Certificate-of-need laws and substance use treatment

Certificate-of-need (CON) laws in place in most US states require healthcare providers to prove to a state board that their proposed services are necessary in order to be allowed to open or expand. While CON laws most commonly target hospital and nursing home beds, many states require CONs for other types of healthcare providers and services. As of 2020, 23 states retain CON laws specifically for substance use treatment, requiring providers to prove their "economic necessity" before opening or expanding. In contrast to the extensive academic literature on how hospital and nursing home CON laws affect costs and access, substance use CON laws are essentially unstudied.

Using 2002-19 data on substance use treatment facilities from the Substance Abuse and Mental Health Services Administration's National Survey of Substance Abuse Treatment Services, we measure the effect of CON laws on access to substance use treatment. Using fixed-effects analysis of states enacting and repealing substance use CON laws, we measure how CON laws affect the number of substance use treament facilities and beds per capita in a state.

We find that CON laws have no statistically significant effect on the number of facilities, beds, or clients and no significant effect on the acceptance of Medicare. However, they reduce the acceptance of private insurance by a statistically significant 6.0%.

Policy makers may wish to reconsider whether substance use CON laws are promoting their goals.