Cross-Border Effects of State Health Technology Regulation

In the American Journal of Health Economics, LDI Executive Director Daniel Polsky and Jill R. Horwitz (UCLA School of Law) explore whether state Certificate of Need (CON) laws have an effect on the supply of medical technology in neighboring states. They studied whether MRI providers disproportionately locate in unregulated states in counties that border states regulated by CON licensing laws. They found a sizable cross-border effect: among counties located on state borders where one state regulates MRI entry and the other state does not, there is more likely to be an MRI provider in the unregulated county than in the regulated county. Of note, these effects are linked to the relative ease of traveling across state borders; the difference between regulated and unregulated border counties stems almost exclusively on state borders that are not separated by rivers, borders that are presumably easier for potential patients and staff to cross. The authors suggest that these spillover effects be considered when evaluating the effectiveness of CON laws.