Medical Licensing: An Obstacle to Affordable, Quality Care

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September 17, 2008
Policy Analysis no. 621

by Shirley Svorny

Shirley Svorny is professor of economics and chair of the Department of Economics at California State University, Northridge, and an adjunct scholar at the Cato Institute.

Published on September 17, 2008

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In the United States, the authority to regulate medical professionals lies with the states. To practice within a state, clinicians must obtain a license from that state's government. State statutes dictate standards for licensing and disciplining medical professionals. They also list tasks clinicians are allowed to perform. One view is that state licensing of medical professionals assures quality.

In contrast, I argue here that licensure not only fails to protect consumers from incompetent physicians, but, by raising barriers to entry, makes health care more expensive and less accessible. Institutional oversight and a sophisticated network of private accrediting and certification organizations, all motivated by the need to protect reputations and avoid legal liability, offer whatever consumer protections exist today.

Consumers would benefit were states to eliminate professional licensing in medicine and leave education, credentialing, and scope-of-practice decisions entirely to the private sector and the courts.

Shirley Svorny is professor of economics and chair of the Department of Economics at California State University, Northridge, and an adjunct scholar at the Cato Institute.

More by Shirley Svorny

If eliminating licensing is politically infeasible, some preliminary steps might be generally acceptable. States could increase workforce mobility by recognizing licenses issued by other states. For mid-level clinicians, eliminating education requirements beyond an initial degree would allow employers and consumers to select the appropriate level of expertise. At the very least, state legislators should be alert to the self-interest of medical professional organizations that may lie behind the licensing proposals brought to the legislature for approval.

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