licensing

THE CASE AGAINST MEDICAL LICENSING
by Lawrence Wilson, MD

Licensing practitioners to protect the public and hold practitioners accountable is often taken for granted. Having received medical training and practiced as an unlicensed physician for 22 years, I have come to appreciate another perspective. Nobel prize-winning economist Milton Friedman wrote:

"... I am persuaded that licensure has reduced both the quantity and quality of medical practice...It has reduced the opportunities for people to become physicians, it has forced the public to pay more for less satisfactory service, and it has retarded technological development...I conclude that licensure should be eliminated as a requirement for the practice of medicine."(1)

Nobel Prize-winning economist George J. Stigler of the University of Chicago wrote:

"As a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit".(2)

Lori B. Andrews, Professor of Law and Norman and Edna Freehling Scholar, Chicago-Kent College of Law, wrote:

"Licensing has served to channel the development of health care services by granting an exclusive privilege and high status to practitioners relying on a particular approach to health care, a disease-oriented intrusive approach rather than a preventive approach....By granting a monopoly to a particular approach to health care, the licensing laws may serve to assure an ineffective health care system."(3)

Ron Paul, MD, a practicing obstetrician and a Congressman from Texas, wrote:

Let us allow physicians, hospitals and schools to spring up where they're needed, abolish the restrictive licensure laws, and simply invoke the laws against fraud to insure honesty among all providers of health care...That will make health care affordable for everyone..."(4).

The idea of deregulating health practitioners may seem extreme. Let us examine why it is not as radical as it may sound.

HISTORY OF LICENSING

Many people take health care and other occupational licensing for granted. However, for her first 140 years, America had essentially a free market in health care services. Few licensing laws or other barriers to entry into the healing arts existed.(5) The American founders opposed licensing, a common practice in England. They believed in 1) a right to work, 2) a right to freedom of choice for practitioners and consumers and 3) the government as a neutral party to protect those rights.

Herbalists, nature cure therapists, hydrotherapists, osteopaths, allopaths, homeopaths and eclectic practitioners offered services. Many types of healing schools and clinics operated without government interference.

At this time, America was among the healthiest nations. Competition between practitioners and healing modalities kept prices down. Low costs made health care widely accessible. The government kept hands off except that laws against fraud and negligence protected the consumer. No healing modality or group of healers had a legal advantage over the others. Whoever helped people the most prospered. There was no need for insurance. Organizations similar to Consumers Union sprung up to inform people about the best doctors and the best methods of treatments. Certifying groups set standards for quality and training.

Many people used private practitioners. Others joined associations such as the Lions Club or the Elks Lodge. Often, members paid annual dues and the societies hired doctors to care for the members and their families if they became ill or unable to work. Government welfare programs later drove these societies out of business by competing with them.

Others in early America formed community health associations. They were similar to HMOs except owned by their members. Their incentives were to offer the best care at the best prices. They were cooperatives that hired doctors to take care of their members. If members were unsatisfied with the doctors, they hired others. Laws giving tax breaks for employer-based health care did not exist, so if one did not like one’s community health association, one could simply try another. A variety of church and community-supported private charities served those unable to pay for health care.

Serious efforts to change the situation began in 1847 with the formation of the American Medical Association or AMA. The AMA said they wanted to protect the public against 'quacks'. The prime objective, however, was to increase the income of its members, the drug doctors or allopaths. A report submitted at the AMA convention in 1847 was unusually candid:

"...The very large number of physicians in the United States has frequently been the subject of remark...No wonder that the merest pittance in the way of remuneration is scantily doled out even to the most industrious in our ranks ...".(6)

THE FLEXNER REPORT

The method adopted by the AMA to increase their members’ incomes was to eliminate the competition by passing licensing laws. Virtually every law restricting the practice of medicine in America has been enacted not on the crest of public demand, but due to intense pressure from the political representatives of physicians.

