine. New York’s certificate-of-need imposes similar obstacles.

Meanwhile, patients lose access to critical health care advances lost in bureaucratic limbo.

This bureaucracy ultimately limits the health care options available in New York. Research from the Mercatus Center at George Mason University found that certificate laws often reduce the availability of important medical technology, such as hundreds less MRIs and CT scan machines across a state.

The results of this are harmful on every level. Ambulatory surgical centers, for example, provide specialized care – often at significantly lower prices than traditional hospitals – yet are frequently denied certificate-of-need approval. For communities with limited medical facilities, state bureaucrats’ denial of a certificate could easily mean locals have to travel far out of the way for more expensive treatment.

Unsurprisingly, the bureaucratic certificate process drives up the cost of health care. A study by the Mackinac Policy Institute found per-capita health care spending was 9 percent higher in certificate-of-need states.

Even the U.S. Justice Department and Federal Trade Commission publicly oppose certificate requirements. In a report, they urged states to reconsider these laws, noting they “can actually lead to increased prices.” The agencies also warned that these certificates could prevent higher quality and more innovative medical services from making it to the market.

Although these laws are obstacles to physicians seeking to help more patients, large hospitals and other established health care companies frequently support this bureaucratic nightmare. They see these certificates-of-need as legalized protection against competition. As the Justice Department and the FTC note, these laws allow some to exploit the process “to forestall the entry of competitors in their markets.”

When health care providers submit their applications for a certificate, competitors are often invited to weigh in, and frequently succeed in blocking the certificate from being granted. In fact, practicing physicians and hospital representatives even sit on many state certificate-of-need boards, regulating the very industry in which they work.

With lives at stake every day, there’s no industry where quality and competition are more important than health care. The certificate of need puts both in bureaucrats’ hands. For the sake of New Yorkers, all of whom deserve access to the best and most affordable health care, state legislators in Albany should start 2016 by cutting the red tape blocking the door to the doctor’s office.

Nathan Nascimento is director of state initiatives at Freedom Partners Chamber of Commerce.