NCPA - National Center for Policy Analysis

Relaxing Licensing Requirements on Nurse Practitioners

March 7, 2014

Peeling back occupational licensing restrictions on nurse practitioners could increase access to care for many patients, say researchers for the National Bureau of Economic Research.

How do occupational licensing laws -- which require a license before a person can practice in a specific field -- impact wages costs and quality of care within the health care industry? Physicians, nurses and dentists are all licensed, as are 76 percent of non-physician health workers. The study's authors looked into the regulations that apply to nurse practitioners (NPs), registered nurses who have more advanced education and training than the typical nurse. Usually, an NP completes a master's program or PhD program that provides training for diagnosing common illnesses, managing chronic conditions and prescribing medications.

Laws concerning NPs vary across states, but the three biggest regulations that affect NPs are those that limit their ability to write prescriptions, to practice independently and to receive direct reimbursement from insurers. The authors found that many of these common restrictions actually increase health care costs.

  • When doctors are required to supervise NPs when prescribing controlled substances, physician wages increase by 7 percent while nurse practitioner wages decrease by 14 percent. This, the authors say, indicates that there is some substitution between the two jobs.
  • Those restrictions also increased the number of physician hours worked by 6 percent to 9 percent while decreasing the number of hours worked by nurse practitioners by 6 percent to 14 percent.
  • The price of a well-child medical exam rises by 3 percent to 16 percent due to these laws.

However, none of these regulations appeared to reduce infant mortality rates or malpractice premiums. The authors concluded that restrictive state licensing practices only increase the cost of medical care without increasing the quality of that care. These results indicate that NPs could be the key to increasing access to care for patients by lowering costs and increasing the number of individuals capable of providing routine medical care.

Source: Morris M. Kleiner et al., "Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service," National Bureau of Economic Research, February 2014.


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