White Coat Cartel

The Malfeasance of Centralized Medical Licensing

Abstract: The question over the validity of centralized medical occupational licensing isn’t exactly at a fever pitch in modern America’s dialectic, nevertheless, it warrants rehashing whenever possible.  Though presumably well-intentioned by the various contemporary participants, medical licensing and its expansion has often been the result of mundane, droning political inertia, whose ripples touch every hospital bed and family in the United States. In the wake of a 2016 study and subsequent letter to the CDC by Dr. Martin Makary of John Hopkin’s University, where he posits that medical error deaths may be responsible for more than 10% of American deaths annually, now is as good a time as any to advocate for the abolition of centralized medical licensing. To be clear from the outset this is not an advocacy piece for the end of medical standardization, scientific research or inquiry, or pay-based models for health care provision. Rather, we’ll explore from a bird’s eye view the history of medical occupational licensing and the various interests that gave birth to today’s cartel of physicians acting as bridge troll for budding providers and consumers alike, and the implications of said licensing on the health industry; wrought with malformations seen nowhere else in the economy or, professionally speaking, in the rest of the developed world. The collective pit in our nation’s stomach is the question of health care provision, and the to-be-discovered tonic is better than most imagine.

French economist Frederic Bastiat asked, “if the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?” (Bastiat). The tale of American physicians and their licensure isn’t, on its face, as gripping as it may sound. On the contrary, the predation of reconstruction-era physicians on competitors within regular medicine, as well as upon unorthodox providers, laid the groundwork for much of the health care industry woes currently facing the US.  Regardless of its profound impact on the early trajectory of governments now-incestuous relationship with health care providers, the question over the state licensure of physicians has always been a forgotten footnote in the history of the modern American healthcare system.

The history of occupational medical licensing, physicians particularly, is summed up by the following: “The economic condition of the profession being what it was in the 1870’s, with no restrictions on entry into the field, a host of competing medical schools eager to graduate doctors in greater numbers, and heterodox medicine contending for the patient’s dollar, regular physicians increasingly felt the need to effectively organize. Their goal was to enlist the support of government as a means of regulating the number and qualifications of physicians. The aims of orthodox medicine and its most effective and tireless spokesman, the American Medical Association, were threefold: (1) the establishment of medical licensing laws in the various states to restrict entry into the profession and thus secure a more stable economic climate for physicians than that which obtained under uninhibited competition; (2) the destruction of the proprietary medical school and its replacement with fewer, non-profit institutions of learning, providing extensive and thorough training in medicine with a longer required period of study to a smaller and more select student body; (3) the elimination of heterodox medical sects as unwelcome and competitive forces within the profession” (Hamowy).  In resounding agreement, Dr. Stanford Chaille, Professor of Physiology and Anatomy at the University of Louisiana in the mid-19th century, wrote to the American Medical Association that, ‘“the profession has good reason to urge that the number [of medical graduates] is large enough to diminish the profits of its individual members,’ he writes, ‘and that if educational requirements were higher, there would be fewer doctors and larger profits for the diminished number”’ (Hamowy).

The Philadelphia 1847 meeting that eventually launched the American Medical Association (AMA) was the beginning of what would become a spurious campaign to agitate state governments for restriction of entry into the medical profession under the auspices of improving ‘public health’; this at a time when bloodletting was standard for just about every disease, and lead, arsenic and mercury were regularly given in various forms for treatment (Greenstone).

