Occupational Licensing

Make Pandemic-Related Occupational License Reform Permanent

Pandemic patients get better care when medical professionals are free to work where they're needed. The same will undoubtedly be true of regular patients after COVID-19 has left our lives.


Whatever trail of wreckage to life, to social norms, and to our civil and economic liberty that COVID-19 ultimately leaves in its wake, there's one potential casualty that many of us would like to see. If the virus were to severely weaken or, better yet, kill occupational licensing, that would be a rare victim of the pandemic that would make life better for us all.

So far, the crisis has inspired at least some suspension of barriers to the movement of doctors and nurses across state lines. That's just the beginning of what should become permanent changes.

On March 13, in response to COVID-19 spread in the U.S., Secretary of Health and Human Services Alex Azar waived several rules under the Social Security Act, including one that allowed compensation by federally funded programs of physicians and other providers only if they "hold licenses in the State in which they provide services." Now, providers must only "have an equivalent license from another State."

At roughly the same time, officials in states including Arizona, California, Florida, Louisiana, Massachusetts, Mississippi, North Carolina, Tennessee, and Washington loosened or lifted some licensing requirements. The degree of leeway varied; some were ready to fully recognize out-of-state licenses, just the way they treat driver's licenses from elsewhere, while Florida required that "such services be rendered to such persons free of charge" and Massachusetts just expedited licensing procedures.

In all cases, the extra leeway acknowledged that state licensing requirements aren't exactly vital bulwarks against some imaginary mayhem that would otherwise be committed by Cousin Bob's long-time primary care doc on the other side of the state line. Instead, such red tape places huge hurdles in the way of allowing perfectly competent providers to cross the border to treat patients.

How big a hurdle?

"The between-state migration rate for individuals in occupations with state-specific licensing exam requirements is 36 percent lower relative to members of other occupations," reported a 2017 paper published by the Federal Reserve Bank of Minneapolis. "Based on our results, we estimate that the rise in occupational licensing can explain part of the documented decline in interstate migration and job transitions in the United States."

That hobbling of Americans was troubling in normal times when licensing requirements made it difficult and expensive for people to move in search of new opportunity. It's deadly when it prevents doctors, nurses, and other medical professionals from crossing lines on maps to treat afflicted patients in places that have a shortage of trained personnel.

Among those places is hard-hit New York, which begged for medical volunteers to treat COVID-19 patients. By April 4, the state government boasted that 22,000 such professionals from out of state had heeded the call.

Normally, those volunteers would have been required to seek government approval through an expensive and time-consuming bureaucratic process before helping patients. To ease their way, the state suspended its normal licensing requirements to allow those "licensed and in current good standing in any state in the United States to practice medicine in New York State without civil or criminal penalty related to lack of licensure."

But what happens when the pandemic passes? If these professionals are good enough to treat people in their own states, and in other states during a crisis, why shouldn't they continue to be free to see willing patients? At the very least, say many economists, reciprocitystates recognizing each other's occupational licensesshould be a permanent feature of post-pandemic America.

"We will learn many lessons as a result of this period in history," says Stephen Slivinski, senior research fellow for Arizona State University's Center for the Study of Economic Liberty. "Hopefully one of them will be the benefits a reduction in the barriers that occupational licensing policies create—not just today in the fight against the coronavirus, but in the future as a means to increase human well-being."

Slivinski is the author of a widely cited 2015 study of occupational licensing that focused on the damage that requiring people to seek government permission to work does to those at the lower end of the income spectrum. As he noted then, "the higher the rate of licensure of low-income occupations, the lower the rate of low-income entrepreneurship." Imposing licenses was like cutting the bottom rung off the economic ladder, denying people employment or driving them to the shadow economy.

The ASU scholar's work helped to inspire both the Obama and Trump administrations to seek not just licensing reciprocity, but to roll back licensing requirements in their entirety for many jobs.

"Licensing an occupation means that work in that occupation is only available to those with the time and means to fulfill licensing requirements," pointed out an Obama-era report calling for licensing reform.

"The cost and complexity of licensing creates an economic barrier for Americans seeking a job, especially for those with fewer financial resources," warned then-U.S. Secretary of Labor Alexander Acosta in 2017. "Excessive licensing creates a barrier for Americans that move from state to state."

Acosta's second point features in the current push to temporarily loosen and suspend licensing requirements for doctors and nurses so that they can treat COVID-19 patients in the states where the outbreak is at its worst, and not just whatever states issued them pieces of official paper. But concerns about complexity, cost, and the barriers they raise to entry should also be considered as we decide what to do with an occupational licensing structure that has grown to ensnare one-quarter of American workers, up from 5 percent in the 1950s.

After all, if life becomes better for us all when we let medical professionals work where they want to work, why shouldn't we extend the same courtesy to barbers, massage therapists, carpenters, and florists, among others?

And, quite likely, license reciprocity among states isn't enough. Many experts recommend independent reviews and voluntary certification as proven alternatives to occupational licensing.

"Voluntary certification through professional associations can benefit practitioners by enabling them to distinguish themselves, while consumers remain free to choose among all providers and decide for themselves how much value to place on such credentials," notes the Institute for Justice.

"Where politically feasible, certain occupations that are licensed would be reclassified to a system of certification or no regulation," recommends the Brookings Institution. "If federal, state, and local governments were to undertake these proposals, evidence suggests that employment in these regulated occupations would grow, consumer access to goods and services would expand, and prices would fall."

Even government officials inclined to impose more control rather than less concede that more pandemic patients get better care when medical professionals are free to work where they're needed. The same will undoubtedly be true of regular patients after COVID-19 has left our lives. And if that's true of doctors, it's almost certainly true of the rest of us.