Solutions to a 150-year-old problem won’t come easily, especially because the licensing system works perfectly well for everyone with the power to
change it.

The professions like it because it maximizes their autonomy. State governments like it because it allows them to avoid the effort and expense it would take to truly balance the interests at stake in regulating the professions. Meaningful reform will involve building the political will to confront the reality that the system doesn’t work for everyone else. Meaningful reform will also have to confront the heart of the problem – self-regulatory state licensing boards.

A Stalled-Out Reform Movement

Before developing a promising agenda for reform, it is important to understand what has been tried already and why it hasn’t brought about widespread change. Lawsuits asserting a right to be free from onerous professional regulation play an important role in holding the line against too much licensing, but they are a limited tool for the full-scale reform that’s necessary. These cases are hard to win and only target extreme overreach, and they cannot address the problem of licensing regulation that doesn’t go far enough. The direct effect of these suits can therefore be characterized as trimming the edges of a problem that’s bigger and deeper than the reach of constitutional law.

There has, however, been an indirect effect of these suits that is perhaps more important than their win/loss record in the courtroom. Libertarian lawfare has brought attention to bad licensing policy, placing pressure on the entities with the real power to change licensing for good: state legislatures. The Institute for Justice [the libertarian nonprofit law firm], for example, augments its legal work with lobbying and research projects that have moved the needle toward more reasonable licensing regulation in several states. It was the same tactic Braden Boucek of Tennessee’s Beacon Center used to eliminate the high school degree requirement for barbers in 2020 by bringing a bill to the legislature and filing suit in the same year.

Indeed, pressure on legislatures to roll back licensing laws is coming from all directions. In 2017, the U.S. Department of Labor gave a $7.5 million grant to the National Conference of State Legislatures and the Council of State Governments to organize a consortium of states to study their licensing laws and pursue reform. In those states – and in just about every other one, too – each new legislative session carries a spate of bills looking to cut some of licensing’s red tape. Some of them even pass, despite the best lobbying efforts of the professions and the licensing boards they control. I heard several references to this movement in board meetings, such as when the executive director of the architecture and engineering board invoked the “temperature of things” at the legislature in an effort to pull the board back from reigniting a turf war.

It is worth celebrating the successes of these efforts. One area of strength for the legislative- reform movement has been improving interstate mobility. It’s hard to justify separate licenses for every state – the needs of consumers and clients in Texas wouldn’t seem to be that different from those in Tennessee. As an advocate for interstate mobility for teachers observed at an NCSL conference about licensing reform, “if you crossed a state line, you haven’t stopped being the person that you were.”

This intuition has proved powerful in lobbying state legislatures, who have recently experimented with various ways to boost professional mobility. Arizona has even gone so far as to create “universal recognition,” which purports to make any professional license from any state good in Arizona. Less drastic measures, like streamlined reciprocity for military spouses and interstate compacts – where states join forces to create a kind of umbrella license that works in all member states – have been even more widespread.

Many states have also implemented a “sunset” review process that automatically terminates a licensure law and abolishes the board unless the legislature affirmatively renews it every few years. However, this review almost never actually results in the demise of a professional board and its licensing regime. (There are some exceptions to this, like when my state eliminated licensing for beauty pageant operators and locksmiths in 2018.) But sunset review does require boards to publicly account for their regulation and face sometimes heated questioning from the legislatures that oversee them, contributing to regulatory transparency. Indeed, a significant amount of the research for this book was based on board documents and testimony prepared for sunset hearings.

Finally, some states have attempted to slow the growth of newly licensed professions by implementing “sunrise” review, a structured legislative process that places the burden on the licensed profession to show that licensure will lead to better, safer practice in a way that justifies the associated higher prices and scarcity. The Institute for Justice has studied sunrise review and found that states that implemented it have been able to significantly cut down on new licensure regimes. They also found that it works best in combination with sunset review.

As important as these legislative efforts are, they are not enough. In a report on the success of the federal grant that funded licensing reform in a consortium of states, NCSL noted that member states have used the grant to slow the growth of new professional licenses, but they have not stopped it. In fact, in states funded by the grant, bills creating a new professional license still outnumber bills delicensing a profession by more than four to one.

Legislative reform has been particularly slow going in the professions with the highest stakes for consumers. Nearly every state licensing reform statute I have come across exempts the state’s medical board. More generally, aside from a few victories for nurse practitioners seeking a broader scope of practice, virtually no health care professions have seen a meaningful rollback of licensing requirements. Here, the legislative wins have been to mobility, where nursing and medical compacts have slightly increased the flow of labor.

