Study: universal license recognition improves access to healthcare services

Occupational licensing rules restrict entry into certain occupations. This limits the supply of goods and services, raising prices. It stands to reason, then, that loosening licensing rules should improve access to goods and services and lower prices.

Indeed, a recent National Bureau of Economic Research (NBER) working paper suggests Universal Licensing Recognition (ULR) has such an effect on healthcare services.

Researchers Morris M. Kleiner — a long-time national expert on occupational licensing — and Yun taek Oh use data to explain the relationship, if any, between changes in physician labor supply due to ULR adoption and access to healthcare services.

The authors conclude that,

adopting universal reciprocity of physician licenses raises the proportion of individuals who have personal doctors or healthcare providers, especially for older individuals, and reduces the proportion of individuals who did not see doctors because of costs

Evidence from the coronavirus pandemic

The restrictive nature of licensing was particularly revealed during the coronavirus pandemic.

As lockdown orders and higher-than-normal demand for certain services restricted supply, states rushed to suspend licensing rules for out-of-state healthcare practitioners. In March 2020, Gov. Burgum issued an executive order allowing out-of-state healthcare workers to practice in North Dakota without a North Dakota license. Burgun terminated this licensing waiver in 2021.

Fortunately, unlike most states, North Dakota has replaced temporary COVID-19 measures with permanent reforms. This year, it became the latest state to adopt universal licensing recognition.

Under the new law,

a board must issue a license to an out-of-state professional who has actively used their license for two of the last three years, demonstrates professional competency, has no disciplinary history, is not under investigation, and passes a background check.

Given this new evidence, universal licensing recognition will likely prove beneficial, particularly for patients in rural areas.