This is not an uncommon practice, the established in an industry will often use the power of government to limit entry into their field therefore protecting their market share, precisely what Dr. Chaille was advocating. He was hardly the only one though, Dr. Perry Millard, Vice President of the AMA and member of the Minnesota State Medical Examiners Board, said in 1887 in an address to the AMA that the “noblest” of professions, medicine, had been too long “left to a competition that is intolerable to an educated man. Had we been alive to our interests our present environment would offer better inducements to the educated masses today.”  He went on, “let me insist upon a renewal of our zeal in behalf of our material interests, and cooperate in obtaining at the hands of the legislatures of the different States such regulations of the practice of our profession as will place the standard thereof upon a citadel of greater strength and power” (Millard). Dr. Perry Millard had also lauded the passage of the Minnesota Medical Practice Act of 1887 by asserting that, “Minnesota possesses a smaller ratio of physicians to the population than any State in the Union. Instead of one physician to every 750 inhabitants, the last medical census shows but one to every 1,300. Through the courtesy of the Secretary of the Minnesota Board, I am permitted the first public announcement of these figures. I may state, however, that they are not made public with a view of promoting emigration. It is a pleasure to announce that both the profession and the public are quite uniformly supporting the law” (Hamowy).

I venture to guess the people probably weren’t ‘uniformly supportive’ of a 40% reduction in healthcare providers, both orthodox and otherwise, in two years. Nationally the story was much the same. From 1850 to 1900 there was an almost 11% reduction in physicians per 100,000, from 176 to 157, out of approved medical schools, in addition to practitioners of heterodox medicine. This is best contextualized when compared to dentists over the same period, increasing from 13 to 33 per 100,000, a 65% increase (Vital Statistics, US Census). In a period when virtually no legislative restrictions were imposed on dentists and many states began adopting medical examining boards to limit physician entry into the profession, the reason for the disparity is no mystery.

‘Of course,’ Dr. Millard and Dr. Chaille would retort, ‘contrary to their appearances, it’s not for personal material gain or stifling of our competition that we write these speeches and letters advocating for such regulation. Our sterile interest is simply the public health.’  That may be true, in part. It may be that limiting the supply of physicians to meet an ever-increasing demand while technology plods ahead is simply a noteworthy side effect.  However, in looking back at the last 130 years of historical data and legislation, it’s nearly impossible to believe.

To do so, it’s first important to reckon with the rivalry between homeopaths and allopaths; to see the animus of 19th century orthodox physicians with the bludgeon of state licensing in their hands. When homeopathy began gaining traction in the US, it’s practitioners began the first American medical society in 1844, the American Institute of Homeopathy. Significant tension had already been building between the two medical communities, and two years later, the allopathic American Medical Association was founded.  Interestingly, many medical doctors of the time considered themselves both ‘orthodox’ providers and homeopaths, as homeopathic medicine was, and is, seen as an attempt to support the bodies healing efforts rather than treating symptoms, an approach that utilizes more natural remedies and low dose, single medication treatments at a given time. Then, the driving force behind advocating allopathy over homeopathy was not empirical; entrenched establishment clinicians, alongside dissatisfied groups like apothecaries who received far less income from local homeopaths, dug in their heels against homeopathic providers. The motivations were obvious, and probably best expressed at a 1903 AMA meeting, “We must admit that we never fought the homeopath on matters of principles; we fought him because he came into the community and got the business” (Kaufman). Generally, multiple competing schools of thought bodes well for consumers, with the winner rising from the ashes by way of meritocracy; but the gloves were off for the AMA. In tandem with their pursuit and eventual development of state medical examining boards, the AMA began purging unorthodox providers from their ranks. At the time, non-members would lose their state licensure and thus the ability to practice within the confines of the law (Kaufman). The weaponization of these licenses to batter competing ideologies out of polite society, out of regular practice, and out of the marketplace did not even require the rationalization of being for the public good. Rather, these campaigns were marshalled from private, smoke-filled rooms with the assurance of state support expressly to limit competition.

Today, the landscape is certainly different, but not better.  The Accreditation Council for Graduate Medical Education serves as the gatekeeper for future doctors by setting the annual number of medical school seats and the number of residency slots permissible. In the US, unlike other countries, residency must be performed in the US (with a 2011 law allowing for Canadian transfer with substantial obstacles). This system allows for leading physicians to ensure a steady but low supply of future physicians for the markets demand, thus guaranteeing overinflated prices. It’s no wonder that unlike other wealthy nations where two thirds of doctors are general practitioners, two thirds of American physicians are specialists, who earn a premium over their foreign counterparts, regardless of generally equal outcomes across national lines (Baker). Doctors and legislators make excellent bedmates, with licensing serving as the cornerstone of their union. Without it, governments would be unable to administer over large swathes of the health care industry, and doctors of allopathy would be required to compete against peers and reprobates in unorthodox schools of thought.