If the legislative reform movement has been lackluster when it comes to cutting back on licensing, it has been DOA when it comes to the other set of problems identified in this book. The idea that boards are insufficiently protective of the public in their disciplinary decisions was not one I heard discussed at any of the national meetings I attended about licensing and reform. Besides Tennessee’s legislative attempt to set mandatory minimum discipline for opioid over-prescribers, I did not run across any major legislative effort to curb board leniency. A few bills have been introduced (and even fewer passed) to increase the transparency of the disciplinary process, but I have not heard of one that actually changes its basic structure or outcomes.

Legislative reform has, so far, been a limited tool for change because of the political economy of licensing reform. Organized professions are good at convincing legislatures that licensing is a win-win for the profession and the public. The more prestigious the profession, the more convincing its lobbyists. The result has been a legislative reform movement focused on what one state senator I interviewed called “the low-hanging fruit of professional licensing” – the restrictions that are the hardest to justify on the basis of consumer protection and the least likely to be successfully blocked by organized professional groups.

The low-hanging fruit of licensing reform includes small professions without a strong lobbying presence: not a single industry representative showed up at the hearing where Tennessee’s licensing law for beauty pageants faced the chopping block. Mobility is also a relatively easy legislative fix because it benefits professionals as much as it does consumers, and so professions tend not to fight it.

These are low-risk, low-reward strategies. As we experienced so acutely during Covid- 19, there is only so much interstate mobility can do – it cannot actually expand the number of overall providers. The abolition of the beauty pageant license may have been sensible, but it hardly opened up any major professional opportunities for the citizens of my state.

Most problematically, the low-hanging fruit of licensing tends to include lowerincome professions, like cosmetology and barbering. That puts the burden of reform on workers who are already on the edge and gives a free pass to the high earners, whose licensing rules have a greater potential to harm the public. That’s not an argument against rolling back licensing in the low-income professions, but the unfairness of focusing only on those professions is another reason to be disappointed in the reform movement so far.

The Case That Shall Not Be Named

There is another, more fundamental reason why neither libertarian law-fare nor the legislative reform movement has done more for consumers and patients: both ignore the role of boards. Libertarian lawyers mounting constitutional challenges accept the existence of, and processes used by, professionally dominated boards as legitimate – they attack only the substance. Legislatures pass reform laws imagining that their edicts will become policy through the same administrative process applied to their other laws – for example, through the state’s department of education or environment. But, when it comes to licensing, the work of the legislature is operationalized by a board that is often indifferent – or hostile – to state policy.

A regulatory system is only as strong as its weakest link. This was driven home for me at a conference where a speaker was touting Arizona’s “universal recognition law,” which purported to allow anyone with a license in any state to automatically practice in Arizona. After the presentation, a member of Arizona’s psychology board told me that her board had interpreted the new law to preclude reciprocity for anyone whose qualifications weren’t identical to those required in Arizona.

For a moment in the recent history of licensing reform, it looked like boards might get their due. On February 25, 2015, the U.S. Supreme Court handed down its first case about professional regulation in more than a decade. Unlike other cases decided that year – same-sex marriage, lethal injection and Obamacare were on the docket – virtually no one was waiting on the edge of their seat for the outcome of Federal Trade Commission v. North Carolina Board of Dental Examiners. No one, that is, except me.

I had spent the previous few years researching the legal issue in the case, writing articles about it and authoring an amicus brief (a kind of advisory document often filed by experts and academics) for the court to consider. When the opinion came down, it adopted my argument into law: professional licensing boards are cartels. When they go too far in their regulation at the expense of consumers, board members can be sued – individually, and for money damages – for antitrust violations.

But if I or any of the justices thought this would mean real change for how the professions are regulated, we were wrong. There were some qualifications in the opinion that made it less powerful than it might have been – most importantly that boards “actively supervised” by state government were exempt from antitrust suits. However, the court was not very clear about what counts as “supervision,” and in the years since North Carolina Dental, boards have been able to exploit that uncertainty to avoid antitrust liability.

