The Medical Monopoly: Your Tax Dollars Limit the Competition

By Richard Leviton

Medical licensing laws and federal reimbursement programs severely limit open competition among medical modalities and keep the cost of American health care exorbitant, states medical analyst Sue Blevins in a policy analysis from the Cato Institute of Washington, D.C.

Ever since their introduction in the 1870s, licensing laws have limited the supply of health care providers, thereby limiting competition and increasing doctor's incomes, Blevins explains. Government policies, which strongly favor (and reward) conventional medicine, are largely responsible for the escalation of health care costs and the lack of a wide range of choices in medical services. In addition, there is "little actual evidence that medical licensing improves quality [of care] or protects the public," says Blevins. The result is a "government-imposed medical monopoly," supported by the tax dollars of all Americans, including the 33% who consult alternative practitioners.

Consider how licensing regulations restrict the public's access to nonphysician health care providers, such as midwives. There are 10,000 [lay] midwives in the U.S., but 36 states either restrict or prohibit their activities. "American's low usage of midwifery does not correlate with high quality birth outcomes," Blevins says, because the U.S. has the fifth highest infant mortality rate among industrialized nations. Midwife-assisted births could save Americans $2.4 billion annually if only 20% of women used them.

Nurse practitioners are another case in point. These are registered nurses (R.N.s) with advanced training. Research indicates that almost 80% of adult primary care and about 90% of child care services could be safely provided by nurse practitioners. A 1993 Gallup poll reported that 86% of consumers would willingly use nurse practitioners for all their basic medical services.

Further, we could be saving between $6.4 and $8.75 billion a year if nurse practitioners were more widely used. But they're not because "many states impose scope-of-practice regulations that prevent nurses from practicing independently as primary care providers," says Blevins. This action suppresses the full potential demand for them because they are not legally free to compete.

Whether you like it or not, your tax dollars directly subsidize conventional medical schools, but not alternative schools such as chiropractic or naturopathic colleges, says Blevins. Today, only 5% of medical school income comes from tuition and fees; the [majority of ] the rest comes from state and federal government subsidies. Of the $23 billion U.S. medical schools received in 1992, $2.7 billion came from state and local governments, and $10.3 billion came from the federal government.

Your tax dollars support the medical monopoly through other means, too, such as research, training, and teaching grants from agencies such as the National Institutes of Health, and Medicare and Medicaid reimbursements, which cover only conventional medicine, Blevins says.

The time for reform is at hand, urges Blevins. Even if you do not particularly favor alternative medicine, she argues, the medical monopoly goes against the capitalist grain of free, unrestricted, nonmonopolistic competition in the marketplace. We haven't seen that for over 125 years when it comes to medicine in this country. "Breaking the anti-competitive barriers of licensing laws and federal reimbursement regulations will provide meaningful health reform, increase consumer choice, and reduce health care costs," states Blevins.

This article was originally published in Alternative Medicine Digest, Issue 11, April 1996.