It’s clear that despite the persistent claim to the contrary, the advent and perpetuation of centralized licensing was and is not for the public’s benefit, but private interests. Mandated training is far removed from the tangible impact on health or whatever conception of ‘public good’ is being used. For example, emergency medical technicians (EMT’s) require licensure in every state and DC but very little state mandated training. “The number of days of required education and training varies from zero (District of Columbia) to 140 (Alaska), with most states requiring between 26 and 39 days, for an average of 33 days. All 51 jurisdictions also require cosmetologists to be licensed, but the education and training necessary is vastly different. The states demand various periods of education and training for cosmetology licensing, ranging from 233 days (Massachusetts and New York) to 490 days (South Dakota), with an average of 372 days. In other words, on average a budding cosmetologist needs to complete more than 11 times the education and training necessary to serve as an EMT” (Larkin). As a matter of fact, EMT’s require less training for licensure on average nationwide than cosmetologists, barbers, interior designers and manicurists. This gross misuse of state licensure often unrelated to the purpose of bettering the public welfare is commonplace: trades like traditional African hair-braiding, a topic not even covered in cosmetology curricula, must complete 3,200 hours of cosmetology training to be certified in states like Mississippi (Kramer).  Twenty-one states require travel agents to be licensed, with Nevada education requiring 733 days and the certificate costing $1500 (Brookings). Medical or otherwise, these cases are less the exception and more now the national rule, with Brooking’s Institute finding that 30% of all American service providing industries now require government occupational licensing, an astonishing figure when considering only 5% existed in 1950, making occupational licensing the fastest growing American labor field since World War II (Hershbein). Of course, then, the license does not serve simply as a requisite baseline in a field, but also as an exclusionary, state-imposed parameter, where the state gets their due. For even if one were to provide evidence of completion of the required training by the state, they would not be permitted to practice until the bureaucratic bridge troll received its toll, typically on a regular basis for as long as they wish to ‘cross’ into the working world.

Broadly, this is the story of the cartelization of the American economy, with various special interests petitioning legislatures for market share protection, not of a measured approach to protect the “public’s interests”. More specifically, if ‘public health’ were the true thrust of physician required licensure, how is it that free health advice is not illegal, but only becomes so when you attempt to sell it? Just as much, if not more, harm can be done by free medical advice than by that which is for sale. It becomes much clearer then, that these regulatory burdens are meant to restrict competitive forces, not safeguard anyone (Rothbard).

Not surprisingly, the expected outcomes of a national system of health provision, more or less devoid of competitive forces, are rife in the current domestic medical landscape. US doctor salaries are almost twice that of other wealthy nations, totaling over $100 billion a year in wages alone (Baker). According to the WHO data on physicians per capita, the US, a leading medical nation in terms of innovation and provision, comes in around the middle of the global pack, amidst countries like Saudi Arabia, Romania and Uzbekistan (WHO). These numbers are generally trumpeted by those unfurling the banner of ever-grander and more ‘scientific’ state interventions, mandating lower wages for doctors (Flavelle) or other sweeping, empirically bad, price-fixing schemes. There’s nothing more intellectually lazy than simply voting and hoping for the right bureaucrat to come along and make the way straight, though. The answer is a complete about face: a gradual but thorough untethering of the system of health care from state certification to allow responsive industry to stand in the gap.

