Unbiased Analysis of Today's Healthcare Issues

Medical Licensing: Improving or harming the quality of medical care

Written By: Jason Shafrin - Oct• 10•08

One way to insure that you have a high quality doctor is that they have a medical license.  In fact, no doctor can legally practice in the United States without one.  Yet Shirley Svorney’s article claims that we can reduce cost any maybe even improve quality by eliminating licensing requirements.

Many readers may pause here and say that they would never go to a an unlicensed medical doctor.  Neither would I.  However, it is important to distinguish between a license and a credential.  Medical licensing prohibits workers from preforming certain tasks without the license.  Private organizations bestow credentials to doctors who have reached a certain quality or knowledge threshold.  How would the world look without medical licensing?

If you were seriously ill, you would be sure to go to a high quality doctor.  You would be able trust that your doctor had a minimum competency level if they had given credentials.  For instance, most specialty physicians today must be board-certified.  Thus, life without licensing may look similar to life with licensing.

Let us say you had a basic cold and you needed some medical attention.  A nurse practitioner would be perfectly qualified to handle this case.  [Svory’s article cites the AMA’s Council on Medical Education which finds non-physician clinicians such as NPs can provide an acceptable level of care].  However, if the government mandated that you must see doctor first, this would make the health care visit more expensive.  Thus, licensing has increase the cost of medical care without improving quality.

Other problems with licensing.

Too much education: Licensing often requires individuals who wish to enter the licensed field to receive “too much” education.  As a PhD student, you may believe that I think that education is like Green Bay Packers victories: more is always better.  However, increased education requirements increase labor costs and decrease labor supply.  For instance, “starting in 2012, California will require new audiologists to have obtained a doctorate (Au.D.), raising concerns that the legislation would exacerbate a shortage of audiologists.”

Turf Battles: One reason licensing is so popular is that it decreases competition.  Optometrists and ophthalmologists may be able to preform some of the same tasks, but ophthalmologists can decrease competition by prohibiting optometrists from conducting certain procedures.

Licensing may not truly improve quality. Dr. Svorny’s paper finds many examples to show that licensing may not be improving quality as much as we had hoped.  For instance:

  • “A study of Florida physicians with malpractice payouts over $1 million found that only 16 percent had been sanctioned by the state medical board.”
  • “According to Dr. Derek van Amerongen, Chief Medical Officer of Humana Health Plans of Ohio and Indiana: ‘People and the legislatures read way too much into licenses. They are extremely poor proxies for quality and knowledge.'”

Without licensing what will insure high quality care?

Credentials could replace licenses.  Credentials would verify a minimum quality level, but not restrict the scope of practice of other practitioners.  Further, a doctors reputation is important. If the doctor preforms poorly, they will lose patients.  In the past, it may have been very difficult for patients to verify quality; with the advent of consumer guides such as Consumer Reports, HealthGrades, Angie’s List, and insurer evaluations, patients can now more easily measure physician quality.


“Many of the most powerful innovations that disrupted other industries did so by enabling a larger population of less-skilled people to do in a more convenient, less-expensive setting things that historically could be performed only by expensive specialists in centralized, inconvenient locations.”

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  1. […] Certification, not licensure.  Doctors are expensive.  Why?  For three reasons: 1) they provide high value services, 2) going to medical school is costly, 3) they participate in a cartel known as the AMA. It has been shown by many studies that the AMA cares more about physician profits than patient health. Because physicians need a license to practice, they limit supply and drive up prices.  Costs would drop if only certifications were required.  (See my series of posts on licensure).  In many instances, the certification/licensure debate would not produce any real change because physician training for both licensure and certification would be nearly identical.  On the other hand, patients could pay more to see doctors with better/more certifications while still being able to save money by going to a provider with worse/less education.  Certifications would also allow talented physicians to perform cross-discipline procedures.  For instance, ophthalmologists have frequently prevented optometrists from conducting certain treatments through…. […]

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