Certificate of Need laws, otherwise known as CON laws, are laws required in many states and some federal jurisdictions before proposed acquisitions, expansions, or creations of healthcare facilities are allowed. They are also absolutely ridiculous and entirely based entirely on cronyism. CON laws are irresponsible, damaging to the economy, and a prime example of an assault on economic liberty. We have the right to life, liberty, and the pursuit of happiness and we are entitled to their protections by virtue of our Constitution. This economic right to earn a living –this pursuit of happiness–began to be eroded during the FDR era for reasons having to do with partisanship and policy; SCOTUS has subsequently not enforced it rationally. As economic liberty is no longer considered a primary liberty, we get laws such as CON laws that are ultimately unconstitutional. The original argument for CON laws was very specifically to make costs cheapers for the public by virtue of less competition. Instead, CON laws stifle competition by requiring regulatory permission for any new services and equipment within a given region. This is an egregious, suppressive scheme. These burdensome economic rules should be unconstitutional under federal (if not also state) constitutions.
The federal government isn’t supposed to restrict this pursuit of happiness. But once FDR began regulating economic rights, we have a situation where certain liberties are more equal than others . Now, 1st Amendment rights are subject to “strict scrutiny”; these are high, narrow standards used to evaluate the constitutionality of a law. In other words, there must be a damn good reason why such a law violates a 1st amendment right. But when it comes to economic rights, it’s not strict scrutiny, and so sometimes the states can get away impinging on your rights to earn a living by coming up with some ridiculous argument or restriction. For instance, say you are a florist and your state requires licensing in order to operate. Such a concept is ridiculous — what health and safety concerns supersede the right for a person to earn a living as a florist? And yet some court cases have ruled that this licensing is justifiable; one in particular argued successfully that someone could possibly be pricked by a thorn and therefore needs regulation and specialized training. And that’s the problem. You can come up with any conceivable basis for enacting some ridiculous regulation even if it’s unconstitutional.
CON laws are even more ridiculous than the aforementioned thorn-pricking argument, because they are entirely based on something that is economically incorrect — that by restricting competition (as CON laws do), you’ll make the competition cheaper. But that concept is fundamentally wrong.
Unfortunately getting these laws removed is difficult for several reasons. Most of the time, judges tend to defer to government agencies. But even more importantly, when we talk about healthcare as opposed to restaurants, many people believe (incorrectly) that healthcare is some special kind of market that operates differently than other markets do. However, this is simply untrue. Healthcare is just like any other market except that it operates within an extremely complicated incentive structure that was created by the government. Can you imagine a restaurant owner having to submit to a review panel any plans he had to build a restaurant or remodel an existing one? Then why do we tolerate such a thing within the healthcare sector?
Ultimately, CON laws are unconstitutional because of their inherent economic favoritism. There’s no reason why some liberties should be treated differently than economic liberty and the right to earn a living should not be considered as fundamental as other rights. CON laws and their cronyism should be eliminated.