NCPA - National Center for Policy Analysis


December 8, 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, explains Svorny, 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, 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, and the process hasn't done much to prevent bad doctors from practicing medicine.
  • In addition, 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, says 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.

Additionally, says Devon Herrick, a senior fellow with the National Center for Policy Analysis, restrictive medical licensure and numerous other needless regulations have kept physician care a cottage industry.

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.

Licensing is the original sin of American health care, says 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.

Source: Jillian Melchior, "Medical Licensing Impedes Quality, Affordability of Care," Heartland Institute,  December 1, 2008; and Shirley Svorny, "Medical Licensing: An Obstacle to Affordable, Quality Care," Cato Institute, September 2008.

For Cato report: 


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