The Trump administration has made a clear signal to state leaders: federal dollars for rural health will be awarded to those willing to loosen or eliminate certificate‑of‑need (CON) laws that govern new hospital construction. The five‑year Rural Health Transformation Program, funded with $50 billion, now scores applications higher when states commit to revising these regulations.
Federal incentive for state policy change
CON laws require health providers to prove a community need before building new facilities, a policy originally intended to curb monopolies and control costs. Critics argue the rules have instead driven up prices, delayed needed hospitals, and limited rural patients’ access to modern technology. More than 30 states plus Washington, D.C., still enforce some form of CON.
In its notice to applicants, the Centers for Medicare & Medicaid Services called CON rules “an additional expense and burden on rural facilities,” and explained that states with fewer CON restrictions would receive higher program scores. Six states have already indicated plans to revisit their laws in their funding applications.
States taking action
Since the program’s enactment last year, Tennessee has led the way, passing a bipartisan bill in April to unwind most of its remaining CON rules over four years. Alaska, Connecticut, Delaware, Iowa and Mississippi have also signaled interest in loosening or ending their CON statutes.
South Carolina’s Republican Senate leader Wes Climer noted that when President Obama and President Trump agree on a policy, it suggests merit. South Carolina’s legislature voted in 2023 to end most CON requirements, and the state will stop requiring CON applications for new hospital construction or expansion starting in January, keeping the process only for nursing homes.
Potential concerns
Health‑policy researcher Maureen Hensley‑Quinn warned that eliminating CON could reduce transparency. Without the reporting requirements tied to CON applications, states may lose valuable data on hospital ownership and financial health, making it harder to monitor private‑equity involvement in health systems.
Opponents in Tennessee, including Maury Regional Health CEO Martin Chaney, argue that ending CON could create “healthcare deserts” as hospitals focus on profitable locations, leaving rural residents with fewer options. Others, like Williamson County commissioner Judy Herbert, fear that big hospital systems will dominate rural markets, forcing smaller facilities to close or sell.
Administration’s stance
The Trump administration views the funding “carrot” as a practical way to encourage states to remove what it sees as outdated barriers to modernizing rural health care. By linking policy reform to federal dollars, the administration hopes to accelerate the removal of regulations that hinder competition and innovation in underserved areas.
While the approach has drawn criticism from some hospital leaders, the administration’s emphasis on state flexibility aligns with its broader goal of reducing federal overreach and empowering local decision‑making in health‑care delivery.
Original reporting: Texarkana Gazette — read the source article.
