GENERAL AGREEMENT THAT MEDICAL LICENSING ENFORCES CARTEL BEHAVIORS
Economists see state licensing as a source of cartel power among
physician groups. Kessel (1958 and 1970) pointed out that licensing
requirements increase returns for existing practitioners at consumers’
expense.
The view that licensure facilitates cartel-like behavior has been
expressed over and over.
[organized medicine] has, for over 100 years, sought and
obtained special privileges from government. These special
privileges take the form of restrictions on free competition
in the marketplace. (Young 1987, 2)
In granting sole authority to the boards to issue licenses,
society has, in effect, given considerable power to
organized medicine to restrict the supply of physicians and
to influence the pattern of medical care for the benefit of
the profession. (Rayack 1982, 393)
The ability of the profession to influence medical school
admissions and licensure exams, as well as their resistance
to legal delegation of more routine tasks to other health
professionals, has certainly helped perpetuate their
economic advantage. (Burstein and Cromwell 1985, 77)
The establishment of limits on the use of physician
extenders is yet another method physicians employ to
protect their economic interests. (Santerre and Neun 2000,
423)
Economists have, for some time, suspected that occupational
licensure operates as a legally sanctioned cartelization
device, restricting entry . . . and restraining competition. . . .
Excessive limits . . . can result in monopoly rents for
members of the profession and higher prices and fewer
services for consumers. (Martin 1980, 143-144)
The AMA has not only controlled the supply of medical
school spaces in the United States . . . but also has worked
to assure that state licensing statutes require graduation
from AMA-accredited schools. Foreign entry has also been
curtailed by restrictive licensing laws as well as a strict
federal immigration policy. (Noether 1986, 233)
coupled with findings that consumers are rarely, if ever,
involved in the process, and that the resulting regulations
do in fact raise prices and decrease the availability of
services, the evidence supporting the self-interest model of
regulation is substantial. (Begun, Crowe, and Feldman
1981, 250)
The emphasis in terms of quality is always on the training
of entering physicians and not on those currently practicing
in the profession. It is in the economic interests of current
practitioners . . . they will receive higher prices and higher
incomes. . . . If the medical profession was concerned
primarily with quality rather than with monopoly power,
there would be at least some emphasis by the profession
on the quality of care provided by practicing physicians.
(Feldstein 1999, 383, 386)
By the 1950’s, organized medicine had achieved virtually
all of its political goals . . . [one of which was] to control
entry into the medical profession and to suppress
competition for physicians’ services. . . . The most important
consequence of the control of medical education by
organized medicine . . . was that physicians acquired the
power to reduce the supply of medical services and
increase their incomes. (Goodman and Musgrave 1992,
137, 147).
As time passed, restrictions were expanded to
cover . . . advertising, price cutting, and other conduct
considered to be “unprofessional.” Clearly licensing laws
serve not only to protect patients but also to limit the
number of practitioners, thus protecting physicians from
would-be competitors. (Henderson 2002, 107
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