Optimizing the regional availability of physicians is a pressing issue. Due to changes in the demographic composition of the US population, the number of states that will experience mismatches in physician availability is expected to significantly increase in the near future. Although it would not raise the overall number of physicians, allowing universal licensing recognition (ULR) for physicians may optimize their geographic distribution. This regulatory relaxation allows out-of-state physicians to practice with their current licenses issued by another state. However, legislators did not consider ULR until the early 2010s. This has restricted physician availability and potentially harmed patient well-being in many states.

Recent studies show that ULR increases the number of physicians within states, but its effects on patients’ well-being and access to physicians have not been analyzed. Furthermore, similar preexisting policy reforms complicate the measurement of ULR’s effects; for example, the Interstate Medical Licensure Compact (IMLC) standardizes the relicensure processes for those who obtained their physician licenses from 1 of 41 member states. Universal licensing recognition is more comprehensive than the IMLC because it recognizes licenses from any state if the licensees’ qualifications meet certain requirements, such as similar scope of practice, education, and experience.

Our research evaluates the impact of ULR on health care usage from 2018 to 2023—separately from the IMLC’s effects—by analyzing the seven states that passed the IMLC before adopting ULR for physicians: Arizona, Idaho, Kansas, Mississippi, Montana, New Hampshire, and South Dakota. Our findings reveal that adopting ULR for physicians increased the proportion of people who have personal doctors or health care providers, especially older adults, and reduced the proportion of people who did not see doctors because of costs. Additionally, ULR increased physician availability by increasing out-of-state practices, particularly those established by physicians from non-IMLC states; ULR did not cause physicians to move to other states. Thus, the availability of physicians and the degree of patient well-being did not increase in the three states that added residency requirements to their ULR policy: Arizona, Kansas, and Mississippi.

Physicians may establish out-of-state practices rather than move because of the prevalence of noncompete agreements, which prohibit physicians from working in other hospitals located within a certain distance from their employer hospitals during and after their employment. These agreements also limit physicians from working more than their contracted hours in their regions, so out-of-state practices are the only way for physicians to increase their earnings.

Overall, our study shows that ULR can increase physician availability and improve patient well-being. This conclusion is consistent with prior research on the benefits of reducing occupational licensure regulations. Although some labor market regulations are needed to protect patients from incompetent or unscrupulous providers and to maintain the quality of services, our research suggests that some existing regulations are overly restrictive and harm patients.

Note
This research brief is based on Yun taek Oh and Morris M. Kleiner, “Does Universal Occupational Licensing Recognition Improve Patient Access? Evidence from Healthcare Utilization,” National Bureau of Economic Research Working Paper no. 34030, July 2025.