The AMA's efforts culminated in 1910 when Abraham Flexner, a former school director and not a physician, was commissioned by the Carnegie Foundation to evaluate medical schools. He was the brother of Simon Flexner, head of the Rockefeller Institute for Medical Research. Working closely with the AMA, he completed a survey of medical schools that was practically a carbon copy of a report the AMA had prepared several years before. The report found all but the drug medicine schools "substandard".(7)

With plenty of financial backing, the Carnegie Foundation and AMA lobbied state legislatures to pass licensing laws ‘to improve health care’. The government, they suggested, should also subsidize the new pharmaceutical industry and drug research. Their efforts succeeded and by 1920 most states had licensing laws. The number of healing schools fell from 140 in 1900 to 77 in 1940.(8) Schools failed because their graduates could no longer practice. All schools that accepted women were closed, as were all but two that trained African Americans. Only drug medicine schools remained.

Licensing remains the basis for virtually total AMA union control of medical education, hospitals, clinics and laboratories. In recent years, chiropractors, physical therapists, psychologists, cosmetologists, naturopaths and others have pushed through their own laws in some or all states. Instead of getting rid of the system that shut them out for years, they have joined it, increasing its power and prestige. Many states now have 30 or more licensing boards.

THE QUALITY OF CARE

Any public benefits of licensing must be weighed against the following problems of licensing:

1. Licensing restricts healing. Healing is a gift and an art. Many gifted individuals cannot, for various reasons, complete the 6 to 12 years of schooling necessary to obtain a medical license. Licensing deprives the population of the skills and art of these individuals, and prevents many gifted individuals from sharing their skills. The public is forced to patronize only those who can 'hack' the medical courses and exams, regardless of whether they are the most gifted healers.

2. It interferes with the doctor-patient relationship. A licensed physician is no longer responsible just to his patient. His loyalty is divided between satisfying his licencing board and satisfying the patient. The licensing board comes first if he wants to stay in practice. Anything that comes between doctor and patient tends to lower the quality of care.

3. It stifles innovation, both in education and research. Not only do licensing requirements control what is taught in medical schools, but many government and university research positions require medical degrees and medical licenses. Yet innovations in every field often come from people in other fields who do not possess advanced degrees and licenses. Morbidity and mortality resulting from restriction of innovation due to licensing laws is incalculable. Dangerous older methods are used while alternatives receive little attention.

4. It protects incompetence and outdated, dangerous drugs and procedures. Licensing laws protect "accepted practice" methods. These include many questionable and dangerous therapies and procedures. Many physicians are hesitant to deviate from the accepted methods, for fear of losing their licenses. Also, it is harder to sue for malpractice when an accepted, but dangerous procedure goes wrong. Furthermore, doctors are much less likely to speak out and testify against other doctors, as they risk censure by their licensing board. Original AMA guidelines discouraged quality comparisons between doctors.

5. The shield of the license results in sloppier practices. Licenses gives doctors and hospitals an aura of respectability and often arrogance that results in mistakes and shoddy work. A recent article in the Journal of the AMA(9) revealed that medical mistakes are now the third leading cause of death in America.

COST OF HEALTH CARE AND ACCESS TO CARE

Licensing contributes to higher costs because:

1) Stifling innovation raises costs dramatically.

2) Reduced competition among doctors and clinics increases the cost of services.

3) Poorer quality of care and a sicker population raises health care costs.

4) Increased litigation due to sloppiness and false expectations raise costs. Litigation is an important cost factor in medicine today. Among other things, it causes physicians to practice 'defensive medicine'. Many unnecessary tests and procedures are performed, all of which raise costs.

5) Complying with licensing requirements, many of which have little to do with patient care, greatly increases the cost of services. Hospitals in some states have to answer to 20 or more types of state and federal licensing agencies.

Licensing also decreases access to care because:

1) Fewer practitioners are available and

2) Artificially-created practitioner shortages due to licensing inflate prices that limit many people's access to care.

