FTC Staff Testifies in Favor of Effort to Repeal Alaska Laws That Limit Competition in the Health Care Sector

The Federal Trade Commission staff has recommended that Alaska repeal its certificate-of-need (CON) laws, which require healthcare providers to obtain state approval before expanding, establishing new facilities or services, or making certain large capital expenditures.

In testimony presented to the Alaska Senate Committee on Labor & Commerce on Tuesday, FTC staff endorsed an April 2017 joint FTC/Department of Justice statement on Alaska Senate Bill 62, which would repeal the Alaska CON laws. The staff’s testimony, like the 2017 FTC/DOJ statement, was provided at the request of Alaska State Senator David Wilson.

“CON laws, when first enacted, had the laudable goals of reducing health care costs and improving access to care,” the testimony stated. “However, after considerable experience, it has become apparent that CON laws do not provide the benefits they originally promised. Worse, in operation, CON laws can undermine some of the very policy goals they were originally intended to advance.”

Observing that CON laws have not succeeded in controlling costs, improving quality, or increasing access, the testimony noted that CON laws create barriers to entry and expansion, which may increase prices, limit consumer choice, and stifle innovation. In addition, incumbent firms can use CON laws to thwart or delay otherwise beneficial market entry or expansion by new or existing competitors.  Finally, the testimony notes that CON laws can deny consumers the benefit of an effective remedy following the consummation of an anticompetitive merger.

The FTC, under the Acting Chairman’s leadership, has been increasingly focused on state laws that unnecessarily restrict competition and harm consumers. For example, the FTC’s Economic Liberty Task Force is working to identify problematic government barriers and engaging with policymakers across government to reduce the harmful effects of excessive regulation.

The Commission vote to issue the comment was 2-0. (FTC File No. V170006; the staff contact is Daniel J. Gilman, Office of Policy Planning, 202-326-3136.)

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