Dear Chair Warme and Members of the Subcommittee:

My name is Jeffrey Singer. I’m a general surgeon in private practice in Phoenix, Arizona—a state that repealed its certificate of need laws more than 30 years ago—and I’m also a senior fellow at the Cato Institute. Thank you for the opportunity to submit written and oral testimony regarding SSB 3048.

Certificate of need laws are a form of central planning in health care. In practice, they operate as a competitor’s veto—allowing existing providers to block new facilities that might offer lower cost or more convenient care.

In a largely rural state like Iowa, where patients often travel long distances for routine procedures, restrictions on new facilities have especially real consequences for access and affordability. Unlike many other industries, Iowa requires new health care facilities, including lower-cost alternatives such as ambulatory surgery centers, to seek permission from incumbent providers before opening or expanding.

The academic evidence on certificate of need laws is remarkably consistent. A review of 20 peer-reviewed studies by the Mercatus Center at George Mason University found that CON laws largely fail to reduce health care costs and are instead associated with higher per-unit costs and higher overall spending. Other research shows that CON programs are associated with fewer hospitals overall and fewer rural hospitals per capita.

States with CON laws also spend more per patient on rural Medicare and Medicaid, have higher hospital readmission rates, and rely more heavily on emergency departments for routine care. And a recent National Bureau of Economic Research working paper examining decades of data found that states repealing CON laws experienced reductions in cancer-related mortality in the years following repeal.

Iowa does not require new physicians to ask competitors for permission before practicing, and health care has benefited from that openness. Allowing new health care facilities to open more freely would benefit Iowans in the same way—by increasing access, expanding choice, and promoting competition on price and quality.

While Senate Study Bill 3084 is a good step in the right direction by streamlining Iowa’s current certificate of need process, I urge lawmakers to consider a more fundamental policy reform: repealing certificate of need laws altogether, as neighboring states like Minnesota, South Dakota, and Kansas have done.

Thank you once again for considering my perspective on this important issue. I am pleased to provide additional information at the Subcommittee’s request.

Respectfully submitted,
 

Jeffrey A. Singer, MD, FACS
Senior Fellow, Cato Institute