John Locke Update / Research Brief

Medical Insurance Reimbursement Doesn’t Justify Creating New Occupational Licenses

posted on in Law & Regulation, Rights & Regulation
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The Wilson Times editors took the General Assembly to task for passing House Bill 277, which would create a study group to decide how to the state should regulate naturopathic doctors as “licensed health care practitioners.”

The editors wrote on June 25:

It’s baffling that a Republican-controlled legislature would seek to expand the state’s already overzealous occupational licensing scheme by regulating naturopathy. The conservative John Locke Foundation has long railed against the practice of setting up professional practice boards for ordinary occupations. They serve as barriers to entry that limit competition and constrain the free market. They are a nanny-state idea fundamentally at odds with conservative principles.

If self-professed small government advocates want to license naturopaths, they are doing so either because they believe in expanding state power or because they want to endorse the outer fringes of alternative health care and give it mainstream credibility it can’t earn on its scientific merits.

It’s very gratifying the editors are taking our work regarding occupational licensing to heart. North Carolina sorely needs to modernize its approach to occupational licensing, which is still stuck in the 20th century. Many other states are upgrading, reforming, and de-licensing.

Still, since gaining control of the General Assembly in 2011, Republicans have at least mostly resisted different occupation groups’ calls for state licensing. In contrast, during the licensing explosion from 1967 to 2010, the General Assembly (under Democratic control) was essentially creating a new occupational license every seven months. So what’s going on?

The siren song of medical insurance reimbursement

Naturopathy is one of several medical practices on “the outer fringes of alternative health care,” as the editors put it, or otherwise not in the mainstream of medical care, and as such, not receiving medical insurance reimbursement for the provision of their services. Having their scope of practice defined and occupation licensed by the state would open practitioners to receiving insurance reimbursement and presumably broaden their consumer base. Other, recent practices in the same reimbursement boat include behavioral analysts, music therapists, and also nutritionists — the legislature just gave them their own separate license, split off from the dietitian/nutritionist license.

The occupational license isn’t to protect the health and safety of consumers; it is to make the practice eligible to receive medical insurance reimbursement. That simply is not a demonstrably necessary reason to impose the extremely limiting regulation of requiring an occupational license.

This issue of medical insurance reimbursement is a fast growing problem, and state lawmakers will need to find a better answer for it than licensing. Model legislation from the Institute for Justice contains a common-sense approach that addresses both problems:

  1. emerging health care practices’ need to demonstrate to insurers their practice is recognized and regulated by the state
  2. everyone’s ongoing need for the state to avoid unnecessary licensing

IJ’s model bill language would create a specialty occupational license for medical reimbursement that would not rise to the level of occupational licensing. A note explains that a specialty license “allows for medical reimbursement without disputes over scope of practice.” It would be a credential from the state determined by meeting certain qualifications identified by legislators — but it would not prevent practitioners without that credential from practicing, just from qualifying for insurance reimbursement:

Specialty occupational license for medical reimbursement. “Specialty occupational license for medical reimbursement” means a non-transferable authorization in law for an individual to qualify for payment or reimbursement from a government agency for the non-exclusive provision of medical services based on meeting personal qualifications established by the legislature. A private company may recognize this credential. Notwithstanding this specialty license, it is legal for a person regulated under another occupational regulation to provide similar services as defined in that statute for compensation and reimbursement. It is also legal for an individual who does not possess this specialty license to provide the identified medical services for compensation, but the non-licensed individual will not qualify for payment or reimbursement from a government agency.

What kind of qualifications? The most obvious would be if the practitioner has received certification from a professional certification agency in that field of practice. There is no reason for the legislature to get into the weeds of each profession when it’s already being done by subject-matter experts.

North Carolina’s approach to licensing occupations needs to be brought into the 21st century. North Carolina should be freeing more occupations from licensing, rather than bringing more in. When new issues arise in occupations, the state’s response should be narrowly tailored to addressing the issue, regulating it no more than is absolutely necessary.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. Serving as Senior Fellow of Regulatory Studies and also Research Editor at the John Locke Foundation, Jon gets in the weeds of all… ...

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