Economists on Health-Care Licensing
By David Henderson
Milton Friedman triumphs, kind of.
Loosening current licensing restrictions on the range of services that nurses, physician assistants, dental hygienists and pharmacists are permitted to perform would help patients on balance, because the additional safety risks would be small compared to the decreased costs in waiting time and fees.
This is one of the statements that the expert economists in the IGM Forum were asked to agree or disagree on, and give their reasons.
The bottom line? 52% agreed and only 2% disagreed with 29% being uncertain or having no opinion. (I can’t tell you what the difference is between being uncertain and having no opinion. I also can’t tell you why the percentages, which cover all the possible categories, don’t add to anything close to 100%.)
As often happens and as often happened in the late 1970s when he and I were colleagues at the University of Rochester, Richard Thaler reveals his common-sensical inner libertarian, writing:
Pharmacists must be the most underemployed professionals. Lots of schooling to count pills. In France they actually do stuff.
This reminds me of a story. I was prescribed a drug some years ago and when I went to take it, I realized that I had not told the prescribing doctor about another drug I was taking. I wanted to know if there might be interactions. It was late at night and there was only one pharmacy open in the Monterey area. It didn’t happen to be the pharmacy that had filled my Rx.
But I was concerned. I called up the pharmacy and felt duty-bound to tell the pharmacist that his pharmacy had not filled my Rx. “That’s alright,” he said, “Ask me your question.” So I did and he answered with a lot of enthusiasm.
“Of course,” I later thought, “he got a chance to use his expertise.” So a part of my routine, when I give talks about how heavily health care is regulated in America, is to tell that story and explain what is probably a great deal of frustration on the part of many pharmacists. My line I end with is: “Look at all the years of training they get and once they get to their jobs, what do they do? Count.”
[That’s an exaggeration, I know. Occasionally they get to formulate drugs.]
Why do I say that Milton Friedman triumphs? Because he almost single-handedly, in the economics profession [the other one was the late Reuben Kessel] got the case against health-care licensing treated seriously with his chapter on it in Capitalism and Freedom.
HT to Daniel Klein.
UPDATE: Note this paragraph, though, from a recent article in which the authors, E. Frank Stephenson and Erin E. Wendt, scoured undergraduate labor economics textbooks for their treatment of occupational licensing:
Despite the importance of occupational licensing and a considerable body of
economic research, again, as shown in Table 1, five in-print undergraduate textbooks
in labor economics fail to do justice to the topic. We are not aware of any that does
better. [DRH note: Three of the five had no mention of licensing at all.]
“Occupational Licensing: Scant Treatment in Labor Texts.” Econ Journal Watch. Volume 6, Number 2. May 2009, pp. 181-194.