Ultimately, despite focusing on boards as the crux of what’s wrong with professional licensing, the Supreme Court’s opinion in North Carolina Dental was reduced to the same status as the other avenues for reform: tinkering around the edges. Since 2015, several lawsuits have been allowed to proceed, perhaps giving boards pause before defending their turf in ways that are obviously bad for competition. The Federation of Associations of Regulatory Boards calls it “the case that shall not be named,” and several times I heard board staff in Tennessee use the case to try to pull back board members from their protectionist instincts.

Real reform will have to take on the state licensing board system more directly. That requires some clear thinking about what licensing is good for in the first place, and whether licensing boards – as we know them – are good for anything at all.

A Theory of Professional Licensing

I define professional licensing as a government- granted privilege to work that’s given after a significant investment in human capital measured in months or years, without which professional practice is illegal. This kind of regulation almost certainly adds a hefty tax to services, has an unproven effect on service quality, erects high barriers to entry and mobility restrictions for workers, and can result in tragic scarcity of services for those who need them most. It’s time to recognize that it should be a regulatory intervention of last resort, not a way to regulate three hundred professions and one-fifth of the American workforce, as we do now.

We can use a process of elimination to arrive at a theory for when to use licensing to regulate the market for professional services. First, we may ask whether governmental intervention is necessary at all. Market forces can protect consumers where there is good information about provider quality, and the effects of bad practice are not particularly widespread. When someone raises the problem of bad professional service, we might first ask whether the market cannot be expected to protect the public because of information asymmetries and externalities.

If so, we would next ask questions about other regulatory interventions – ones that already exist, or ones that might serve as alternatives to professional licensing. Licensing is clumsy because it asks professionals to engage in months or years of education on topics they may never need to know about when they specialize. For example, a criminal attorney must demonstrate proficiency in contracts and property to get a license, and cosmetologists must learn perming and coloring even if they only plan to cut hair.

Other governmental regulation is narrower. For example, in Tennessee, day care centers are regulated not by professional licensing for providers but by premises licenses that demand short, targeted trainings for workers (on CPR, for example) and adherence to straightforward rules of practice. Regulations created by the Department of Human Services require, for instance, that babies sleep on their backs and that toddlers eat while secured in highchairs. Note that the choice to use something other than licensing doesn’t mean that childcare is less important or less dangerous than other work; indeed, it is hard to think of a job with higher stakes.

Premises licenses, backed up by inspections, govern establishments where sanitation and safe handling of chemicals is important, such as restaurants and dry cleaners. For the hair professions, we may think that a combination of market forces (for the bad haircuts) and codified rules about sanitation (for the possibility of infection) are more reasonable means of protecting the public than a year of education and two examinations.

Where the risks to the public are harder for a regulator to observe during an inspection – such as fraud or theft – there are still other regulatory interventions that are more targeted and therefore more efficient than fullblown professional licensing. If an auctioneer absconds with a client’s funds or misrepresents an item at auction, the criminal and civil systems may respond. To mitigate the risk that an auctioneer may slip through the cracks in these systems, states that don’t require licensure for auctioneers do require them to post a bond and carry insurance to compensate aggrieved consumers.

Rules that specify what is and isn’t allowed (rather than vague ethical standards that require interpretation), and bonding or insurance requirements, are simpler to enforce, cost consumers less and create a much lower barrier to entry for workers than full-blown professional licensing. Perhaps most importantly, these forms of regulation do not need professional expertise to be administered, obviating the need for self-regulation.

The clearest illustration I have found of the difference between professional licensing and codified regulation comes from the death industry. In Tennessee, both a funeral director and someone operating a cemetery may handle dead bodies (neither can embalm – that’s a separate license) and both deal with vulnerable consumers who are unlikely to be repeat customers. Both professionals are trusted to honor long-term promises, as when a funeral director makes a “pre-need” sale to a living person, or a cemetery commits to the upkeep of the burial grounds for future mourners. These similarities would suggest that the risks to the public posed by each of these professions are similar.

Their regulatory frameworks, however, are not. Funeral directors are regulated through professional licensure by a board dominated by funeral directors. In contrast, cemeterians are regulated by the Burial Services Section program, which is led by an assistant commissioner of the Department of Commerce and Insurance who’s a full-time state employee and combines this work with other administrative and regulatory duties

Regulatory structures have dictated regulatory outcomes. Both regimes impose special reporting and financial requirements on pre-need sales, but only the funeral board enforces a year-long education requirement and a high-school degree on its licensees. The regulatory focus of the funeral board is on disciplining unlicensed practice, where they take action in more than 90 percent of complaints (while only acting on about half of consumer complaints about service quality). The assistant commissioner, in contrast, focuses enforcement of the cemetery permit on compliance with the statutory financial and reporting requirements.

