Abstract
Most US states use certificate-of-need (CON) programs in an attempt to slow the growth of health care spending. The objective of this study is to evaluate how CON in fact affects health care spending. With 1980–2009 state-level data on spending from the National Health Expenditure Accounts, this article uses fixed-effects regressions to evaluate how the presence and scope of state CON laws affect these spending outcomes. This article estimates that CON laws lead to a statistically significant 3.1% increase in total spending and finds that this increase is primarily driven by spending on physicians. Rather than decreasing health care spending as intended, it appears that CON laws actually increase it. To the extent that policy makers wish to restrain health care spending, they may wish to repeal these laws.
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