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1889 Institute of Oklahoma proposes to eliminate Certificates of Need (CON), deeming them government-enforced cartels

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Staff Report

OKLAHOMA CITY — The 1889 Institute, an Oklahoma state policy think tank, recently published a paper entitled “Certificates of Need: An Oklahoma CON that Needs Repealing.”

The paper explores Certificate of Need (CON) laws in Oklahoma, their economic effects and why they should be repealed.

CON laws require a business to get the permission of others in its industry to enter the market. Businesses that are fully qualified to offer a service must prove there is a need for the service according to arbitrary definitions of “need,” thus allowing existing businesses to object.

Oklahoma has two CON laws on its books: one applies to long-term care facilities like nursing homes, and the other applies to psychiatric and chemical dependency facilities.

“CON laws were all the rage in the 1970s and 1980s as states responded to a federal mandate to get Medicaid and Medicare costs under control,” said the paper’s author, Byron Schlomach, and the 1889 Institute’s director of state policy. “At one time, Louisiana was the only state that did not have a CON law, but many states have since completely repealed those laws because they’re obsolete. The system that made them seem necessary no longer exists.”

The paper describes how CON laws create a monopolistic cartel system in the industries impacted. They also present specific instances where the state’s CON laws have been used by existing facilities to block competition. The result is higher prices and lower quality in CON-affected industries.

“There is no excuse for the existence of CON laws,” said Vance Fried, the 1889 Institute’s president. “CON laws exist to protect the pocketbooks of select businesses with the expense coming from the pocketbooks of the aged and infirm.”

Schlomach pointed out that two facilities, one that opened only after long delays and another that never did open after two years of process due to CON laws, were nursing homes focused on Alzheimer’s patients.

Per Bylund, one of the study’s coauthors who is originally from Sweden, said, “It’s hard to believe, but in some ways free enterprise is in worse shape here than in my native land. Oklahoma’s CON laws are an example of this.”

About the 1889 Institute: The 1889 Institute is a new Oklahoma think tank committed to independent, principled state policy fostering limited and responsible government, free enterprise and a robust civil society. This paper, “Certificates of Need: An Oklahoma CON that Needs Repealing,” can be found at the nonprofit’s website.

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