‘Free market health care:’ Boon or bane for rural Kentucky?

Lawmakers renew debate on certificate of need law

Jun 21, 2024 at 3:25 pm
Sen. Stephen Meredith, R-Leitchfield, a former hospital executive, argued that ending the certificate of need law would decrease rural Kentuckians’ access to health care during a meeting of the Kentucky legislature’s Interim Joint Committee on Licensing, Occupations, & Administrative Regulations, June 20, 2024.
Sen. Stephen Meredith, R-Leitchfield, a former hospital executive, argued that ending the certificate of need law would decrease rural Kentuckians’ access to health care during a meeting of the Kentucky legislature’s Interim Joint Committee on Licensing, Occupations, & Administrative Regulations, June 20, 2024. LRC Public Information
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Experts and lawmakers continue to split over whether Kentucky should reform its controversial certificate of need process.

click to enlarge Rep. Marianne Proctor, R-Union, said her Northern Kentucky constituents want more choice in health care providers. - LRC Public Information
LRC Public Information
Rep. Marianne Proctor, R-Union, said her Northern Kentucky constituents want more choice in health care providers.

Two Republican lawmakers on different sides of the issue — Sen. Stephen Meredith of Leitchfield and Rep. Marianne Proctor of Union — spoke Thursday during a meeting of the Interim Joint Committee on Licensing, Occupations, & Administrative Regulations.

Meredith, who was previously a hospital executive, said that repealing certificate of need (CON) would create more competition among for-profit providers and would harm patients who rely on Medicare and Medicaid. He said the amount of dollars Americans spend on health care is already a “crisis that’s truly of biblical proportion.” 

As of 2022, Americans were spending more than $13,000 per person on health care. Meredith said he recently got a bill of $39,000 for an emergency room visit and hospital stay.

“We have to address the cost, but the problem is, what’s going to be presented today, I believe, will not address that issue. It’s going to be suggested that by implementing free market principles in health care, we can reduce costs and increase access to care,” Meredith said, adding that the opposite would happen in rural areas of the state.

However, Proctor argued that rural hospitals are already facing challenges. She said that since 2005, four rural hospitals have closed in Kentucky. Nationwide, 104 rural hospitals have closed since 2005, according to Becker’s Hospital CFO Report, including 14 in Tennessee and five in West Virginia.

In her Northern Kentucky district, Proctor said, constituents are “​​clamoring for choices in their health care hospitals.” She added that she is concerned that dominant providers can “swoop in” communities and close rural hospitals, and gave an example of a Northern Kentucky provider, St. Elizabeth Healthcare, purchasing an Owen County hospital and then closing it.

She said Meredith had valid points but that under the certificate of need law, Kentucky imposes restrictions on health care providers that apply to no one else. “What other industry do we allow that?” she said. “But we’re doing it with our most important, which is health care.” 

Proctor appeared alongside Jaimie Cavanaugh, legal policy counsel for the Pacific Legal Foundation, a public-interest law firm that defines its mission as defending “Americans from government overreach and abuse.” Cavanaugh said that federal administrations — from Reagan to Biden — have repeatedly recommended that states repeal CON laws since the 1980s.

Eric Friedlander, the secretary of the Cabinet for Health and Family Services, was set to testify Thursday, but did not appear because he had COVID-19, according to co-chairman Sen. John Schickel, R-Union. 

CON In Kentucky

The certificate of need requirement is a mechanism for reviewing and approving or rejecting major capital expenditures by certain health care facilities, based on an area’s need, according to the National Conference of State Legislatures (NCSL). 

Many legislative attempts to reform the CON process in Kentucky have failed in recent years. The Kentucky Hospital Association supports the current law, warning that without CON protections, out-of-state companies would come in and “cherry pick” privately-insured patients, leaving Kentucky hospitals even more dependent on lower-paying government insurance programs and rendering them no longer able to afford to provide unprofitable but needed medical services.

Sometimes called the “competitor’s veto,” certificate of need (CON) laws are in effect in 35 states and Washington D.C. As of Jan. 1, NCSL reports 12 states either repealed CON or allowed their state programs to “expire.” 

Last year, a legislative task force spent six months studying CON and concluded more study was needed. A resolution filed to reestablish that task force for the summer of 2024 did not pass in this year’s session. Schickel said he had spoken with legislative leadership about renewing the task force, but the leaders wanted to cut back on task forces and use established interim committees to review issues like CON.