Trouble With Licensure
too long ago, the Tennessee Dental Society sued to stop a "danger
to patients": professional tooth cleaning. Not that they had anything
against professional tooth cleaning; they wanted the professionals
to be dentists and their employees, not dental hygienists in independent
of the hygienists protested that her price was lower, and therefore
people would get their teeth cleaned more often. "It also helps
that they don't have to fear the drill, although I refer any problems
I see to dentists." But she was driven out of business because she
wasn't licensed as a dentist. What her customers thought meant nothing.
few years before, the Oklahoma State Dental Society lobbied for
a toughened law against "denturists": dental technicians who make
false teeth directly for customers, bypassing the dentist.
a press conference, the head of the dental society was asked if
this weren't already against the law. Yes, he said, but a patient
had to bring a complaint, and none would. It seems the denturists
would give dissatisfied customers their money back and
let them keep the teeth in the bargain. A reporter wondered whether
a dentist had ever returned an unhappy patient's money, and was
told the question was irrelevant.
like my dentist, and would never go to a less qualified if cheaper
professional. But why should it be illegal, in a free market, for
me to do so?
centuries, professionals have sought to cartelize their occupations,
that is, to limit competition. The stated reason is protecting consumers,
but the real reason is financial.
recently, a legal secretary was threatened with jail in Florida.
She was helping people fill out legal documents, something she had
done in a law firm for 20 years. But now she was doing it on her
own, for pay. In Florida, as in all other states, the actual crime
is practicing unlicensed law, medicine, or dentistry for money,
which alone tells us the real nature of the offense.
organizations argue that only licensure enables us to distinguish
the qualified from the goof-off. In fact, it is the reverse. Licensure
endangers consumers by making them less watchful, since they assume
that any state-licensed doctor is competent.
specialists where the market process of certification rules consumers are very watchful. Any doctor may legally do plastic surgery,
for example, but customers look for a highly qualified, well-recommended,
board-certified surgeon. The same is true in every other specialty,
as it would be for all physicians without licensure.
should it be illegal for a pediatric nurse to set up an independent
practice in Harlem, or a geriatric nurse in West Texas? Yet both
would be tossed in jail.
I would never go to anyone but my family doctor. But why, in a free
society, should I not be allowed to choose?
the supply of medical care has a long history. Hippocrates built
a thriving medical center on the Greek island of Cos in the fourth
century B.C., and taught any student who could pay the tuition.
But when the great man died, there was fierce competition for students
and patients, and the doctors sought to cartelize the system with
the Hippocratic Oath.
oath pledged devoted care to the sick, but also that "I will hand
on" my "learning to my sons, to those of my teachers, and to those
pupils duly apprenticed and sworn, and to none others."
the modern world, England's Royal College of Physicians a state-approved
licensing agency has long been the model medical monopoly, exercising
iron control over its members' economic conduct. But this guild-like
system wasn't salable in laissez-faire America.
1765, John Morgan tried to start an inter-colonial medical licensing
agency in Philadelphia, based on the RCP. He failed, thanks to bitter
infighting among the doctors, but did begin the first American medical
school, where he established the "regular mode of practice" as the
dominant orthodoxy. Those who innovated were to be punished.
the Revolution, said historian Jeffrey Lionel Berlant, "a license
amounted to little more than a honorific title." In Connecticut
and Massachusetts, for example, unlicensed practitioners were prohibited
only from suing for fees. And in the free-market 1830s, one state
after another repealed penalties against unlicensed practice.
the mid-19th century, there were virtually no government barriers
to entry. As economist Reuben A. Kessel noted, "Medical schools
were easy to start, easy to get into, and provided, as might be
expected in a free market, a varied menu of medical training that
covered the complete quality spectrum." Many were "organized as
profit-making institutions," and some "were owned by the faculty."
time to time, doctors attempted to issue tables of approved fees with price cutting called unprofessional but they failed,
because price-fixing cannot long survive in a competitive environment.
medicine's lobbying against new doctors and new therapies began
to be effective in the middle of the century, however. The official
reason was the need to battle "quackery." But as historian Ronald
Hamowy has demonstrated in his study of state medical society journals,
doctors were actually worried about competition lowering their incomes.
American Medical Association was formed in 1847 to raise doctors'
incomes. Nothing wrong with that, if it had sought to do it through
the market. Instead, its strategy, designed by Nathan Smith Davis,
was the establishment of state licensing boards run by medical societies.
He attacked medical school owners and professors who "swell" the
number of "successful candidates" for "pecuniary gain," fueled by
the "competition of rival institutions." These men advance "their
own personal interests in direct collision" with "their regard for
the honor and welfare of the profession to which they belong." The
answer? "A board of examination, to sit in judgment" to restrict
entry and competition, which he did not point out could only
have a pecuniary motive.
philosopher William James told the Massachusetts legislature in
1898: "our orthodox medical brethren" exhibit "the fiercely partisan
attitude of a powerful trade union, they demand legislation against
the competition of the 'scabs.'" And by 1900, every state had strict
medical licensure laws.
Flexner Report of 1910, which Murray N. Rothbard discusses elsewhere
in this issue, further restricted entry into the profession, as
legislatures closed non-AMA-approved medical schools. In 1906, there
were 163 medical schools; in 1920, 85; in 1930, 76; and in 1944,
69. The relative number of physicians dropped 25%, but AMA membership
zoomed almost 900%.
the great depression, as Milton Friedman notes, the AMA ordered
the remaining medical schools to admit fewer students, and every
school followed instructions. If they didn't, they risked losing
their AMA accreditation.
with increasing government intervention in medicine often at
the AMA's behest the organization exercises somewhat less direct
policy control. But it still has tremendous influence on hospitals,
medical schools, and licensing boards.
limits the number of medical schools, and admission to them, and
makes sure the right to practice is legally restricted. The two
are linked: to get a license, one must graduate from an AMA-approved
program. And there is a related AMA effort to stop the immigration
of foreign physicians. The AMA also limits the number of hospitals
certified for internships And licensure boards will accept only
licensure boards who invariably represent medical societies can revoke licenses for a variety of reasons, including "unprofessional
conduct," a term undefined in law. In the past, it has included
such practices as price advertising.
licensure is a grant of government privilege. Like all such interventions,
it harms consumers and would-be competitors. It is a cartelizing
device incompatible with the free market. It ought to be abolished.