Today, a license serves, at least in part, to bolster the confidence of the consumer in a given field. Being officially certified demonstrates an acceptable level of competency, presumably decided upon by unbiased experts with authority in the profession. This demonstration is supposed to signal to the consumer that the service provider can be trusted, and that a lack of technical knowledge in the field doesn’t preclude you from receiving sound service. But with centralized, or state administered, certifying boards there is no recourse for dissatisfied customers. Dr. Martin Makary of John Hopkin’s University published a staggering report in 2016 regarding deaths related to medical error, and the gross misrepresentation of cause of death statistics. He asserts that deaths expressly due to medical error as defined as “an error in judgment, skill, or coordination of care, a diagnostic error, a system defect resulting in death or a failure to rescue a patient from death, or a preventable adverse event” (Makary) resulted in at least 251,454 deaths in 2013. For reference, that year the deadliest category, heart disease, was responsible for 611,104 deaths while cancer was the cause of 584,881, followed by respiratory disease at 149,205. Importantly, these projections don’t include any out-patient deaths or those that occurred at home as a result of medical error.

Considering those numbers, it’s amazing that people aren’t more acutely aware of the dangers associated with hospitalization or receiving medical care; due, I suspect, in large part to state administered medical licenses. Consumer’s believe that when a wrong is committed, the state medical board will adjudicate the matter properly; but that just isn’t the case. In its 2018 report, the Federation of State Medical Boards released its aggregate numbers from each state’s board on disciplinary action, the first report since Dr. Makary’s letter to the CDC. There were 8,813 medical board actions in 2017, including restrictions, ‘reprimands’, and administrative alerts. 4,081 physicians were disciplined in total, 711 put on probation, 656 suspended and 248 had their license revoked. There are 970,090 licensed physicians nationwide; that means physicians have a 1 in 40,000 chance of being disciplined on an annual basis, with 6% of those resulting in license revocation. Based on the numbers of medical errors, even if over-inflated ten-fold, there are enormous discrepancies between patient injury and physician accountability.

What about a private alternative for licensure, where the mystique and authoritative prudence people superimpose on government actions were replaced by a healthy skepticism of corporate dealings? When buying diamonds, for example, I trust that the GIA certification stamped on the product ensures its legitimacy and quality as someone who knows nothing about gems or how to assess their worth. Companies like GIA have their entire reputations staked to those approvals or certifications and must ensure they do everything possible to maintain that or their firm suffers. Despite those lofty consumer demands, GIA has been around since the 1930’s completely innovating the world’s gemological certifying criteria with their “4 C’s” for diamond assessment, and over 80 years of various other important works in the field of gemology. How can it be that Americans spend millions of dollars on diamonds across the national economy annually, and yet people would find it absurd to call for government to regulate gemological certification (GIA)? Furthermore, imagine the scorched-earth response by consumers and talking-heads alike if Dr. Makary’s findings on medical error deaths were instead linked to a GIA-like agency for certifying providers, surrounded by competitive forces and subject to profit and loss calculations, instead of to a collection of faceless, droning central planners.

Medicine is not due special regard by its very nature. Medical education and provision require the same competitive forces to remain accountable to consumers, innovative and cost conscious. A state license, theoretically, serves the purpose of an acceptable minimum for quality assurance and consumer protection, however, the preponderance of evidence suggests something like the opposite in practice. Regardless of original intent, state licenses were almost immediately used by established medical firms to block heterodox competitors and limit supply in the name of public health. A century later we find ourselves amidst a health care crisis, with medical error projected to attribute to 10% of American deaths annually, physicians facing practically no consequences for such errors and health care costs and physician’s salaries dramatically higher than other wealthy nations, while physicians per capita remain far lower. Yet, somehow state medical licensing is considered as natural a human advancement as medicine itself, opposed only by troglodytes, quacks and enemies of society. We can all recognize, almost innately, the gross malformations of our health care system; and there exists no shortage of prognostication in the name of treating it. The cure isn’t the handling of one symptom or another though, the cure is to cut off what is harmful and rotten: to excise the entangled interests of corporate health care and the state apparatus, allowing entrepreneurs and industry experts to grow in their place.

References

WHO: Density of Physicians (total number per 1000 population, latest available year). (2018, February 22). Retrieved from http://www.who.int/gho/health_workforce/physicians_density/en/


BIO: 
John is a former marine and Afghan war veteran currently working as an ER nurse.  With writing as a passion project, John writes on free markets in health care and against the war state.  IG: sackclothcenturion
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