Medical licenses are not rent-seeking
Like many of you, I read James Hanley’s fascinating post the other day about rent-seeking. I look forward to his upcoming post wherein he offers more detail on his proposed amendment to ban it. Whether or not I agree with it, I have no doubt it will be well-worth reading and considering.
That said, there was something in his first post that I feel merits a dissenting response. Specifically:
Types of special privileges include monopoly and cartel protections, subsidies, tariffs and quotas, preferential tax treatment, and barriers to entry such as occupational licensing.
He elaborates later:
- Occupational licensing does not mean an end to regulatory requirements for safety and health. For example, I used to drive a cab, for which I had to earn a cabbie’s license. Eliminating that special license would not mean that I couldn’t be required to have a safe driving record, or that the vehicles I drove could be required to go through regular safety checks.
- Licensing should not be confused with credentialing. Those with credentials could charge more because they’d be more trusted. Those without credentials would find it harder to get customers, would have to charge a lower price, and would find it hard to retain customers unless they proved themselves in performance.
- While the public tends to believe that occupational licensing is for consumers’ benefit, occupational licensing laws are most often sought after by practitioners in the various industries. Liberals don’t generally believe businesses have the customers’ best interests at heart, and I only ask them to consider that general position here as well.
Perhaps unsurprisingly, I do not agree with him here. While I have no great love for the tedious and laborious process of obtaining a medical license, I believe it is far more than a professional form of rent-seeking.
First, a concession. As James alluded in his piece, this was the element of his argument most apt to raise hackles with his liberal friends, among whom I would number myself. He offered to go into greater detail in the comments to his post, and for all I know may have already addressed everything I will lay out from this point forward. I have not have the opportunity to read all the comments in detail, so if this entire post is superfluous, I apologize in advance for wasting everybody’s time.
However, let’s assume I have something novel to say. My counter to James has a few facets. That said, I will begin with yet another concession. Professional licensing, more specifically efforts to prevent licensure of other, potentially-competitive professionals in the same field, most certainly can be a form of rent-seeking. An easy example is the well-documented tension between some physicians and nurse practitioners, which in some cases has taken the form of lobbying against licensure for the latter by the former. While there are, in my opinion, legitimate reasons for objecting to licensure for healthcare providers if you feel their practices are unsafe, I would be a fool to deny that physicians have engaged in asinine and counter-productive efforts to elbow other health professionals out of a position to compete with them. To whatever extent James’s proposed amendment would mitigate the harms from this kind of idiotic turf war, I’m all ears.
But medical licenses serve a few very useful purposes, the loss of which would be a harm to consumers and patient safety.
While the requirements for licensure vary from state to state, they all pretty much require a few things. You have to have graduated from an accredited medical school, have completed some degree of post-graduate training, and have passed all three steps of the United States Medical Licensing Exam (USMLE). This is, to my mind, a minimum standard of competence that anyone who would hang out a shingle as a doctor should meet.
Without licensure, the onus of determining if a provider’s credentials are sufficient to assure competence falls unduly upon the patient. Assuming that James wishes to retain medical school accreditation under his new system, we would then expect patients to know that Johns Hopkins is accredited but, say, Northern Idaho Correspondence School of the Health Sciences isn’t. If some fly-by-night entity crops up that offers “accreditation” outside of the LCME, to what degree would patients be responsible for parsing that distinction?
Further, a medical license does more than merely communicate to patients. It also confers a set of privileges. Without licensure, how will it be determined who can write prescriptions for amoxicillin or Vicodin? As unpleasant as obtaining a medical license may be, it’s nothing compared to the process I have had to go through to get privileges at the hospitals where I practice. Would I need to go through a similar process with each and every pharmacy (or, at least, pharmacy chain) before they will agree to let me prescribe medication? Again, assuming that we’re not jettisoning the requirement for some kind of expertise before prescribing privileges are conferred, without licensure how will this expertise be verified?
Finally, licensure provides a level of protection for patients in the case of physician misconduct or incompetence. Patients who believe they have been harmed by a reckless, impaired or negligent physician can complain to the board of licensure at no risk to themselves. (Having been the lucky recipient of a wholly meritless complaint once, I am not unaware of the potential the system has for abuse.) Absent board oversight, the only recourse a patient who suffered at the hands of such a physician would have would be a lengthy and potentially costly malpractice suit. Since the bar for winning this kind of lawsuit is actually quite high and all manner of harms can be done without outright malpractice being committed, getting rid of licensure actually would leave patients are greater risk for harm than before and let many physicians who ought to be penalized off the hook.
I can see James’s argument that licensure has the potential to be a form of rent-seeking, and as such understand why he would be in favor of abandoning it. But licensure serves many useful purposes, which we should not try to do without.