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Eliminating Scope of Practice and Licensing Laws to Improve Health Care

Published online by Cambridge University Press:  01 January 2021

Randall G. Holcombe
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Extract

Entry into the practice of medicine is heavily regulated through scope of practice and licensing laws that make it illegal for nonlicensed individuals to perform many medical services. As institutions are structured at the beginning of the twenty-first century, most regulation takes place at the state level, through state departments of health that establish criteria for performing different types of medical activities, and that restrict allowable activities for various types of health care professionals. The regulations over the activities of physicians are more uniform across states than for other health care professionals because, although the regulation is done by individual state governments, the standards for physicians are set by the National Board of Medical Examiners, a group controlled by physicians themselves. The justification for this regulation is that it produces higher quality health care. Some would make an even stronger argument that regulation is necessary because patients do not have sufficient knowledge to distinguish effective practitioners from ineffective ones.

Type
Article
Information
Journal of Law, Medicine & Ethics , Volume 31 , Issue 2 , Summer 2003 , pp. 236 - 246
Copyright
Copyright © American Society of Law, Medicine and Ethics 2003

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References

All states use the same U.S. Medical Licensure Examination created by the National Board of Medical Examiners to certify physicians, so physician certification is uniform across the states, although certification for other medical professionals is not. Guidelines for actual practice and standards of care are determined in large part by specialty societies, but these standards are different from those required to obtain a license to practice. Other health professionals also have national licensure examinations (physical therapists are an example), but their scope of practice regulations vary significantly from state to state.Google Scholar
Considering occasional instances of malpractice and questionable practices, one would not want to argue that these laws eliminate all medical care below a certain standard, or even that they assure patients that they will only be treated by adequately qualified medical personnel.Google Scholar
Other health care professionals are more limited by government because scope of practice regulations more severely restrict the activities of other professionals, and because in many cases other health care professionals by law must work under the supervision of a physician.Google Scholar
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There is a substantial literature on the costs and benefits of FDA regulation of drugs, sparked by Peltzman, S., “An Evaluation of Consumer Protection Legislation: The 1962 Drug Amendments,” Journal of Political Economy, 81 (1973): 1049–91, and Peltzman, S., Regulation of Pharmaceutical Innovation (Washington, D.C.: American Enterprise Institute, 1974).CrossRefGoogle Scholar
HMOs are an example of insurers that are selective regarding which medical practitioners they will reimburse for treatment of those they insure. Physicians may be quick to point out that HMOs do not always use quality of care as the criterion of whom or for what to reimburse, but this provides a good example of the trade-off people are willing to make between the quality of health care and the price they pay. While many people have no good alternative to their employer's health plan, others may be able to choose among plans their employer offers, and two-earner households can choose a family plan from either spouse's employer. Of course, people could also choose to buy their own insurance, although because tax laws have made employer-provided policies the norm, this is typically much more expensive.Google Scholar
Many physicians would be appalled at the idea of people getting medical treatment from a medical school dropout, or worse. However, for certain types of treatment (such as a cut needing stitches), that might be a reasonable option, and because of the high cost of medical care in a regulatory environment, the most common alternative may be self-treatment. This article is being written on a computer running the Microsoft Windows operating system, using Microsoft Word. I am willing to trust my computing requirements to a firm run by a college dropout (Bill Gates). Of course, my health is more important to me than my computer, and I am grateful that my health does not crash as often as my computer, although I am not sure how much credit 1 owe my physician for this.Google Scholar
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Franchise operations have similar characteristics, but require standardized appearance, products, and so forth, and franchise operators are often required to buy supplies from the parent company. Best Western does not have these kinds of standards, so Best Western motels are free to design their motels as they like, as long as they meet the quality standards Best Western imposes.Google Scholar
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Licensing boards apply a long list of standards to practicing physicians, but violations leading to a loss of the right to practice typically deal with billing fraud, drug violations, sexual transgressions, and other issues not related to competency. More important, when issues do arise, they are almost always reactive, looking at accusations brought against physicians — there are no proactive evaluations of skills, knowledge, or practice.Google Scholar
Technically, pilots who fail the test retain their license, but are not allowed to fly passengers until they demonstrate the skills to pass the test. All pilots (not just commercial airline pilots) must pass a biennial flight review, which includes a demonstration of flight skills and a written knowledge examination on the ground (regarding rules and procedures) to retain their flying privileges. Commercial airline pilots must pass such tests every 6 months. In addition to the test of flight skills, commercial airline pilots must also pass a physical examination every 6 months.Google Scholar
A physician suggested to me that as they are currently administered, specialty examinations do not test one's skill at being a doctor in the same way that the FAA pilot examinations test one's skill at being a pilot, so recurrent testing would not serve the same purpose. That physician also told me that it is not unusual for doctors to know other doctors who they believe are marginally competent or incompetent, but are still allowed to practice. Both of these observations suggest that the current system, which is nominally intended to ensure that patients do not receive substandard care, does not always achieve that end. No system is perfect, so one question — but not the only question — is whether the market-oriented safeguards discussed here would produce better care than the current system of government regulation. Another question, considered below, is whether consumers should be allowed to make what experts believe to be inferior choices.Google Scholar
This is not intended to imply that physicians have purposefully designed an inferior system of certification, but rather to suggest that even when people believe they are acting in the public interest, their view of the public interest tends to be colored by their own interests.Google Scholar
In addition to practicing physicians, the AMA also admits residents and medical students. For the AMA to serve as a brand name that would ensure the current quality, it would have to require that student members and resident members differentiate themselves as such.Google Scholar
Presently, many physicians are not AMA members. In one sense, the AMA is not a credentialing society, and board certification may serve as a better indicator of quality. However, AMA membership would take on a larger role if the current government certification requirements were removed and more physicians would join. It is used as an example here because it already exists, and in effect sets the state certification requirements, so it would be a close substitute for the current regulatory regime.Google Scholar
My conjecture that it does not take an M.D. to administer a physical exam comes from my own experience going to the doctor for a physical. Nearly the entire exam is administered by a nurse practitioner, with my doctor just stopping in at the end to see whether I appear to be breathing.Google Scholar
For an analysis of the way in which markets allow people to make use of the knowledge of others, see Hayek, F.A., “The Use of Knowledge in Society,” American Economic Review, 35 (1945): 519–30.Google Scholar
For an interesting take on this idea, see Sobel, R.S., “Public Health and the Placebo: The Legacy of the 1906 Pure Food and Drug Act,” Cato Journal, 21 (2002): 463–79. Sobel notes the evidence that placebo treatments do improve health outcomes, so preventing them means keeping some people from getting treatment that would improve their health. Sobel focuses on the vast patent medicine industry at the beginning of the twentieth century that was negatively affected by the passage of the Pure Food and Drug Act in 1906.Google Scholar
This argument deals with people who are voluntarily seeking treatment for some medical condition. A new set of issues arises for people with contagious diseases, which a society as a whole has an interest in containing. People with contagious diseases may be in a position to violate the rights of others by passing them along, and there may be an argument for some social mechanism to prevent the spread of disease, much as there are laws against drunk driving. Note, however, that today's laws do not require people with contagious diseases to seek treatment.Google Scholar
This paternalistic argument is oriented toward what is best for the purchasers of health care. A broader argument might also include an analysis of the right of people to earn a living in the profession of their choice. See, for example, Sandefur, T., “The Common Law Right to Earn a Living,” Independent Review, 7 (2002): 69–90.Google Scholar
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