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Lifting Doctor-Licensing Restrictions Could Drive Competition, Lower Costs


Nurse Julie Ahn checks the arm of Aaliyah Clark,4, after she received an immunization shot at the city of Newark's 'School Bus Express' free immunization program for Newark youth on August 28, 2013 in Newark, New Jersey.(Spencer Platt/Getty Images)

Doctors are shielded from the competition that animates much of the economy. A number of overlapping regulations restrict the number of foreign doctors, bar nurse practitioners from performing traditional doctor duties, and keep telemedicine from replacing in-person doctor visits. Advocates of these rules say that limiting medical care to doctors with the best training ensures quality. The problem, critics say, is that it raises costs and limits access to doctors in certain regions. It's an issue of supply and demand.

Loosening those restrictions could help push down health care costs by increasing the supply of medical services. Such a move would mesh with Obamacare's focus, through new rules and incentives, on delivering the same or better care at a lower cost.


Many doctors in the United States already come from abroad. Roughly 32 percent of all practicing doctors in the U.S. graduated from foreign medical schools, according to a May 2012 study in the Public Library of Science. But they face a years-long slog of residency if they want to practice in the U.S., no matter what their previous qualifications were.

Foreign-educated doctors are more likely to spread out to areas with a shortage of physicians, bringing down costs and expanding access to care. "If we can get doctors at a lower cost from elsewhere in the world then we could save enormous amounts of money," Dean Baker, an economist at the left-leaning Center for Economic and Policy Research, says.

Regulations also restrict nurses from alleviating some of the nation's care shortage. In 2012, 32 states—including California, Florida, and Texas—blocked primary-care nurses from prescribing medication or diagnosing or treating patients without aid from a licensed physician. But there's no evidence of a large difference in quality or even treatment course between physicians and nurse practitioners, at least in the primary-care space. "Clinical outcomes are similar," according to a May 2013 Health Affairs policy brief summing up a review of 26 studies.


Another systematic review published in 2002 by the British Medical Journal found that patients were often more satisfied with primary care from nurses than physicians and suggests why: Nurses tend to communicate better, offer more information about treatment, and spend more time with patients. The Health Affairs brief also found higher satisfaction with nurses, and suggests that nurses' "patient-centered education" may account for the difference.

But physicians' interest groups have resisted increasing the scope of nurses' practice. In August, extensive lobbying by the California Medical Association stymied the state Legislature's effort to expand nurses' scope of practice. The American Medical Association has similarly advocated limiting nurses' roles; an article on the AMA's news website notes that the organization's "policy supporting a physician-led, team-based approach to care."

Like nurses, practitioners of telemedicine face strict licensing rules, even as the demand for doctors who can work remotely grows. Many hospitals now rely on companies to analyze scans offsite, the Advisory Board, a health-care consultancy, found in a 2012 report. The number of radiology practices offering off-hours teleradiology climbed to 55 percent in 2011, up from 15 percent in 2003. And there are now 40 teledermatology programs in the U.S., according to a 2012 report.

Many states restrict the practice of telemedicine by requiring doctors to hold special licenses to offer remote diagnoses. Nebraska bars reimbursement to remote doctors if patients are within 30 miles of comparable in-person service, and other states have similar requirements. Medicaid programs in California, Oklahoma, and elsewhere require that patients travel to the hospital or other official settings to be seen, even though some patients find the visit difficult. "For many mental-health patients, it can be stressful to travel to the doctor's office," Joseph Kvedar, the director of Partners HealthCare's Center for Connected Health, recently noted.


There's some federal support for loosening telemedicine restrictions. "I think we can encourage states to streamline [license requirements] or form reciprocity agreements," Jessica Rosenworcel, a commissioner at the Federal Communications Commission, said at a recent conference. Rosenworcel encouraged Congress to consider taking action; lawmakers had previously passed a law allowing doctors affiliated with the Department of Veterans Affairs to practice remotely.

It may be a mistake to lean too much on the theory that increasing the supply of medical services will reduce medical costs. Princeton health economist Uwe Reinhardt notes that one of the key problems in the healthcare system is "supplier-induced demand." Many people do what their doctor tells them to do without questioning, and more doctors—or nurses performing what may be traditionally thought of as doctors' work—may mean more doctors' orders. Increasing the number of physicians may just increase the use of health services.

But the level of AMA resistance to expanding nurses' practice suggests that the organizationt doesn't buy that argument. And the Affordable Care Act contains a number of payment regimes aimed at discouraging excess medical care: high-deductible plans encouraging patients to shop among providers for cheaper care; bundled payments, which reimburse providers for an "episode" of care rather than each individual service provided; and accountable-care organizations, which aim to lower costs by improving coordination among providers. The effect of these reforms could level supplier-induced demand in the future, leading more competition to take hold, especially if the number of doctors and scope of nurses' duties expands. That might lower health care costs without sacrificing quality, which is surely a win.

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