1978 Utah L. Rev. 3 (1978)
Health Planning and Regulation through Certificate of Need: An Overview

handle is hein.journals/utahlr1978 and id is 13 raw text is: Health Planning and Regulation Through Certificate
of Need: An Overview*
James F. Blumstein**
Frank A. Sloan***
Certificate-of-need laws have now been enacted in over two-
thirds of the states.' An integral part of the local, state, and national
health planning scheme, certificate-of-need statutes are intended to
establish a review process by which the proliferation of health care
facilities may be controlled. As an introduction to health planning
and regulation through certificate-of-need laws, this Article will dis-
cuss the rationale for government health planning; the intent and
effect of the National Health Planning and Resources Development
Act of 1974; the 1974 Act in light of policy perspectives; the evalua-
tion of certificate-of-need initiatives by the states; the effect of these
initiatives; and the newly proposed Hospital Cost Containment Act.
I. WHY PLANNING?
In a nation whose institutions have relied on market mecha-
nisms for making basic economic choices, governmental imposition
of planning bears a burden of persuasion.' Justification for planning
in the health sector is typically founded on two rationales. First,
government intervention traditionally follows as a remedy for some
market failure. The medical marketplace deviates in some signifi-
cant ways from classical market assumptions,3 and planning is often
promoted as a replacement for the dysfunctional market. A second
rationale is found in the economist's view of a merit good.4 This
* Work on this article was supported in part by the Vanderbilt Institute for Public Policy
Studies and by Grant No. 7-R01-HS 02590 from the National Center for Health Services
Research, United States Department of Health, Education, and Welfare.
** Professor of Law, Vanderbilt Law School; Senior Research Associate, Vanderbilt
Institute for Public Policy Studies; L.L.B., 1970; Yale Law School.
*** Professor of Economics, Vanderbilt University; Senior Research Associate, Vander-
bilt Institute for Public Policy Studies; Ph.D. (Economics), 1969; Harvard University.
1. As of January 31, 1978, thirty-six states had enacted certificate-of-need laws.
DIVISION OF REGULATORY ACTIVITIES, BUREAu OF HEALTH PLANNING AND RESOURCES DEVELOP-
MENT, DEP'T OF HEALTH, EDUCATION AND WELFARE, STATUS OF CERTIFICATE OF NEED AND SECTION
1122 PROGRAMS IN THE STATES (1978).
2. See generally Blumstein & Zubkoff, Public Choice in Health: Problems, Politics and
Perspectives on Formulating National Health Policy, INT'L J. HEALTH SEavICES (1978) (forth-
coming); Blumstein & Zubkoff, Perspectives on Government Policy in the Health Sector,
51 MILBANK MEM. FUND Q.: HEALTH & Soc'y 395 (1973).
3. Blumstein & Zubkoff, Perspectives, supra note 2, at 405-07.
4. Id. at 407-12.

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