Examining Certificate-of-Need Laws in the Context of the Rural Health Crisis

Abstract

To evaluate certificate-of-need (CON) laws in rural areas and their relationship with selected healthcare outcomes and with common measures of potentially avoidable spending, we regress county-level Medicare data and state-level all-patient spending and utilization data to compare healthcare outcomes and common measures of wasteful spending in rural states with and without CON laws. Results show that patients residing in counties restricted by CON laws spend more per Medicare beneficiary and have higher utilization rates in ambulance services, emergency departments, and readmissions, both before and after controlling for social risk factors such as race, education, and poverty status. These findings imply that policies countering CON restrictions may reverse the outcome gap for rural states in access to care, which in turn may reduce wasteful spending and utilization.

Keywords: Medicare, health outcomes, certificate of need, rural health, healthcare

JEL Classification: I18, I13