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ambulatory and intermediate care” which, presumably, would be less-costly than other modes of care. 3(p. 2) Lawmakers also believed that CON programs would ensure an adequate supply of care, especially for “under served populations,” including “those which are located in rural or economically depressed areas.” 3(p. 3) Finally, they hoped to “achieve needed improvements in the quality of health services.” 3(p. 4) These aims—cost containment, greater access (especially for underserved populations), and quality improvement—continue to be widely-shared goals of health policy and nearly every state CON website cites them as the main purposes of the program. The intellectual origins of CON can be traced back to 1959. In that year, UCLA health researcher Shain and Roemer 4 published a coauthored study reporting a positive correlation between the number of hospital beds available per capita and the number of used hospital days per capita. The finding became known as “Roemer’s Law” and was shortened to the pithy characterization that “in an insured population, a hospital bed built is a hospital bed filled.” 5 Lawmakers hoped CON laws would cause hospitals to acquire fewer beds, fill them with fewer patients, and there fore spend less money. As we will see, there are some prob lems with this theory. But it was evidently convincing enough for President Ford, who signed the NHPRDA in early 1975. The Federal Inducement Disappears The NHPRDA’s threat to withhold funding from non-CON states never materialized as Congress repeatedly postponed the financial penalty. 6(p. 2) But the Act achieved its goal of encouraging state CON programs. By the 1980s nearly every state in the country had a CON program in health care. 7 At the same time, the political and economic arguments that had produced CON began to unravel. This was a time when thinkers on both the left and the right were increasingly emphasizing the potentially anticom petitive effects of regulations, especially regulatory barriers to entry. 8,9 These authors pointed out that while regulatory barriers to entry were often sold as public interest measures, they tended to serve the narrow interests of producers by lim iting competition, raising prices, and driving more customers to the large, incumbent firms. As one regulatory economist put it, the economics of regulation often brought together strange bedfellows: those who emphasized the public bene fits of such measures and those who actually stood to gain from them. 10 Out of this intellectual milieu, Presidents Carter and Reagan began to deregulate several sectors, including finance, telecommunications, and transportation. 11,12 At the same time, the early research suggested CON was not work ing as intended. Researchers were finding that at best, CON failed to significantly restrain spending. 13 At worst, it seemed to be associated with higher spending. 14-18

As this evidence was emerging, Congress was making important changes to Medicare reimbursement practices. Medicare had originally reimbursed hospitals on a “retro spective” basis. “Under this system,” explained healthcare researchers Guterman and Dobson, 19 “hospitals were paid whatever they spent; there was little incentive to control costs, because higher costs brought about higher levels of reimbursement.” Because it encouraged hospitals to over spend, the system was sometimes called “cost-plus” reim bursement. Recognizing the problem, Congress switched to “prospective” reimbursement in 1983. 20 Botti of the Antitrust Division of the Department of Justice noted the implications of this change in testimony before the Georgia State Assembly in 2007: In addition to the fact that CON laws have been ineffective in serving their original purpose, CON laws should be reexamined because the reimbursement methodologies that may in theory have justified them initially have changed significantly since the 1970s. The federal government no longer reimburses on a cost plus basis. 21 Three years after Congress switched from retrospective to prospective reimbursement, it elected to do away with the CON mandate. 22 Almost immediately, 12 state eliminated their CON programs. Representative Roy Roland (D-Ga.), a physician representing the largely rural center of Georgia, captured the sentiment of his colleagues noting a few years after repeal that: At first glance, the idea [of certificate of need] may have looked pretty good. In practice, however, the effect of certificate-of need on health care costs has been dubious, at best. And the program has certainly been insensitive in many instances to the true needs of our communities. 23 Representative Rowland urged his colleagues to go further, asserting that “it’s now time to abolish it throughout the nation.” 23 Representative Rowland didn’t get his wish. Still, without the federal threat, 15 states had eliminated CONs for most or all aspects of health care as of 2021. 7 Since then, several other states have pared their programs back. Florida, for example, enacted significant reforms in 2019, eliminating CONs for most technologies and investments. 24 The global pandemic of 2020 to 2021 sparked interest in eliminating barriers to health care and as evidence mounted that these rules were associated with bed shortages, 24 states eased or suspended their CON regulations. 25-27 In 2021, Tennessee, Washington, and Virginia passed modest CON reforms while Montana eliminated all but 2 CON requirements. In 2023, Present The States Experiment with CON Reform