Medical Licensing Impedes Quality, Affordability of Care

Medical Licensing Impedes Quality, Affordability of Care
December 1, 2008

Medical licensing is ineffective and inefficient, and patients would be better served by relying on brand recognition when choosing their doctors, writes Shirley Svorny in a new report for the Cato Institute.

“In health care, we haven’t used brand names because people have been trusting licensure,” Svorny told Health Care News, “but it’s a weak apparatus, and it’s not trustworthy. People put a lot of faith in this license, and it doesn’t tell you very much.

“In essence, you’re putting your life at risk,” Svorny continued.

Patients Misled

Svorny, who teaches economics at California State University at Northridge and is a Cato Institute fellow, said she approached the issue as an economist. She discovered that contrary to popular belief, private insurance companies and medical boards, not state licensure, vet doctors and are responsible for making them hirable or keeping them in practice.

Government medical licensing boards cannot screen doctors thoroughly enough, Svorny said, and the process hasn’t done much to prevent bad doctors from practicing medicine. In addition, she noted, licensing forces doctors to do work physicians’ aides or nurse practitioners could do competently. That drives up the cost of health care.

“The state can’t watch what individuals are doing,” said Svorny. “Patients are being misled by the license. If there were no licensing, they’d say, who is this guy? And we’d go to national recognition.

“What you think you’re getting from the state, you’re really getting from these other processes,” Svorny said.

Controversy Stirred

The study has stirred controversy in the medical community.

Josie Williams, president of the Texas Medical Association, said the state’s licensure system is strong enough to ensure doctors do their jobs. It also keeps physicians’ aides and nurse practitioners from encroaching on jobs doctors alone should do, he said.

Williams, formerly a nurse and now a doctor, said, “I was a darn good nurse, and I knew a lot then, but what I didn’t know was that I really didn’t know a lot until I got to be a physician. Looking back on that scares me to death, some of the leeway physicians left me.”

Williams said only state licensing can competently assess doctors’ skills and ensure quality practice.

Alternative Praised

Devon Herrick, Ph.D., a senior fellow with the National Center for Policy Analysis, disagrees. “Restrictive medical licensure and numerous other needless regulations have kept physician care a cottage industry,” he noted.

“The accounting industry is an example of how medical licensure should work,” Herrick continued. “For instance, a Certified Public Accountant is not exclusively licensed to practice; anyone can hang out a shingle advertising bookkeeping to the public. Yet accounting professionals seeking to prove their skills can obtain that certification to illustrate professional competence, and consumers are free to decide the level of accounting skills they are willing to pay for.”

“Professor Svorny has made a valuable contribution to our understanding of the drivers of health care costs: Turf-protection laws for medical professionals that replicate the characteristics of medieval guilds,” said John R. Graham, director of health care policy at the Pacific Research Institute.

“They didn’t make sense in the Middle Ages, and they don’t make sense in the twenty-first century,” Graham continued. “Instead of enhancing and communicating medical quality, such rules create an opaque environment. As a result, patients have little ability to direct their health care dollars to providers whom they can be confident are likely to suit their needs.”

Unnecessary Barrier

According to Kalese Hammonds, health care policy analyst for the Texas Public Policy Foundation, “One of the biggest problems with medical licensing laws is that they are a barrier to entry into the medical field. Medical licensing laws keep potentially lower-cost health care providers from being able to provide less-expensive services, and they drastically limit the choices of those in need of medical attention.

“In a time when more affordable health care is the goal, we should be doing all we can to diversify the provider pool so that people have more choices when electing health care providers,” Hammonds concluded.

“Licensing is the original sin of American health care,” said Michael Cannon, director of health policy studies at the Cato Institute. “It has done worse than just increase costs: It has cost lives by blocking safer ways of delivering medical care.”


Jillian Melchior (jkmelchior@hillsdale.edu) writes from Michigan.

For more information ...

“Medical Licensing: An Obstacle to Affordable, Quality Care,” by Shirley Svorny, Cato Institute, September 2008: http://www.cato.org/pubs/pas/html/pa-621/pa-621index.html