When Doctors Get Between You and Your Health Care

With pressure to find ways to slow the growth of health care costs, many states have granted nurse practitioners more autonomy in providing patient care. However, this type of commonsense reform can run into lobbying from special interests seeking to maintain a monopoly on service delivery, as lawmakers in California are finding out.

California policymakers are considering a move to expand nurse practitioners' ability to practice without doctor supervision in hospital and clinical settings. Increasing their autonomy is designed to help address the state's shortage of doctors, as well as an increased demand for medical services as more patients gain insurance coverage under the Affordable Care Act.

Initially the bill would have permitted nurse practitioners to work completely independently, but intense lobbying from the California Medical Association – a trade association for the state's doctors – prompted an amendment to the bill that would limit the settings where nurse practitioners could operate without supervision.

Currently 26 states and the District of Columbia allow nurse practitioners to practice independently, with 17 of those states permitting them to prescribe medicine. Groups such as the California Medical Association argue that requiring nurse practitioners to practice under doctor supervision helps ensure consumer protection, suggesting that independent nurse practitioners will provide lower quality care than a doctor with more training. However, a growing body of research shows that patients have no discernible differences in health outcomes in states where nurse practitioners are allowed to practice with greater autonomy. In fact, patients report better experiences in office visits, perhaps because an increased supply of independent practitioners leads to each patient getting more time to meet with their provider and facilitates greater competition to provide the best possible patient experience. 

The current political situation in California reflects the typical dynamic of occupational licensing considerations. The supporters of licensing rules often benefit from licensing because it protects them from competition. With improved technology offering greater information sharing, it is also worth questioning the effectiveness of some licensing rules. Today, the pervasion of free online reviews on nearly every service-based business provides consumers with more information about service quality than any license can convey.

The fight over licensing rules certainly isn't limited to health care; licensing even impacts professions that post little risk to consumers, such as hair braiding. In 2011 a Utah state legislator introduced a bill to exempt hair braiders from the state's requirement that individuals working in the hair industry perform 2,000 hours of coursework and obtain a cosmetology license. The bill failed due to lobbying from the cosmetology industry.

Pascal-Emmanuel Gobry recently analyzed the use of nannies as an example of an unlicensed industry that demonstrates who the winners and losers are when a profession is protected with licensing requirements. He explains that those who employ nannies are a high-income and politically well-connected group. They're exactly the type of consumers who would be able to organize to demand licensing protection if, in fact, licensed nannies would provide higher quality childcare. Rather, it's likely that licensed nannies, shielded from competition from new entrants to the service, would provide lower quality care at a higher price, so parents have not demanded state licensing.

The costs of occupational licensing are not well understood. Just in the past year, two prominent labor economics textbooks added the topic to their contents. While the issue has received relatively little attention from economists, the growth of licensing since the 1970s may be significantly limiting economic growth. Licensing is designed to protect those who provide a service in a pre-approved manner. It prevents entrepreneurs who see an innovative new way to provide a service from entering the industry, and stifling this competitive process limits improvements to our standard of living over time. In the health care industry, it is clear how we would benefit from increasing the supply of medical care to improve patient access and lower prices. California policymakers should permit incremental increases in nurse practitioners' autonomy, and protests from the California Medical Association should be taken in context, coming from a group who is protected by the status quo.