The Goldwater Institute today filed a brief in the Mississippi Supreme Court urging the justices not to allow existing businesses to use the state’s “Certificate of Need” (CON) law to block potential competitors from entering the market. These laws, which govern all sorts of businesses, from taxi companies to medical clinics, require anyone who wants to open a new company to first get permission from the companies already in the market. And, since the existing businesses will usually not want more competition, they typically say no. That’s why CON laws have often been referred to as “competitor’s veto” laws—they allow companies to veto their own competition.
CON laws are especially insidious when it comes to the health care market—or, in the Mississippi case, the market for mental health clinics. As the Goldwater Institute reported a few years ago, CON laws that prevent new mental health clinics from opening have horrible consequences for those in need, who often can’t find care and who sometimes languish for hours or days in facilities unable to care for them. In one Iowa case, witnesses “testified about the dire need for more inpatient beds. … Healthcare providers, mental health advocates, and law enforcement officials all had their own horror stories to tell. Mentally disturbed patients wandering through emergency room corridors or handcuffed to hospital beds for days. Violent individuals who needed treatment being locked in jail cells because there were no mental health hospitals that would take them. Sheriff’s deputies driving for hours, crisscrossing the state to deliver disturbed men and women to the single facility in Iowa that would admit them.”
These competitor’s veto laws were created a century ago to regulate railroads but gradually grew to encompass a wide range of different industries. In the 1970s, the federal government and many states finally eliminated them in many of these markets, thanks to overwhelming evidence that they raise prices and decrease the quality of goods and services available. But some states, including Mississippi, have kept them in place.
The good news, as we argue in our friend-of-the-court brief—filed by American Freedom Network member Theodore Cooperstein—is that the state’s CON law isn’t as bad as many others, and in fact doesn’t explicitly prevent economic competition the way many others do. So, we’re asking the court to interpret the law narrowly, with an eye on protecting patients rather than the financial interests of existing clinics.
CON laws are an obsolete idea—refuted by economics, health care researchers, and common sense. It’s time to let the medical community serve the needs of patients without having to ask “mother may I?” from self-interested businesses seeking to stifle the free market.
You can learn more about CON laws here and read our brief here.
Timothy Sandefur is the Vice President for Legal Affairs at the Goldwater Institute.