OTHER PROBLEMS WITH LICENSING

If medical and economic reasons are not enough to question licensing, other problems with licensing include:

1. Licensing criminalizes the population. Medical practice acts convert thousands of citizens into criminals, although they have done no harm. In most states it is a criminal offense to "diagnose, prescribe, or treat anything, mental or physical, real or imaginary" (quoted from the Arizona Medical Practice Act). Heavy-handed tactics including raids by armed SWAT teams have been used to enforce licencing laws and terrorize innocent people.

2. Control is tyrannical. Licensing boards possess police power. However, their members are not elected by the public. Boards are mainly composed of members of the profession. Ordinary citizens have little or no representation, but must abide by decisions of the licensing board. This amounts to tyranny.

3. Licensing greatly expands the power of the government. Licensing shifts responsibility and power from the consumer to government agencies. It is not a coincidence that all modern dictators have advocated government control of health care. It is an excellent way to subdue dissent in the population. If one does not go along with official doctrines, one may lose one’s health care benefits or be imprisoned as mentally ill. Certification and registration, the alternatives to licensing, do not increase the power of the state.

4. Licensing debates waste legislators’ time. An Arizona state legislator told me the legislature spends up to 85% of its time resolving turf conflicts between licensed groups. The time could be far better spent.

5. It increases unemployment. Licencing keeps many potential healers out of the job market.

6. It severely distorts the health care marketplace. Licensing amounts to a huge government subsidy of certain groups and healing arts, and the suppression of others. Such distortion has decidedly negative effects upon health, the economy and the quality of life in America.

7. It creates false expectations. Licensing gives the consumer of health care a false sense of security in his physician that leads to false and often unfulfilled expectations. This contributes to dependency, and later to anger and frustration. The malpractice crisis is in part due to high expectations of the public, generated in part by the licensing of physicians.

8. It is discriminatory. Licensing discriminates against the poor and less academically inclined. They have difficulty meeting licensure requirements but may be superb healers. Licensing has also been used to prevent women, African Americans and other ‘undesirables’ from entering the healing profession.

9. It tends to create a privileged class. This was the original intent of licensing, but is accentuated in a modern welfare state. Welfare programs paid for by all citizens such as Medicare only reimburse licensed practitioners. In Arizona, registered dietitians fought hard to become licensed. There was no need except to receive insurance payments.

Medical licenses also serve as ‘tickets of entry’ for thousands of government research jobs, grants and fellowships. Licensing is an integral part of a welfare system that redistributes wealth to certain privileged individuals and groups including licenced doctors.

10. It is falsely promoted. Promoters of licensing claim it protects the public. Yet almost all pressure for licensing laws comes from the professions, not due to public demand. Existing criminal laws against fraud, negligence and misrepresentation already protect the consumer. These laws are far more stringent than the protection licensing affords. It is rare, for example, for a physician to lose his license unless he is convicted of a serious criminal offense. Licencing boards do not like to punish their own members. Repeated malpractice claims, no matter their merit, rarely result in loss of licensure.

OTHER LEGAL CONSIDERATIONS

Medical licensing laws restrict trade and impair the right to contract. The U.S. Constitution, Article I, Section 10, states: "No state shall ... pass any ... law impairing the obligation of contracts." Such laws also interfere with an individuals' right to protect his property. What more personal and intimate property does one have than the body?

The Ninth Amendment to the Constitution states that "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people." The right to offer and to seek health care services of one's choice was not guaranteed in the U.S. Constitution. However, this does not mean the right does not exist or was given away. This is discussed in more detail in chapter 11.

THE ALTERNATIVES

One alternative is to eliminate mandatory licensing. This would mean a return to principles that worked well in America for over 100 years. Without licensing, private certifying agencies would spring up to replace state medical boards. Many such groups already exist. One could still choose an AMA-approved, board-certified physician. However, one could also choose among a variety of alternative practitioners who are not presently permitted to practice.