If we removed from the current set of licensed professions those that could be wellregulated by the market, or through a codified set of rules administered by bureaucrats, what would be left? Another way of asking the question is this – for what kind of work is it impossible to reduce good practice to a finite set of straightforward rules of dos and don’ts?

Professional licensing is only appropriate for work that requires what I will call “professional judgment.” This is the process of applying a complex system of knowledge to an individual case. The complexity of the abstract knowledge on the one hand, and the variety of possible individual needs of a client or patient on the other, create a nearly infinite matrix of appropriate professional choices. It’s not possible, let alone desirable, for the government to try to tell these professionals how to handle their work at each step of the way. Relatedly, work that’s appropriate for professional licensing will often be done independently, where professionals are given the autonomy to be their own bosses and to decide for themselves how to handle their cases and clients. The more structured the work environment, the less appropriate the profession is for full-blown licensure.

Although it is possible to assess professional judgment after the fact (that is, or at least should be, the role of professional discipline), beforehand we can only enforce it indirectly. The best we can do is to ask the provider to go to school, pass an exam, and adhere to necessarily vague ethical rules of practice. We believe that someone who does these things is likely to have the necessary professional judgment to be a safe and effective provider.

But notice how inefficient that regulation is. It requires extensive investment (often years!) before society can have confidence in that provider, and even then, we cannot really know if they will do a good job. We are just guessing based on their background and experience. That’s another reason why, as a regulatory intervention, professional licensing should be somewhat of a last resort.

If we limit professional licensing to work that applies complicated knowledge on a case-by-case basis, then it will naturally include some high-status, high-prestige professions like medicine and law. But not all professions that are important or dangerous are ripe for professional licensing, as the childcare example makes clear. We need to decouple the idea of the seriousness or the social value of a profession from the idea of licensing. Of course, the ingrained sociological meaning of professional licensure will make this difficult, but we should nevertheless try to resist arguments for licensure based in social status and parity with other professions.

Culling Professional Licensing

This theory of licensing would suggest that many professional licenses should be eliminated and others should be significantly streamlined. This legislative work can be achieved with bolder and more widespread use of sunset and sunrise review, which should be implemented in every state and for every profession.

Sunrise review, properly designed, can reframe the political debate about new or expanded licensure away from the “win-win” outcome sometimes perceived by legislatures who don’t look hard at the costs of licensing. At the moment, sunset review frames the question in deregulatory terms – asking whether the government or the market best protects consumers. But states should be asking a less binary question: whether the profession poses a risk to the public that cannot be mitigated through codified practice rules.

Sunset review should be designed to force legislatures to ask a similar set of questions of an existing licensed profession – whether licensing is necessary for this profession at all, and if so, whether the current rules can be justified in light of other regulatory possibilities. Many currently licensed professions could not answer these questions satisfactorily.

In eliminating licensing through sunrise and sunset review, legislatures should be careful not to opt only for low-hanging fruit – the professions that lack the political clout to fight deregulation. Fairness and equality demand that all professions failing the test for licensure should face the chopping block.

By providing a middle path where the government regulates not through onerous educational or testing requirements but directly through codes and inspections, legislative review that applies my theory of licensing has a better chance of halting the spread of professional licensing than an all-or-nothing deregulatory approach, even if it does not stop governmental intervention when consumer protection calls for it.

Fixing Boards

For work that poses a significant risk of harm to the public, and where good practice requires professional judgement, regulation requires an effective administrative system. The board system we have now works against public protection by increasing costs and the scarcity of professional services while also exposing the public to unacceptable risks from dangerous providers. Professional licensing, if done right, may be good for some professions (though fewer than we use it for today), but professional licensing boards, as currently conceived, aren’t good for much at all.

Boards have three main weaknesses: they are hopelessly under-resourced, they are controlled by members of the profession that they are supposed to regulate, and they use casual, collegial procedures for making decisions. Reform must take on all three problems.

First, boards need to be given the money, staff, data and expertise to do their work. They need budgets that adequately cover timely investigations and allow for proactive measures, like periodic background checks, that would turn up criminal charges against licensed professionals. Boards should also have the funds to more extensively use databases like the National Practitioner Data Bank and state-controlled substance-monitoring programs that would reveal a pattern of dangerous or unethical practice.

