CON Laws and the ACA — The Next Frontier for Affordable Healthcare Reform

Nov 17

It’s Time to Fix the ACA’s Biggest Blind Spot: Competition

The Affordable Care Act (ACA) transformed the U.S. healthcare system by expanding coverage and protecting consumers. But more than a decade later, millions—especially in rural America—are discovering that coverage does not equal access. Premiums continue to rise, insurers post record profits, and care deserts widen.

Suppose we want real, lasting healthcare reform. In that case, we must address the structural forces that block competition and drive costs skyward, starting with one of the most overlooked barriers: state certificate-of-need (CON) laws.

The ACA Expanded Coverage—but Couldn't Rein in Market Power

The ACA assumed that expanded coverage would drive affordability. Instead, consolidation accelerated. Today, a few dominant insurers control exchange markets, while vertically integrated giants own everything from physician practices to pharmacy benefit managers (PBMs). This structure shields inflated profits even as patients face narrowing networks and skyrocketing deductibles.

CON Laws: A Classic Case of Good Intentions Gone Wrong

Originally designed to prevent oversupply and keep costs down, CON laws do the opposite: they suppress competition, block new clinics and surgical centers, and leave rural communities with fewer providers and worse outcomes.

Research consistently shows that repealing CON laws increases service availability, especially in ambulatory surgical centers, while lowering prices through competition. For millions of Americans insured through the ACA or Medicaid expansion, access is meaningless when the closest provider is hours away.

Multiple studies show CON laws raise prices, reduce supply, and harm rural communities the most.

Research:

Mercatus Center report on CON law impacts: https://www.mercatus.org/research/state-testimonies/certificate-need-laws

Academic paper analyzing rural ambulatory care growth: https://pmc.ncbi.nlm.nih.gov/articles/PMC10547156/

For millions covered under the ACA or Medicaid expansion, insurance means little if the nearest provider is hours away.

Healthcare’s Layered Barriers—From Drug Development to the Exam Room

Costs are inflated at nearly every step:

Drug development: Patent gaming, lengthy FDA timelines, and PBM formulary restrictions suppress generic competition.
FDA drug approval timelines: https://www.fda.gov/drugs/development-approval-process-drugs
Patent evergreening analysis: https://uclawreview.org/2022/12/13/patent-evergreening-and-the-response-by-the-uspto-and-fda/
Distribution: Middlemen profit through spread pricing and rebate manipulation.

PBM rebate distortion analysis: https://insights.citeline.com/pink-sheet/market-access/pbms/pbms-no-longer-profit-from-rebates-but-plans-benefit-should-sponsors-push-more-for-reform-GYQTW6WWK5A3FIJZ7EV43XWFC4/

Provider access: CON laws and hospital consolidation create care deserts.
Hospital consolidation’s effect on prices: https://www.kff.org/health-costs/ten-things-to-know-about-consolidation-in-health-care-provider-markets/
Insurance: Consolidated insurers dominate ACA marketplaces, limiting choice and raising premiums.
Kaiser Family Foundation on marketplace competition:https://www.kff.org/state-category/health-insurance-managed-care/insurance-market-competitiveness/

The entire pipeline is rigged to favor incumbents.

Leveling the Playing Field—Without Blowing Up the System

Real reform doesn’t require scrapping the ACA. It requires reinforcing it with a competition-oriented policy:

Repeal or relax CON laws. Start with outpatient surgical centers and rural facilities. Allow competition where shortages are already harming patients.
Regulate middlemen—not patients. Demand full PBM rebate transparency, ban spread pricing, and require pass-through pricing for drugs on ACA plans and Medicaid.
Expand competitive access. Introduce federal incentives for new rural microsites, telehealth hubs, and multi-state cooperative plans to enter fragile exchange markets.
Encourage innovation through pilot programs. Deploy CON-free “innovation zones,” transparent drug-pricing pilots, and digital-first rural care models. Pilot programs allow reform without destabilizing hospitals or insurance risk pools.
Streamline burdensome regulations. Accelerate licensing reciprocity, reduce administrative layers for rural providers, and fast-track generics and biosimilars where competition is lacking.

These steps stabilize the system while opening it to competition and innovation.

These are not partisan ideas—they are common-sense, competition-driven correctives.

A Reform Roadmap That Minimizes Shock

Healthcare markets are fragile, and sudden deregulation can cause legitimate concerns. But targeted, incremental pilot programs allow policymakers to test reforms, measure impact, and avoid the shocks that historically accompany major health policy shifts.

The goal is not to destroy existing institutions but to prevent further price hikes and stabilize profits through increased efficiency—not scarcity and monopolization.

Congress and States Must Face Reality

The ACA improved coverage, but it did not fix the structural weaknesses in the healthcare economy. Rural Americans still endure unacceptable barriers to care. Patients still face artificially inflated drug prices. And insurers and middlemen continue to make billions off a system designed to serve them, not the families paying the premiums.

If we truly want affordable, accessible healthcare, the path forward is clear: unleash competition, eliminate outdated barriers, and build a system that rewards innovation rather than restriction.

Over a decade after the ACA, it’s time to finish the job.

Monica Dudley-Weldon

CON Laws and the ACA — The Next Frontier for Affordable Healthcare Reform