Iowa is one of 35 states that limit the ability of health care providers to expand their businesses through an approval process known as a certificate of need (CON). Iowa’s certificate of need program currently restricts 17 devices and services, including organ transplants, psychiatric services, and acute hospital beds. Iowa’s CON law covers more services than the national average (14), giving the state a ranking of 32nd in the Mercatus Center’s study examining the restrictiveness of state CON laws.
For many years, Iowa’s CON laws have allowed existing hospitals to block the expansion of their competitors, skewing the system in their favor. As a result, CON laws raise medical care costs by keeping new medical providers from competing with existing providers. Iowa’s CON laws have one particularly glaring loophole that benefits established health care providers: Existing facilities do not require a certificate of need if the cost of the proposed expansion does not exceed $1.5 million.
The cost of applying for a CON is also a barrier to new providers. According to the Institute for Justice, the fee for applying for a CON with the Iowa Department of Public Health can be as high as $21,000. The Department is then required to inform all those affected by the CON, which typically includes competitors, who would then be able to testify at a mandatory public hearing held to debate the CON approval.
Read the full report at the Heartland Institute.