A Win for Healthcare Freedom in North Carolina

November 21, 2019
By Christina Sandefur

Great news for healthcare freedom in North Carolina! Our friends at the Institute for Justice (IJ) just won the opening round of their lawsuit challenging the state’s government-backed medical monopoly.

Under North Carolina’s certificate of need law, it’s illegal for healthcare providers to offer healthcare services to patients without first getting government permission. That law prevented Dr. Gajendra Singh from purchasing an MRI machine to offer lower-cost imaging services—which are critical to patient diagnosis and care—simply because existing providers in the area already own MRI machines.

That violates the state Constitution, which prohibits monopolies within the state. Barring people from entering a business or offering a service just to protect existing providers against would-be competitors is the very definition of a government-created monopoly. In fact, it was already struck down once by the North Carolina Supreme Court—for violating the state’s anti-monopoly clause! So how does the law remain on the books? State lawmakers turned around and passed it again.

In its defense, the North Carolina Department of Health and Human Services claims that the certificate of need law is needed to control healthcare costs. But it’s common knowledge that certificate of need laws do the exact opposite: Indeed, it’s the certificate of need law that’s prohibiting Dr. Singh from providing patients with lower-cost services in the first place! Countless economists have denounced certificate of need laws for failing to contain costs. The American Medical Association calls certificate of need laws a “failed public policy.” Even the federal government—which once encouraged states to enact certificate of need laws—has since reversed course and advocated for their repeal in the states.

Despite the fact that certificate of need laws have been declared unconstitutional—and proven ineffective at achieving their supposed goal, the Department asked the court to throw out Dr. Singh’s case. The Goldwater Institute filed a brief in support of Dr. Singh, arguing that the court should enforce the Constitution and not allow special interests to trump patient access to affordable care. Thankfully, the court denied the Department’s request to dismiss the case, and Dr. Singh (and the patients who rely on his quality, low-cost services) will get his day in court.

But this victory is only the first step in the long fight to rid North Carolina of these anti-competitive, anti-patient laws. Meanwhile, 37 other states have similar laws on the books. Doctors and patients shouldn’t have to lawyer up to protect their right to buy and sell better, more affordable healthcare services. Instead, state lawmakers setting their 2020 legislative agendas should stand up to politically powerful incumbents and put patients first.

For more on how CON laws protect entrenched businesses at the expense of patients, check out Goldwater Institute National Investigative Journalist Mark Flatten’s in-depth report and video.

Christina Sandefur is the Executive Vice President at the Goldwater Institute.