Repeal Certificate of Need requirements, assuming you are one of the ~35 states that have them.

That’s what I find in a paper with Shishir Shakya just published in Health Economics.

Certificate of Need laws require healthcare providers to obtain government approval before building new facilities or expanding services. The original intent of the laws was that less building would mean less spending, but critics worry that it means less competition and higher prices leading to higher spending. Our paper finds that the critics are right, as states repealing their Certificate of Need laws see their healthcare spending fall relative to those that maintain them.

Longtime readers may recall that back in 2022 I posted about another paper of mine with a similar result, and even that wasn’t the first word on the subject. So what’s new in this paper? Besides newer data, we measure health spending as a percentage of the state economy rather than in raw dollars, to try to account for how CON changes the true burden of healthcare spending. We also use newer regression techniques that are probably more accurate but definitely help make prettier graphs.

Here’s what we found happening to health spending when states repeal Certificate of Need:

Full published paper is here, ungated working paper version here.