It’s shocking to see how fast logic, common sense, or the basic rules of supply and demand are ignored when crony businesses and their sympathetic politicians explain their racket.

For years, South Carolina hospital lobbyists tried explaining the benefits of South Carolina’s certificate-of-need (CON) laws. Somehow, CON laws would lower prices, improve options, and expand care even though CON laws—by definition—limit options, strain existing care, and push prices higher.

However, when the COVID pandemic exposed so many of these problems, they couldn’t be ignored or explained away any longer.

And when that happened, the Palmetto Promise Institute made sure reforms followed. Today, thanks to Palmetto’s strategy, research, and advocacy, South Carolina’s CON laws (once believed to be untouchable) are a thing of the past.

Background: What are Certificate-of-Need Laws?

Certificate-of-need laws are regulations that require healthcare providers to get special permission from the government before adding or expanding healthcare services or facilities. For example, if a hospital wants to add an infant heart center, it has to first prove to the state regulatory board why that center is needed—hence the name, “certificate-of-need,” also known as CON.

CON laws for healthcare largely came into prominence in the 1970s when the federal government started heavily incentivizing them for state healthcare systems.

Despite any economist being able to easily explain CON laws’ many problems, one of the reasonings behind the push for them was the belief that by limiting competition, hospitals would use increased profits for more charitable community care.

However—unsurprisingly—when data showed that CON laws did nothing to increase charitable care, the federal government stopped incentivizing them and many states repealed them. But strong hospital lobbies were able to keep CON laws on the books in over 30 states.

Palmetto’s Research Highlights How CON Laws Reduce Access to Healthcare and Increase Costs

In 2016, Palmetto was just three years old. However, despite its fledgling status, Palmetto’s team set their sights on what was believed to be untouchable: South Carolina’s CON laws.

An incredibly strong hospital lobby had prevented any reforms or changes to South Carolina’s CON laws for years. In fact, hospital lobbyists were so entrenched that the Hospital Association used the Speaker of the House’s ceremonial statehouse office for their headquarters during legislative session.

But Palmetto wasn’t deterred.

Palmetto teamed up with research partners like the Mercatus Center and the Cato Institute to publish research and commentary on the problems being created by the state’s CON laws.

Then, in 2020, when COVID began spreading, Palmetto had the data and reforms ready to go. A month prior to the COVID outbreak in South Carolina, Plametto actually met with Governor McMaster’s team to discuss the need to reform CON laws. Then, as Palmetto’s CEO and President, Ellen Weaver explains, “when the pandemic struck, it was a quick call to the Governor’s staff—providing them with chapter and verse of what other states such as North Carolina were doing to head off bed capacity shortages like those that hamstrung New York’s COVID response—to make sure they knew urgent action was needed. The Governor’s executive order was issued the next day.”

Palmetto Educates Lawmakers and the Public on the Problems with CON Laws

After Gov. McMaster suspended South Carolina’s CON laws, many state legislators (who’d read Palmetto’s research) began calling for a permanent repeal. To help the groundswell for CON law repeal calls, Palmetto’s team prepared briefing binders for each legislator with data and commentary from doctors and patients on the need to permanently repeal the state’s CON laws.

In addition to their work directly with legislators, Palmetto teamed up with Americans for Prosperity and Convention of States to engage with South Carolinians across the state in town halls and community events. Palmetto’s coalition not only educated people on how CON laws were impacting the state’s healthcare system, they encouraged people to reach out to their legislators.

Finally, thanks to the growing grassroots calls for CON law repeal, more reform-minded legislators winning election in 2020 and 2022, and Palmetto’s consistent push for reform, South Carolina legislators unanimously passed a bipartisan bill to repeal the state’s CON laws.

Repealing Certificate-of-Need in South Carolina: A Blueprint for Other States

For years, South Carolina has had the reputation of only passing small, incremental policy changes. But the state’s repeal of its CON laws changed that dynamic.

Dr. Matthew Mitchell, a senior research fellow at Mercatus and the foremost authority on CON laws, explains the nationwide significance of South Carolina’s reform. “Two years ago, Montana enacted a similar reform, eliminating every CON but that for nursing homes. The difference is that Montana only regulated 9 services and technologies, South Carolina has one of the most extensive programs in the country, requiring a CON for 18 different services and technologies.”

South Carolina’s broad reforms provides a roadmap for CON law repeals across the country. Now, thanks to Palmetto’s 7-year push to repeal South Carolina’s CON laws, every state has a blueprint for reform.

CON laws only act to limit patients’ options, increase the cost of healthcare, and enrich hospitals. And thanks to the Palmetto Promise Institute, the realities of these laws can’t ever be ignored again.

For their work to improve healthcare for South Carolina residents, the Palmetto Promise Institute was a finalist in SPN’s Bob Williams Awards for Outstanding Policy Achievement—in the “Biggest Win for Freedom” category.