COLUMBIA, South Carolina — The federal government on Monday recommended South Carolina repeal requirements that health facilities get state permission for many kinds of construction and expansion, backing up something Gov. Nikki Haley has sought for years.
In a letter and attached statement to Haley, who sought officials' opinion in November, the Department of Justice and the Federal Trade Commission wrote that laws requiring something known as a certificate of need impede competition and make such projects more expensive.
"By interfering with the market forces that normally determine the supply of facilities and services, CON laws can suppress supply, misallocate resources, and shield incumbent health care providers from competition from new entrants," federal officials wrote.
South Carolina's certificate of need program nearly died in 2013 when Haley vetoed its $2 million in funding, saying then that such decisions were best left to the open market. The program was resurrected a year later when, after a lawsuit from hospitals, the South Carolina Supreme Court ruled it couldn't be eliminated unless lawmakers directly voted to kill it.
A spokeswoman for Haley, who is slated to give the Republican response to President Barack Obama's final State of the Union address on Tuesday, did not immediately respond to a message seeking comment.
State lawmakers are still mulling a provision that would make such projects easier to launch and would end the permission requirement entirely in 2018. The House last year gave key approval to a bill, which is now pending in the Senate. If no final action is taken on it by the end of the session that convenes this week, the measure will die.
The proposal emerged from nine months of work by a special committee formed after protracted wrangling over the certificate of need program.
South Carolina is among several dozen states that require the regulatory review of major medical projects. A 1974 federal law required states to enact the process in an effort to control health care costs. But Congress repealed the law 13 years later, after studies showed it had little effect.
Since then, more than a dozen states have repealed their certificate of need programs. Regulations vary widely among remaining states, according to the National Conference of State Legislatures.