Department of Justice and Federal Trade Commission Support Reform of Alaska Laws that Limit Competition in the Health Care Sector

The Department of Justice’s Antitrust Division (DOJ) and the Federal Trade Commission (FTC) 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 Alaska’s CON laws, the joint statement suggests the state consider whether its CON program best serves the needs of its citizens. 

“Alaska lawmakers have the opportunity to bring lower costs and greater options to health care consumers,” said Acting Assistant Attorney General Andrew 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.”  

“CON laws raise considerable competitive concerns and generally do not achieve their alleged benefits for health care consumers,” said Acting Chairman Maureen K. Ohlhausen of the Federal Trade Commission.  “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.”

According to the joint statement, the DOJ and FTC 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.