More information would lead to more cases, so resources must also be allocated to hiring more staff to follow up on investigations and prosecute cases. Less obviously, boards need more resources to pursue reasonable rule-making: without access to systematic data and expert reports about how a rule might affect practice and the availability of providers, boards are left guessing and revert to learned patterns of protectionism.

These solutions to well-documented problems are obvious, and they have been proposed many times. Why, then, are boards still not given what they need to do their work? The simple answer is that it’s expensive. But as the saying goes, you get what you pay for.

States have had to pay millions to settle suits over state-employed doctors whose misdeeds were enabled by a licensing board. Tennessee alone has spent billions of dollars to combat an opioid crisis enabled by nonexistent discipline for prescribers. Add to that the 80 The Milken Institute Review financial burdens states and the federal government have had to take on because of an overwhelmed health care system whose pathologies include licensing turf wars and ever-higher professional barriers to entry. It’s time for states to recognize that underfunding boards is penny wise and pound foolish.

Second, board membership needs to reflect the true set of stakeholders in professional practice, not just the profession itself. When I attended licensing board meetings, the word “stakeholder” was always used to refer to members of the profession. But the true stakeholders in a profession’s regulation go well beyond its practitioners. In other areas of state administration, the boards reflect a range of perspectives. For example, Tennessee’s Air Pollution Control Board comprises a physician, an engineer, a professor, a farmer, a member of the auto industry, three people in manufacturing, a conservationist, an environmentalist, two people from city government and two administrators from state government. The board’s work has analogies to professional licensing; it makes rules, issues permits (like licenses) and decides individual controversies about violations and variances (like disciplinary action).

A licensing board could reflect this structure. In the course of my research, I had many occasions to meet people with important perspectives on professional regulation, from advocates for patients’ rights fighting for safer medical boards to professors studying the lack of legal services for the poor. For example, I got to know Monti Herring, who works for Prevention Partnership, a Nashville-based nonprofit organization that provides Narcan and training on how to use it to homeless shelters and first responders. (Narcan is an overdose-reversing drug that saves lives that would otherwise be lost to the opioid crisis.)

As someone in recovery himself, Monti has deep professional experience in how the practice of medicine has contributed to the crisis of addiction in our state. I asked him if he would be willing to sit on a hypothetical medical licensing advisory board, and he said “absolutely.” He speculated that he “would ask totally different questions” from the physician members.

In setting the statutory membership rules for licensing boards, legislatures should give a voice to advocates for consumer and patient rights – experts on licensing’s effects on public health, employment, equality and access to services. The few public members who currently serve on professional licensing boards are inadequate to represent these interests because they don’t have expertise to offer beyond the common sense they’ve acquired as an occasional consumer of professional services. Professional members should comprise a minority on the board, there to provide professional expertise as one of several inputs into the decision-making process.

Members should be selected based on merit, not political patronage, through an open, competitive process and according to pre-identified, relevant qualifications. When necessary to attract qualified candidates, board members should be compensated for their time at a rate commensurate with their expertise. This would ensure not only expert, engaged decision-makers, but it would also allow them to devote enough time to their regulatory work.

Third, board procedure needs to be overhauled to be less like a collegial, private meeting and more like the government regulation it purports to be. Boards should not be allowed to go into executive session except for deliberations in disciplinary cases, where having to hash out a disciplinary order in front of the accused cuts against public protection. Meetings should be live-streamed and recordings made available on easily found state websites. Boards should post public records like budgets and minutes as a matter of course.

Professional discipline, especially from the complaint process to the resolution of cases, needs a procedural overhaul. All states should use an online complaint system that does not bully patients and clients into keeping mum. Complainants, including employers such as hospitals, should receive immunity from lawsuits for complaints filed in good faith. States should publish anonymized complaint data about providers and hold all complaints for context in the event of future complaints, even after the statute of limitations (which, in most cases, should be lengthened) has run out.

Next, investigations should be swift, thorough, and as independent from professional bias as possible (the Tennessee system of giving a physician the authority to secretly decide whether a case warrants investigation and, again, whether an investigation merits charges, is unacceptable). Investigations and charging decisions should be guided by clear, detailed and public guidance. Charging documents should be public, as they are in the criminal and civil legal systems, and plea deals should not be allowed. Any professional whose misconduct is serious enough to merit the filing of charges should be subject to a public airing of the facts, not a curated “consent order” with sanitized information about the wrongdoing.