Existing laws against fraud, negligence and misrepresentation would continue to protect the public. The public would be better protected from malpractice because no physician would be shielded by his license. Physicians would be directly accountable to their patients. Groups similar to Consumer's Union would spring up to rate practitioners, hospital costs and the effectiveness of treatments. A truly consumer-driven system would weed out the more dangerous and ineffective treatments and irresponsible practitioners far more effectively than licensing.

Health care would operate in a manner similar to car care. There would be many levels and types of care available. Not everyone enjoys the same level of car care, but most people receive care, innovations are permitted and competition keeps prices in check.

LIMITING LICENSING

In Oklahoma in 1994, the state legislature voted to restrict the power of the state medical board to regulating only allopathic doctors. This is quite a revolutionary idea. It means that one can practice healing without a license as long as one does not hold oneself out as a medical doctor. In all other states, the medical board regulates everyone except those with specific exemptions to the law.

In naturopathy, practitioners are split. One group, represented by the American Association of Naturopathic Physicians, desires licensing for all naturopaths. The other group, represented by the American Naturopathic Medical Association, opposes licensing. Similar splits also exist in other healing arts such as acupuncture and nutrition.

BROAD EXEMPTIONS

Minnesota and California have opened up the healing field somewhat by adding broad exemptions to their state medical practice acts. These permit some unlicensed practitioners to offer services without fearing arrest for practicing medicine without a license. However, the allopathic or drug medicine union remains firmly in control of hospitals, doctors, laboratories and other health care facilities.

REGISTRATION

Dietitians, nurses and others may be registered instead of licensed. All who meet qualifications are listed in a registry used to establish eligibility for employment. The threat of loss of registration polices the registered healers. The government is not involved. This is basically the same as certification.

Registration becomes like licensing if the government in any way favors registered practitioners or punishes unregistered practitioners.

CONCLUSION

It is easy for health practitioners to take advantage of the sick and debilitated. One is led to believe that licensing is the way to control this problem. However, licensing does a poor job of protecting the public. Existing criminal laws are much better for that purpose. Licensing was instituted to reduce the number and variety of health practitioners, increase the income of one group, and control physicians and the public alike.

Positive aspects of licensing are that it prevents some abuses and creates a more standardized, if lower quality of care. Also, for holistic practitioners, licensing may provide protection from the state Board of Medical Examiners. In Arizona, for example, the homeopathic, naturopathic, and chiropractic boards protect some holistic practitioners from the control of the medical board.

The negative effects of licensing include lower quality of care, reduced access to care, greatly increased costs and much poorer health of the public. Its major drawback is the loss of millions of opportunities for healing.

America did very well without health practitioner licensing for many years. As one looks for causes of the health care dilemmas the nation faces, licensing need to be considered. Perhaps it is time to join Milton Friedman and other prominent economists and question the blind belief in licensing.

References

1. Friedman, M., "Medical Licensure" in the Dangers of Socialized Medicine, ed. by Hornberger and Ebeling, Future of Freedom Foundation, Fairfax, Va. 1994, p.68.
2. Andrews, Lori B., Dregulating Doctoring: Do Medical Licensing Laws Meet Today's Health Care Needs?, People's Medical Society, 1983, 1986.
3. Andrews, L., ibid. See also: The Shadow Health Care System: Regulation of Alternative Health Care Providers by Lori Andrews, Houston Law Review, Vol. 332, #5, 1996.
4. Paul, R., "Health Care", Health Freedom News, Monrovia, CA, Feb. 1989, P18-19.
5. Goodman, J. and Musgrave, G., Patient Power, Cato Institute, 1992, p.140.
6. "Proceeding of the National Medical Convention", NY J of Med., 9 (July 1847):115.
7. Flexner, A., Medical Education in the United States and Canada, Bulletin #4, Carnegie Foundation for the Advancement of Teaching, 1910.
8. U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, bicentennial Edition, Part 2, Series B 275-90, pp.75-76.
9. JAMA, 284;pp.483-485, July 26, 2000.
10. Kleiner, M., Licensing Occupations” Ensuring Quality or Restricting Competition, Upjohn Institute, 2006.

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