Each year about 100 medical providers take up the gauntlet and apply for a CON in Virginia. No doubt many more take a hard look at the application process—which can take years, cost hundreds of thousands of dollars, and result in no certificate—and balk.
Established businesses can formally intervene in the hearings as well. Seven different local hospitals and clinics that already own CT scanners fought Dr. Baumel. Yes—even though none of them use their scanners to perform colonoscopies.
Earlier this year, a trial court threw out Dr. Baumel’s claims that the law treads on his constitutional rights. A three-judge panel reinstated his suit this week. “The district court gave a serious claim the back of its hand,” wrote Judge J. Harvie Wilkinson III. “This was error.” The case will now head back to a trial court for further proceedings.
Meanwhile, it’s been over four years since Dr. Baumel, who is represented by the Institute for Justice, first applied for a CON. (Full disclosure: I am working on a part-time project for IJ. This article is my own, however, and I thought ill of certificates of need well in advance and independent of this litigation.)
Health planners claim that CON laws allow states to improve on market outcomes through “managed” competition. Empirical support for this proposition is scant. Like all protectionist laws, CON laws restrict choice, raise costs, and stall innovation by blocking newcomers from entering the market.
As Virginia’s CON law demonstrates, the health system is bogged down by dynamism-destroying rules—rules that generate the very outcomes that supposedly justify the Affordable Care Act.
With the new law coming into effect, things are going to get worse before they get better.
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