FTC and DOJ Support Reform of Alaska Laws That Limit Competition in the Health Care Sector

Agencies submit joint statement regarding proposed legislation repealing the state’s certificate-of-need laws

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The Federal Trade Commission and the Department of Justice’s Antitrust Division have 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 response to a request by Senator David Wilson for views on Alaska Senate Bill 62, which would repeal the Alaska CON laws, the joint statement suggests the state consider whether its CON program best serves the needs of its citizens.

“CON laws raise considerable competitive concerns and generally do not achieve their alleged benefits for health care consumers,” said Acting FTC Chairman Maureen K. Ohlhausen.  “CON laws can restrict entry and expansion, limit consumer choice, and stifle innovation.  Additionally, the CON process can be exploited by incumbent firms to thwart or delay entry by new competitors, as well as potentially obstruct efforts to restore competition lost to an anticompetitive merger, harming free markets and consumers.”

“Alaska lawmakers have the opportunity to bring lower costs and greater options to health care consumers,” said Acting Assistant Attorney General Andrew C. Finch of the Antitrust Division. “CON laws can increase the costs of investing in new health care services and can shield incumbents from competition.Repeal of Alaska’s CON laws could invigorate competition in this critical sector, to the benefit of patients, employers, and other health care consumers.” 

Although requirements vary for those states that have CON laws, these laws, including Alaska’s CON program, typically require certain health care providers to obtain approval from a regulatory body before expanding, establishing new facilities or services, or making certain large capital expenditures.

According to the joint statement, the FTC and DOJ historically have urged states to consider repeal or reform of their CON laws because they can prevent the efficient functioning of health care markets and harm consumers.  CON laws can create barriers to entry and expansion, limit consumer choice, deny consumers the benefit of an effective remedy for antitrust violations, facilitate anticompetitive agreements, and stifle innovation. 

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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