Licensing is Anti-Consumer, Health Care Edition

I have written a zillion times that government licensing programs tend to be incumbent protection from competition for the licensees, rather than any real benefit to consumers.  This is particularly true in health care.

Why does a person need to go to school and residency for a decade to put three stitches in a kid's cut?  Why do I have to go to a full dentist's office to get my teeth cleaned?  Why does someone have to go to school for years to tell me my contact lens strength needs to be incremented by another 0.5, when I already knew that and could have just ordered them myself?  The reason is licensing, and it both increases prices by limiting the number of providers and by forcing me to see someone who is often wildly overqualified to handle my problem.

My sense is that this over-licensing for routine functions in medicine is the second largest contributor to costs (the first is the elimination of price-shopping by  making the payor for the services different from the person who receives the services).  But don't expect the government, long in thrall to the AMA, to do anything about this in any health care "reform":

bills and amendments died during the Texas legislative session that would have allowed advanced practice nurses to diagnose and to prescribe for common, minor illness and injures without doctor supervision.

You can blame Texas doctors.

Despite better protections from malpractice lawsuits and lower malpractice premiums, Texas has a doctor shortage. Nevertheless, the Texas Medical Association took every step to ensure physicians will have a tight rein on the activities of well-trained nurses.

The barrier against nurses will continue to keep low-fee retail health clinics, such as those operated by Walgreen and CVS drug store chains, from expanding in Texas. The state law requiring doctor supervision adds too much cost to the clinics.

Texas has only about 85 of the 1,200 retail health clinics in the nation. San Antonio does not have a single one. The clinics are popular wherever they exist because nurse practitioners can treat common ailments and minor injuries with little waiting time and fees that average about $60, much less than emergency rooms. The clinics operate evenings and weekends and accept insurance plans.

The clinics would represent real health care reform, especially in Texas. Most of the state, 179 counties out of 254, is classified as medically underserved. Among them are 45 metropolitan counties, including Bexar.  (hat tip:  Carpe Diem)

Postscript: But Coyote, how can you possibly be against licensing of doctors?  You wouldn't want just anyone doing open heart surgery on you, would you?

No, I wouldn't, but while AMA licensing is overkill for putting in stitches, it falls short of what I would want for heart surgery, or oncology, or major plastic surgery.  I would not just accept any licensed doctor to do these things - I would do research and get referrals.  I would enforce a higher standard.  And this is why broad licensing is so un-helpful.  It is overkill for certain procedures, but falls short for others.  I guess their may be a Goldilocks application for current licensing (maybe for my GP?) but that is almost an accident.

I don't oppose third party certifications per se.  I think that in a free society, many groups, such as the AMA (or consumers reports, or the UL, or whoever) could act as certification or review bodies for different medical practices.  And I would very likely as a consumer find such an organization I trust and insist the providers I used for certain procedures be minimally approved by this group.


  1. NormD:

    This bothers me also. Why do I have to get a prescription for fluoride for my kid's teeth? What value does my doctor offer when getting a prescription for Propecia? Why do I have to pay outrageous fees to get a mole removed? Many times I know more about a subject than my doctor, but nonetheless I have to go through him/her.

    One sore point that I have been on the warpath about is aortic aneurysms. In the US, more people die of these than die of AIDS (15,000-20,000 a year). The disease is silent until the aneurysm ruptures, then you are dead. The test is a simple under $100 ultrasound and the condition can be surgically fixed. Yet, I have received hundreds of warnings about AIDS and none about aortic aneurysms.

    There are all kinds of situations where doctors seem to just spout the party line without really thinking. Why do we vaccinate all newborns for Hepatitis B but only vaccinate adults of they are at risk of coming in contact with contaminated bodily fluids? My kid's doctor had no idea. Its what we do...

  2. DrTorch:

    I never understood the willingness to turn over some current gov't activity to an organization like the AMA.

    There the politics, regulation and bureaucracy is just as bad as the gov't, but w/ even less oversight.

    Case in point: Home Owner's Associations. Some how various libertarians point to these as much better institutions to enforce local aesthetics statues.
    WTF? Maybe if you could opt-out at some point. But how are mandatory HOA fees any different than local or municiple taxes? (Answer: you can't even deduct them from your Federal taxes!)
    And when my politically far-left HOA in Reston, VA didn't get the turnout on a referendum it was pushing, and paying for w/ members' dues(ironically alienating the old-guard SDS members who founded it) they simply EXTENDED the ELECTION!

    At the very least if a village or town tried this, they'd be restricted by state and federal election statutes.

    So why would anyone trust the AMA, who has a vested conflict of interest, to provide a broader license structure to create benficial choice for the customer?

  3. Dr. T:

    Remember that licensing professionals is a state government function (one of the few things that hasn't yet been nationalized), and the rules vary tremendously from state to state. (Note to DrTorch: The AMA has nothing to do with physician licensure at all. It is a professional society and lobbying organization that only a minority of physicians belong to. I, personally, abhor the AMA and its public policy positions.) In most states, the simple medical tasks you described can be performed by physician assistants or nurse practitioners. In many states, PAs and NPs can bill directly for their services, though in a few states only the supervising physicians can bill. All states require physician supervision of PAs and NPs, but that doesn't have to be on-site supervision: review of cases within a short period of time is acceptible.

    Texas is atypical in requiring strict physician oversight of PAs and NPs. I suspect that will change soon, as the general public's demands for more care overcome the entrenched interests of some of the physicians. What's weird is that most family practice and internal medicine physicians I know would gladly let PAs and NPs handle the simple stuff so they can focus on the more challenging cases. With Texas having so few physicians, they must continually be swamped. Maybe Texas doctors like 80-100 hour work weeks.

  4. DrTorch:


    I understand your point, but my comment was directed at Coyote's final paragraph.

  5. decon:

    I'm sympathetic to your position, but do not agree with your analysis.

    Tyler Cowen had a short and provocative blog the other day on the third party payer problem and whether it does or does not lead to increased costs. Using the price history of treatments for autistic children, which are usually NOT covered by insurance, Tyler suggested that the 3rd party payer phenomenon may not be the cause of runaway inflation for healthcare. I understand the theory, but tend to agree with Tyler. I think it has more to do with asymmetric information and bargaining power. For treatment in a hospital I know the uninsured pay MORE, frequently a lot more. Not sure about outpatient as I have very little personal and no professional experience with those treatments and payments.

    As to shopping around for a heart surgeon, that doesn't work so well when you suddenly have a heart attack. It also doesn't work when the surgeon knows a lot more than you do about both your condition and the availability and urgency of various options. Asymmetric information can and does lead to market failure (doesn't mean the government can do it better, just that an unregulated market doesn't maximize consumer welfare) and this will always be a problem in markets for healthcare. If Doc says you need procedure X, and it costs Y, who are you to argue with him.... especially if you are losing blood while you "think" it over (if you are conscious).

    The problems are clear, the solutions, not so much.