Does Universal Occupational Licensing Recognition Improve Patient Access? Evidence from Healthcare Utilization

Optimizing state and regional physician labor supply has been an important policy issue in healthcare in the United States. One of the proposed solutions has been the universal licensing recognition (ULR), which allows out-of-state physicians to provide healthcare services without relicensing and increases the local labor supply of physicians. There has been no empirical analysis of the effect of such regulatory relaxation on the local labor supply and subsequent improvements of consumer welfare. In this study, we use the Behavioral Risk Factor Surveillance System to investigate the effect of universal reciprocity of physician licenses on healthcare utilization, and use data from IPUMS-USA, IPUMS-CPS, and the Doctors and Clinicians National Downloadable File from the Centers for Medicare & Medicaid Services to examine the changes in the local labor supply of physicians through interstate migration and out-of-state practices. Our results show that adopting the ULR significantly raises the proportion of individuals accessing healthcare, particularly among older individuals, and reduces the proportion of individuals not getting healthcare services because of costs. We provide empirical evidence that these effects are from the universal reciprocity of physician licenses, instead of unknown factors related to the ULR. We also show that the positive effect of the ULR on healthcare utilization is closely related to the increase in out-of-state practitioners to include temporary and telehealth physicians, by showing no changes in interstate migration of physicians and an increase in out-of-state practices. The adoption of ULR may allow for a more efficient regional distribution of physicians and result in greater access to healthcare.