The most life-changing innovation to come along since my family moved to our urban neighborhood in Washington, D.C., a decade ago has been the appearance of Uber, the app that allows someone to easily hail a ride using a smartphone. Besides making my car-less life much easier, it represents a tangible economic gain to society by allowing cars to be used much more productively.

A similar, though low-tech, practice in the medical profession known as locum tenens increases people’s access to doctors and helps tamp down health care costs. However, the Internal Revenue Service may effectively end locum tenens, claiming (though offering no evidence) that the practice could help doctors to cheat on their taxes.

Temporary doctors / Locum tenens is a formal market for doctors employed on a temporary basis. While the vast majority of doctors employed by hospitals have a long-term contract, many medical offices find it necessary or convenient to also hire some doctors short-term, typically for a few weeks at a time. Hospitals use locum tenens to cover for doctors on vacation or to plug a hole between a resignation and a new hire. Sometimes it makes sense for hospitals experiencing a surge in demand to hire a series of doctors on short-term contracts rather than make a costly commitment to permanently add a new doctor to their staff. In rural, out-of-the-way markets, recruiting a full-time specialist can be quite difficult to pull off; bringing in someone for a week or two a month might be the only viable way to supply a necessary service.

On the supply side, it is easy to see why this model might be attractive for a semi-retired doctor. Rather than have a 40-hour-a-week job with regular on-call hours, a locum tenens could limit himself to working a week or two a month.

Tax evasion? / The problem is the IRS does not like how hospitals go about securing these doctors. Hospitals typically contact a locum tenens firm that has a stable of doctors on its roster and the company essentially acts as a middleman to place a doctor with a hospital. The hospital pays a fee to the locum tenens firm and treats the doctor as an independent contractor. The IRS claims that doctors acting as independent contractors may underreport the taxes they owe to the government, and wants to change the nature of the contract to make the doctors full-fledged employees of any hospital they work for.

However, the IRS has trouble explaining how this tax larceny might work. The hospitals still issue 1099s to their contractors. And hospitals are large information reporters, not small mom-and-pop firms that might bungle their accounting or be tempted to not report and abet tax fraud. Besides, what benefit would hospitals or locum tenens providers gain from misreporting? If hospitals cannot be trusted to issue 1099s, who can the government trust?

Nonetheless, the IRS wants to force hospitals to turn these short-term doctors into full-time employees for a short period of time. And the hospitals would incur a significant cost to do so. For starters, they must put the doctors on the hospital payroll, which may qualify the doctors for the hospitals’ full panoply of employee benefits, including 401k, health insurance, and myriad and sundry other benefits that someone coming in for a handful of weeks likely would not use. Further, hospitals may have to include the doctors in the hospital’s existing pay scale, instead of tailoring compensation to the preferences of the temporary fill-in. This convoluted stricture makes being a doctor on short-term employ much less attractive for many doctors seeking such positions. The transaction becomes much more burdensome and complicated, with the middleman locum tenens firm (and the benefit it supplies) essentially shoved aside.

If the government really thinks that tax evasion is a problem in this profession, there are easier ways to fix it besides eradicating an entire market.

Benefiting no one / If the government really thinks tax evasion is a problem in this profession, there are easier ways to fix it besides eradicating an entire market that developed organically. More audits or a closer scrutiny of hospitals that avail themselves of this practice would clearly be a more cost-effective way of dealing with this problem—if it really does exist.

But as it currently stands, demanding that doctors employed on a short-term basis no longer be independent contractors is a step away from a market solution that will result in fewer productive and engaged doctors bothering to seek out employment. That, in turn, will result in higher costs and less patient access to doctors.

Adopting a policy that harms public welfare in every aspect is a tough feat to pull off, but a government edict that effectively ends locum tenens earns that dubious distinction. It is the equivalent of the various states and municipalities that attempt to ban Uber from operating in their jurisdiction, something that is always ostensibly done “for the benefit of the consumer.”

But those edicts are at least easy to comprehend, since banning Uber would help existing market participants. Ending locum tenens helps no one: not doctors, not patients, and definitely not the government, which would almost surely end up with less tax revenue as a result.