A Justice Department lawyer said the state's Certificate of Need regulations "harm consumers."
"They undercut consumer choice, weaken markets' ability to contain health care costs and stifle innovation," Mark Botti, a section chief in Justice Department's Antitrust Division said.
Mr. Botti appeared before a joint Senate and House Human Services Committee, along with two other opponents.
Georgia's Certificate of Need regulations control the ability of health care facilities to expand and offer some services. Under the system, hospitals must show there is a need for their services before they start or expand.
Doctors want to eliminate the regulations, which would pave the way for them to open their own money-making imaging and ambulatory surgical centers. Hospitals say while the regulations should be streamlined, they need to remain intact. They worry that the freestanding centers would cherry-pick lucrative services and well-insured patients that help hospitals offset costs of caring for the uninsured.
On Thursday, legislation was filed - backed by Republican Gov. Sonny Perdue - that would remove some regulations but keep others in place. Some Republicans want to go farther than that and repeal Certificate of Need completely.
Mr. Botti said a federal study by the Justice Department and the Federal Trade Commission found no evidence that the repeal of certificate of need laws in other states had damaged health care delivery. Instead they had worked to keep costs artificially high by not allowing for more competition, the study found.
Hospital officials warned that a complete repeal of the laws would be disastrous for the state's most fragile hospitals, which would be left caring for the poorest patients.
"Forty percent of our population is either on Medicaid, PeachCare, is uninsured or indigent," said Earl Rogers, a senior vice president with the Georgia Hospital Association.
The Perdue bill would exempt ambulatory surgical centers from the regulations but mandate that they provide a prescribed amount of indigent care.