Report: US Taxpayers Bear the Brunt of Health-Care Licensing Laws

Occupational restrictions prevent physician assistants and nurse practitioners from prescribing drugs to patients in some US states.
Occupational restrictions prevent physician assistants and nurse practitioners from prescribing drugs to patients in some US states. (Wikimedia)

If you are a Medicaid recipient in the United States, the cost of your medical care — absorbed by taxpayers — is being driven up by occupational-licensing requirements in the health-care industry.

According to a new study by the Mercatus Center at George Mason University, licensing restrictions for physician assistants and nurse practitioners have significant consequences for Medicaid beneficiaries, as well as US taxpayers. The study, published on Tuesday, January 26, finds that prohibiting physician assistants from prescribing drugs to patients raises costs by more than 11 percent. The increase translates to approximately US$109 in additional expenses per beneficiary.

Furthermore, the study concludes that relaxing these restrictions would not only lower costs but would also have no adverse effect in the availability of care. Edward Timmons, author of the study and an associate professor of economics at Saint Francis University, notes that the concerns that relaxing licensing restrictions would harm health-care access are “unfounded.”

“Increasing licensing requirements for healthcare professionals in particular may be promoted as a measure to improve the quality of care,” he writes, “but the main effect may be to raise costs for patients.”

Medicaid is a health-care program that is jointly funded by the states and the federal government. The US government’s Medicaid website describes the program as providing “health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities.”

In the Mercatus study, Timmons acknowledges that the “provision of health care to low-income Americans remains an ongoing policy challenge.” The study asserts that while many Americans would rather opt to receive care from a nurse practitioner or a physician assistant instead of having to wait for a doctor, the ability of these professionals to respond to this demand is limited by state-imposed occupational requirements.

“Relaxing occupational licensing requirements by broadening the scope of practice for healthcare providers may represent a low-cost alternative to providing quality care to America’s poor,” Timmons writes.

The study analyzes the effects of licensing restrictions in the health-care industry by examining Medicaid spending on prescription drugs and outpatient claims from 1999 to 2012. Researchers measure the “cost of care” through total Medicaid claims per beneficiary, total outpatient Medicaid claims per beneficiary, and total prescription drug Medicaid claims per beneficiary. The “access to care” is measured by total Medicaid claims and total care days.

Since lowering these restrictions has been shown to reduce the cost of providing Medicaid services to low-income families in the United States, researchers suggest that US taxpayers stand to benefit from a policy shift in this direction.

The study concludes that removing these barriers will be “beneficial for consumers in the healthcare market,” and recommends that “state policymakers (and taxpayers) interested in reducing the cost of care for citizens on Medicaid” consider scaling back licensing restrictions.

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