Abstract

BEYOND HEALTH CARE REFORM: RECONSIDERING CERTIFICATE OF NEED LAWS IN A MANAGED COMPETITION SYSTEM

PATRICK JOHN MCGINLEY

1995 Florida State University Law Review

The focus of recent health care reform has been the "managed competition" model, which seeks to control health care costs by encouraging price competition among health care providers. However, early health care regulation involved "certificate of need" (CON) laws. CON laws were designed to keep health care costs low by requiring advance approval by state agencies for most hospital expansions and major equipment purchases. Congress required all states to pass CON laws in 1974, but quickly repealed that requirement after finding it ineffective for controlling health care costs.

Today, thirty-eight states retain CON laws. Many of these same states have passed managed competition laws. This Comment explores the role of CON laws in a state with a managed competition system. Part II traces the origin and intent of CON, noting that CON has historically failed to achieve its intended policy goals. Part III summarizes the origin and implementation of a managed competition health care strategy, illustrating that strong evidence demonstrates that managed competition can lower health care costs. Part IV shows that managed competition invalidates the presumptions underlying the alleged need for CON. Part V focuses on Florida, where the conflict between CON and managed competition is becoming reality, and urges Florida and similarly situated states either to scale back CON or accept the failure of managed competition that CON will inevitably cause.


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