A License With Teeth: SCOTUS Ruling Helps Us All

The following article originally appeared on TheHill.com on March 12, 2015.

By Megan McHugh

Millions await the final word following arguments on the U.S. Supreme Court’s King v. Burwell, the case that puts Obamacare subsidies in jeopardy for 7.5 million people.  But the Court recently released its decision on another important but lesser known health policy area in need of reform – state professional boards.

The SCOTUS ruling on North Carolina State Board of Dental Examiners v. Federal Trade Commission, represents a welcome step towards reform that is likely to lead to greater oversight of professional boards’ activities. 

The case concerns the Board’s efforts to restrict nondentists from offering teeth whitening services.  In response to complaints from dentists about lower prices charged by nondentists, the Board issued approximately 50 cease-and-desist letters, directing nondentists to cease “all activity constituting the practice of dentistry” and warning that unlicensed practice is a crime.  The Board is comprised of 6 dentists, a dental hygienist, and consumer.

The Federal Trade Commission alleged that the Board’s actions were anticompetitive and in violation of anti-trust laws.  The Board responded that it was exempt from anti-trust laws because it is a state agency not a private actor. 

The Court sided with the FTC.  The majority (6-3) decision penned by Justice Anthony Kennedy states that because the Board was dominated by active participants in the profession that the Board regulates, the Board is exempt from anti-trust laws only if the state provides active supervision of the Board’s actions.  

All 50 states have established state medical boards.  Like other professional boards created by the state (e.g., boards of fire service personnel, professional counselors, and lawyers), the primary responsibility of medical boards is to protect consumers.  Medical boards ensure that physicians are properly licensed and comply with laws pertaining to the practice of medicine.  Like other professional boards, medical boards are largely – and sometimes exclusively – made up of active members of the profession.

But leaving professionals to establish their own licensing requirements has resulted in abuses of power to limit competition.  For example, in some states, nurse practitioners delivering primary care must be supervised by a physician, even though physicians and nurse practitioners have similar clinical outcomes and patients report higher satisfaction with nurse practitioners.  Professional boards in some states have determined that dentists can only hire two hygienists each, a restriction that boosts the demand for dentists.

It has also led to requirements that make little common sense.  Because of state licensure laws, cosmetologists spend an average of 372 days in training, compared to 33 days for the average emergency medical technician (EMT).  A study of barriers to entry among 102 professions found that interior design was among the most difficult occupations to enter, requiring over three years of training in some states. 

Licensing is ultimately costly for consumers, and there is no clear link to quality. As a result, state professional boards have been likened to cartels. 

Much of the oral arguments in the recent SCOTUS case focused on the risks and benefits of greater supervision of professional boards.  If board decisions were subject to the approval of state policy makers, the potential for abuse of power may be lessened.  But then decisions about public safety would be left in the hands of individuals who lack technical expertise.

Justice Stephen Breyer suggested that supervision might be more appropriate for some areas than in others.  For example, state approval of board decisions about who can sell wine is reasonable, but brain surgeons – not bureaucrats – should ultimately determine who is qualified to perform brain surgery.  

But leaving licensing and practice decisions to a group of self-interested individuals who are not accountable to the electorate (many are elected by members of the profession) does not align with democratic values.  Even brain surgeons should be able to make a compelling case to policy makers – in laymen’s terms – to justify their decisions to policy makers.

The Counsel for the North Carolina State Board of Dental Examiners argued that requiring too much state supervision of boards’ decisions will result in a dearth of professional experts willing to serve on boards.

However, there is reason to believe that experts will continue to serve on boards, even if oversight is required.  At any given time, there are over 1,000 federal advisory committees comprised of 60,000 volunteer experts who offer advice to the president or a federal agencies.  There is no requirement for policy makers to follow the advice of federal advisory committees, but experts continue to volunteer because service on the committees is considered to be a professional honor.

The Court's ruling to offer anti-trust immunity only if it is coupled with oversight is part of a small but steady movement toward reform of professional boards.  Some states have developed legislation to reduce occupational licensing barriers that keep people from doing the jobs they have the skills to do. And in his most recent budget, President Obama proposed $15 million for states to reassess their occupational licensing systems.

It’s a rare issue that aligns groups across the political spectrum.  The Cato Institute submitted an amicus brief in support of the FTC in the North Carolina case. State licensing boards were established to protect the public, but who is protecting the public from the boards? 

This most recent largely overlooked ruling from SCOTUS is likely – and sensibly – going to result in more accountability. 

- Megan McHugh is a research assistant professor of medicine at Northwestern University.