Contested cases should be more adversarial, structured, and guided by clear criteria. Cases should apply a “preponderance of the evidence” standard, not something more generous to the accused professional, as some states do. They should be bifurcated into a fact-finding phase and a sanction phase, where during the latter the rules of evidence are relaxed to give the tribunal a fuller picture of the professional’s life and career before the alleged misconduct. And the decision-makers should be guided by rules and policies – created by the board through notice-and-comment rulemaking – about everything from the theory of professional discipline to the minutiae of board orders like when to use practice monitoring.

States should create advisory sanction ranges for given offenses to promote uniformity and counter the tendency to cut slack in individual cases. Failure to adhere to guidelines or advisory ranges should increase the risk that a court will throw out the disciplinary decision as arbitrary and capricious.

Finally, cases should be heard by panels that have training and expertise in professional regulation, where no more than one member is from the profession of the accused. Panels should include at least one lawyer to provide some expertise in the adversarial system (this may be an administrative law judge, the kind that rules on procedural issues in Tennessee).

To the extent more expertise is necessary to understand the conduct in question, the parties could call expert witnesses. That’s how medical malpractice trials use experts. The idea that a doctor is entitled to a malpractice jury made up of mostly other doctors would offend notions of due process in civil trials, as it should in professional administrative hearings.

Finding Models for Board Reform ...

Some elements from the three categories of reform – increasing boards’ resources, diversifying their membership and changing their procedures – have precedent in at least one state. (As we’ll see later, most of the suggestions found above are used in concert, and to notable success, in the United Kingdom.)

None of the 50 states dedicate enough funds to regulate the professions that need it, but some seem to do more with less. A few states “continuous query” the National Practitioner Data Bank for instant information on changes to their licensees’ criminal status, hospital discipline and malpractice history. In Colorado, an umbrella agency provides the necessary staffing, data and analysis that its boards need to understand the impact of their licensing decisions. That state’s Department of Regulatory Agencies comprises 600 regulatory staff who, among other regulatory tasks, review new and existing professional licenses to “ensure that they are necessary, fair, effective, and efficient.”

Diversifying board membership has been a slow process since the reform was first suggested decades ago, but in a few states and for a few professions, nonprofessional board members have achieved parity or even dominance over professional members. California seems to be the leader here, with professionals dominating less than half of its licensing boards. But even there, boards governing the health care professions – where the stakes of regulation are perhaps the highest – tend to be dominated by practitioners.

Likewise, examples of better board decision- making procedures can be found around the country. Tennessee records and posts board meetings and does not allow boards to discuss matters privately. Some states have robust board member training systems. Delaware provides explicit, public guidance for boards in disciplinary cases, even if a close reading reveals that many of the recommended sanction ranges are too wide to meaningfully constrain boards’ decision-making.

In a minority of states, an administrative law judge, not a panel dominated by professionals, tries disciplinary cases. This is an improvement on the typical disciplinary system where professionals truly face a jury of their peers. But even in this handful of states, the judge’s opinion is merely advisory; a board dominated by professionals must give it the green light.

To see what all these reforms might look like in the aggregate, we have to go abroad. The United Kingdom, for example, uses two different regulatory bodies to oversee the profession of medicine, both of which improve upon the American model. The members of the General Medical Council, the body responsible for setting the terms of professional entry and practice, are merit-selected, trained in their regulatory role and paid a competitive wage for their part-time work. Only half the seats go to physicians. The GMC investigates disciplinary cases, but hands off adjudications to the Medical Practitioners Tribunal Service.

The MPTS follows a decision-making protocol far more guided, transparent and adversarial than that used by the typical American licensing board. Plea bargaining doesn’t exist; all cases are tried to a panel of three drawn from a pool of people who are also merit-selected, trained and paid. A disciplinary panel must comprise one lawyer, one doctor and one lay member. In most cases, this has the effect of limiting the number of doctors to one-out-of-three members.

Panelists are constrained by more than 40 official documents guiding their decisions about facts, fitness to practice and sanction. Decisions are internally reviewed for appropriateness and consistency, and may also be appealed by an arm of the National Health Service as well as by the physician.

Any comparison between systems so different – an American state licensing board and a national regulator of health care providers in a country with socialized medicine – should be taken with a grain of salt. Yet the empirical evidence we have suggests that the British disciplinary system works better. British patients complain less frequently about their doctors and, based on recent data I collected with a colleague in the UK, the British system imposes a serious sanction more frequently in almost any category of offense.

