Licensing (controlling supply)

My simple policy proposal is to relax licensing restrictions at all medical professional levels. The truly Libertarian solution would be to repeal all licensing laws, but most Americans are not ready for that much freedom.

Medieval guilds controlled entry into various occupations during the Middle Ages. There were guilds for painters, textile workers, masons, carpenters, carvers, glass workers, and many others. In 15th century Hamburg, for instance, there were 100 guilds. The American Medical Association is a modern guild. Governmental licensing is a form of the medieval guild. The governments of the various states and the Federal government license many activities from hair braiding to neurosurgeons. Thorough readers of this web site will have seen that MD licensing can take up to 15 years.

Licensing restricts supply of the licensed professional in order to keep the fees for service up. The basic economics of this is shown by this supply-demand curve.

 

Limiting supply causes a leftward shifting of the supply curve. Other things being equal, the equilibrium price goes up. High prices is the goal of medical service providers and their politicians.

Again, an understanding of Basic Economics makes understanding the American healthcare crisis very simple. Even a high school student who has taken Basic Economics can understand.