effects of Certificate of Need laws: 1970s: Health insurers have a dilemma, and Uncle Sam is about to get involved. At the time, insurers pay hospitals for their costs. Hospitals go on buying sprees, and everyone else foots the bill. 1971: North Carolina decides hospitals have a spending problem, and they need a budget. Lawmakers require providers to get state permission before making any big purchases — and Certificate of Need laws are born. 1973: Not so fast. The N.C. Supreme Court axes the first version of CON laws for “establishing a monopoly.” 1974: Congress picks up the idea, and it passes a Certificate of Need mandate. But Congress does nothing to fix the underlying incentive to waste money. Instead, Congress pushes states into adopting regulations known as CON laws.