Legislative report makes clear: Occupational licensing isn’t for insurance reimbursement

My research brief this week discusses several implications of a new report on the state’s occupational licensing from the General Assembly’s Program Evaluation Division (PED).

Here’s one that legislators should bear in mind when providers of emerging medical practices come begging them to license them, not out of concern for public safety, but out of desire to get medical insurance reimbursement.

The report makes it crystal clear that occupational licensing is an extreme regulation for only the most extreme risks. It’s for protecting public safety. That’s it.

The report lists three objectives behind occupational regulations:

  • protecting the public from “unscrupulous, incompetent, and/or unethical practitioners”
  • assuring the public that practitioners are “competent”
  • disciplining errant practitioners

The report explains:

Determination of the most appropriate form of regulation for each profession is generally made based on the perception of potential threat to public health, safety, and welfare.

The report makes it explicit that occupational licensing is the “Most Restrictive,” occupational regulation, which is to be used only when the risk to public welfare is “High” (see the report’s Exhibit 1 below).

Public safety, not insurance reimbursement

Other rationales for licensing don’t fly. As I state in the brief,

when emerging medical practices ask for licensure from the General Assembly on the grounds that they can’t get medical insurance reimbursement, the answer must be “No.” Going to the extreme of licensing just to help a discipline get medical insurance reimbursement doesn’t meet the state’s interest in licensing.

Now, is there a way that isn’t occupational licensing for the legislature to help a discipline get medical insurance reimbursement? Yes. Create what’s called a specialty occupational license for medical reimbursement.

Similar to recognizing certification, this specialty license would be a credential from the state determined by meeting certain qualifications, which would allow for medical reimbursement without disputes over scope of practice. It wouldn’t prevent practitioners without that credential from practicing, just from qualifying for insurance reimbursement.

How to test whether licensing is necessary or overkill

This isn’t to say that just asserting a threat to public welfare is sufficient to qualify an occupation for the extreme regulation of licensing. It just means that’s the only area for debate about whether licensing can even be considered.

Responsible policymaking would use the following three tests to see whether a move to license an occupation or practice would be the right choice, or whether the state’s regulatory need could be met with a less intrusive intervention:

 

For more information and for good ideas adopted in other states, see:

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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