Legislature Must Remove the “Compact Exception” to License Reciprocity
I’ve talked a lot about licensing reform in the last decade, especially in the health care space. The reason is simple: supply matters, and ensuring that consumers of all services have the maximum available supply of professionals of all sorts is crucial to maximizing quality and minimizing costs through competition.
First with the Volunteer Health Services Act in 2014 and then with a raft of licensing reforms in recent years—including unilateral license reciprocity/universal license recognition (ULR) in 2020—Missouri has been on a solid policy trajectory on licensing reform in the last decade. Just last week, in fact, the Archbridge Institute announced that by its metrics, Missouri has the second lowest burdens for licensure in the United States behind only Kansas.
Clearly, the Show-Me State can’t allow itself to be second fiddle to the Sunflower State, so the legislature. must. act. now.
And while my grammar here is intentionally overdramatic, my point is unironic: Missouri can and should make its licensing system better. I was reminded of this when I heard that the House was debating adoption of the Interstate Medical Licensure Compact (IMLC,) which deals with physician licensing and which I even wrote about in my 2016 paper “Demand Supply: Why Licensing Reform Matters to Improving American Health Care.” There, I noted:
[U]nder the Compact . . . the status quo licensing restrictions remain largely the same, harming physicians and patients alike. The Association of American Physicians and Surgeons (AAPS) has concerns similar to [researcher Shirley] Svorny’s, cautioning that the Compact will “[increase] the power of a private bureaucratic organization to intervene in, define, and control the practice of medicine.” The Compact would preserve the 50-State licensing regime physicians and patients currently live under, with the wide variety of requirements to not just earn but also maintain a physician’s license in each jurisdiction.
As I’ve long argued, licensing reciprocity statutes are superior to “compacts.” A “compact” that allows physicians and other professionals to practice in other states that they otherwise couldn’t has the potential to be a good thing, but in a state with license reciprocity on the books, a “compact” has the potential to actually harm consumers.
That’s because in a state like Missouri, if the legislature passes a compact law for a profession, it could actually supersede the state’s better reciprocity statute. As my former colleague Corianna Baier observed last year:
[T]he current licensing reciprocity statute states that licensing reciprocity “shall not apply to an oversight body that has entered into a licensing compact with another state for the regulation of practice under the oversight body’s jurisdiction.” On its face, this language indicates that the license compact would overrule licensing reciprocity to the injury of Missouri consumers.
Here’s another way to think about it. With Missouri’s current licensing reciprocity, Missouri consumers have access to professionals in 50 states and Missouri licensees have access to 1 state (Missouri). (Of course, they may have access to other states with reciprocity, but that is not controlled by Missouri lawmakers.) If Missouri were to enter the Audiology and Speech-Pathology Interstate Compact, it seems that consumers seeking audiology or speech pathology services would have access to professionals from only 16 states (the 15 in the compact plus Missouri), and Missouri licensees would have access to customers in 16 states. While this change gives a small benefit to licensees, Missouri consumers lose out. [Emphasis mine]
This is an important point and explains why we have seen redoubled efforts to pass “compact” language for some professions in Missouri recently. A compact would take power from the market and give it to powerful, entrenched leaders in various professions and allow them to regulate members and competition for that field.
The simple fix (and one that you might have surmised from the title of this post) is to remove the “compact exception” to license reciprocity. Clearly, the adoption of the IMLC for physicians may be advantageous to physicians and the medical bureaucracy, but Missouri’s reciprocity statute must supersede such agreements to be in the interest of consumers. Striking language in the current statute to the contrary would be a major advancement that, I think, would catapult Missouri into an unambiguous position as the national leader in licensing reform, ahead of that state-that-shall-not-be-named to the west.
If the IMLC bill continues through the legislative process, it may be the best vehicle for compact-excising reform to come, but we’ll see what the remainder of the session brings on this policy front. Stay tuned.