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Insanity, as the saying goes, is doing the same thing over and over while expecting a different result. But that seems to be the approach some in Michigan want to take to deal with the state’s severe shortage of inpatient mental health beds.

There is no doubt the situation is dire. Michigan ranks near the bottom nationally when it comes to availability of inpatient psychiatric hospital beds. In the 1990s, the state began reducing the number of inpatient beds at its mental hospitals. The idea back then was that as the number of beds at the state-run mental hospital decreased, the private sector would pick up the slack and begin adding beds on its own. 

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But that hasn’t happened: Instead, the total number of inpatient mental health beds in the state has been cut by more than half since the draw-down began. Part of the problem is a state law the American Medical Association deems a “failed public policy” that is actually written to restrict access to care.

Michigan and dozens of other states curtail the ability of the private sector to provide medical or mental health services through what are called certificate of need laws. These laws, which came into vogue in the 1970s, require the state’s permission to open or expand health-related facilities, including the addition of new equipment. So government bureaucrats, not market forces, determine whether there is a need and dictate what facilities and services will be permitted.

The idea behind certificate of need laws was that they would control cost by limiting the availability of medical services, which was supposed to eliminate excess capacity in the system. But they’ve had the opposite effect: By limiting competition, certificate of need laws resulted in higher costs, lower quality, and less availability of needed medical services, according to a series of academic studies and assessments from the U.S. Federal Trade Commission and Department of Justice. Instead, they have become effective tools of existing providers of medical services, who use the cumbersome and expensive certificate of need application process to freeze out competitors.

Yet despite this proven track record of failure (Michigan’s certificate of need law has been on the books since 1972), state officials still cling to these laws. And in Michigan, they are looking to double down on failure.

One of the ideas that is gaining traction there is to use the state’s certificate of need law to require large medical providers like hospitals to add psychiatric beds as a condition of approval of other projects. As described in a recent news account, the idea would be to “leverage state-issued Certificates of Need” that hospitals must obtain for capital improvement projects to force them to add mental health facilities.

That approach makes no sense if the goal is to increase the availability of mental health services in the state, said Matthew Mitchell, senior research fellow at the Mercatus Center at George Mason University, which has produced numerous widely cited studies on the failures of certificate of need laws nationally. “If you are worried about access to psychiatric services, probably the first thing you should do is eliminate the rule that is specifically designed to restrict access to psychiatric services,” Mitchell told the Goldwater Institute. “Even though CON advocates talk about CON as a way to increase access to care, there is nothing in economic theory or the 40-year experience with CON that would lead us to believe that that’s how they work. It doesn’t make any sense that you are going to increase the quantity of services provided by decreasing the supply of services.”

The crisis in mental health care is not unique to Michigan. As the Goldwater Institute documented in an investigative story and a separate video, certificate of need laws were used in Iowa and other states to block private sector providers from building their own mental health facilities using their own money and without any government incentives. In eastern Iowa, existing providers used the state’s cumbersome certificate of need process to stall for more than two years a new 72-bed mental health hospital that was proposed by a private company. They argued there was no need for such a facility. The certificate was finally issued only after intervention by the governor and a movement in the Iowa Legislature to repeal the state’s certificate of need regimen.

The consequences of certificate of need in Iowa were nearly identical to those described in recent media reports from Michigan. Because of the crushing lack of inpatient mental health facilities, people having mental health crises routinely wind up in jail or handcuffed to hospital beds for days or weeks at a time. Sheriff’s deputies spend entire shifts transporting mental patients across the state to far-flung hospitals that have a single open psychiatric bed. Patients go untreated while existing providers maintain there is no need for more facilities, and if there is, they are the ones to fill it.

The Michigan Legislature is showing some impatience with the state certificate of need law. There have been recent, though unsuccessful, efforts to repeal it in recent years. Earlier this year, the Legislature overrode efforts by the state’s Certificate of Need Commission to restrict access to an innovative new cancer treatment by layering on costly and burdensome regulations.

So maybe some in the state are beginning to realize that after almost 50 years of trying the same thing over and over, they are unlikely to get a different result.

Mark Flatten is the National Investigative Journalist at the Goldwater Institute and the author of the report "CON Job: Certificate of Need Laws Used to Delay, Deny Expansion of Mental Health Options." 

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