Medical monopoly: protecting consumers or limiting competition?

• Author: Blevins, Sue A.

At time when government is looking for ways to reduce spending, it should examine closely the supply side of health care reform. Some experts have raised concerns about an oversupply of specialists who rely heavily on government funding for training, while, at the same time, licensure laws and Federal reimbursement regulations restrict nonphysician providers from entering the health care marketplace.

Any serious reform of the U.S. health care system must address the medical monopoly. Barriers to entry into the health care marketplace are partially responsible for high costs and lack of access to primary and preventive care.

Professional licensure laws and other regulatory restrictions impose significant barriers to Americans' freedom of choice in health care. Clark Havighurst, the William Neal Reynolds Professor of Law at Duke University, has pointed out that "Professional licensure laws have long made the provision of most personal health services the exclusive province of physicians. Obviously, such regulation limits consumers' options by forcing them to use highly trained, expensive personnel when other types might serve quite well."

Individuals should have the legal right to decide with whom they will contract for the provision and coordination of their health care services: doctors, midwives, nurse practitioners, chiropractors, spiritual healers, etc. Any restriction denies them the right to make decisions about their own bodies.

States use three mechanisms for regulating health professionals: licensure, the most restrictive form of regulation, makes it illegal to practice a profession without meeting state-imposed standards; certification, granting title protection to persons meeting pre-determined standards (those without it may perform services, but may not use the title); and registration, the least restrictive form of regulation, requiring individuals to file their names, addresses, and qualifications with a government agency before practicing.

Professional health care associations have been influential in setting the standards for licensure laws in the U.S. Economist Paul Feldstein has identified ways in which such organizations limit competition. The first simply is to have substitute providers declared illegal. If substitute providers are prohibited or severely limited in the tasks they legally are permitted to perform, there will be a shift in demand away from their services. That approach has been used with lay midwives. In addition, states impose professional "scope-of-practice" regulations that prevent nurse practitioners from functioning independently as primary care providers.

Another method of limiting competition -- used when licensure and scope-of-practice fail -- is to restrict or limit substitute providers' services from payment by government health programs. That approach has been used by organized medicine, for instance, to limit access to chiropractic treatment. Medicare regulations prohibit reimbursement to chiropractors for services they are licensed to perform in all 50 states. The Federal reimbursement regulations appear not to be based on empirical evidence. The government's Agency for Health Care Policy and Research released national guidelines in 1995 that recommend spinal manipulation as a safe and cost-effective treatment for acute back problems. The following examples show how the medical monopoly has used the power of government to restrict the practice of a variety of nonphysician health care providers:

Midwifery. Thirty-six states restrict or outright prohibit the practice of lay midwifery. Consequently, a mere five percent of U.S. births are attended by midwives, compared with 75% in Europe. Americans' low usage of midwifery does not correlate with high-quality birth outcomes. The U.S. has the second highest caesarean rate in the world and the fifth highest infant mortality rate among Western industrialized nations.

There are an estimated 10,000 midwives in this country who fall into two categories: the certified nurse-midwife and the lay midwife. Certified nurse-midwives are registered nurses with two years of advanced training who most often work under the supervision of a physician and practice in clinic or hospital settings. They represent approximately 4,000 of the midwives nationwide.

By contrast, lay midwives enter the profession directly from independent midwifery schools or through apprenticeship. They are trained to meet individual state requirements for licensure, registration, or...