For example, fraud was punished more harshly in the UK (serious sanctions in 89 percent of cases with a finding of fraud versus 63 percent in Tennessee). And the UK suspended or revoked a license in 95 percent of cases where the board found that the doctor had engaged in sexual misconduct. In Tennessee, that number is just 33 percent.

Importing the British system of professional licensure to the United States is not, of course, a straightforward task. One of the biggest differences between the two jurisdictions is that the UK enjoys the economies of scale lost in a state-by-state system. But even if recreating the British system for every state and every profession would be prohibitively expensive, efficiencies could be found by combining professions within a state. For example, New York uses an agency housed in the Department of Education to hear disciplinary cases for most professions. Cases are heard by three-person panels drawn from a large and diverse set of professionals and lay people. In practice, quorum rules – that a panel must comprise two members of the “relevant” board – recreate the professional bias so problematic in American professional discipline. But the example suggests that combining professions under one state regulatory authority may be a way to keep down the costs of adequate regulation.

A more dramatic way to achieve economies of scale would be to create federal professional licenses that preempt state regulation altogether. If we were writing on a clean slate, this may be a plausible design. Not only would national licenses for each profession be efficient in terms of regulatory resources, but they would ease interstate mobility.

One serious downside to a national license, however, is that to achieve political viability, the license may have to approximate the requirements from the most onerous state so as not to be seen as reducing public safety anywhere. The effect, of course, would be to increase licensure burdens for just about everyone in the name of bureaucratic efficiency and interstate mobility. Indeed, something like this ratchet effect is in play in interstate compacts – agreements among participating states to honor a single license – where requirements tend to be especially burdensome.

To be clear, we are not writing on a clean slate. Hundreds of years of state regulation of the professions has created strong political winds against federal preemption in this area and the professions themselves can be expected to cling to the status quo. They will raise arguments about tradition, states’ rights, and perhaps even the constitutionality of federal professional licensing. Until the crisis of professional regulation becomes so acute that Congress decides to take the drastic step of preempting state licensure and risk being batted down by the Supreme Court, reform will have to be state by state.

… Or Eliminating The Board System as We Know It

Would these changes to licensing boards’ resources, membership and procedures be enough? There is only one way to find out. But if not, there is another approach, one suggested by the fact that the state professional licensing board is a regulatory anomaly. States could scrap the board system altogether and use what they do for virtually every other kind of regulation: a governmental agency, vested with the authority to make decisions in its own right, that uses input from industry as one of several sources of information.

As I watched licensing boards at work, I often felt that the people in the room who knew the most about the practices being interpreted and applied, and who seemed best positioned to decide in the public interest, were the state employees who had no vote – the executive directors, attorneys, full-time consultants and administrative law judges. In many other areas of regulation, civil servants do the deciding while industry does the lobbying. Professional licensure could be like that, too.

For some professions, legislatures could replace the decision-making body with a single bureaucrat, like the assistant commissioner who runs the Burial Services Sector program in Tennessee. Administrative law requires certain processes for rule-making and disciplinary decisions; each of these provides an opportunity for input from the regulated entities. If the head of a licensing program needed professional expertise beyond what’s provided at these hearings, they could hire a consultant or convene a task-force. The crucial difference between a commissioner-run program and a licensing board is that experts from within industry would be providing information, not making the decision in the final instance.

For complex professions, legislatures may recognize that expertise will be needed in a more sustained way. One way of harnessing expertise, and one with precedent in state government, is to use an advisory board. My personal favorite in this category is Tennessee’s Elevator and Amusement Device Safety Board, which advises the Department of Labor and Workforce Development on “everything that goes up and down and round and round.” The board comprises representatives from the industry (when I attended a board meeting, the COO of Dollywood was a member), public representatives, and someone from the insurance industry. Final decision-making power, however, is vested in the Department of Labor.

At least one state uses advisory licensing boards.

Vermont, which holds itself out as a state with less-than-average professional red tape, vests final decision-making authority over professional licensing decisions in a state official. In implementation, however, the system falls short of the fully accountable, bureaucratized system I have in mind. The Vermont boards – which are, of course, dominated by professionals – do not merely advise, they perform all the rule-making and disciplinary work in the first instance, subject to a final sign-off from the commissioner. The commissioner does sometimes veto board decisions, and the threat of her disapproval undoubtedly pushes regulation at least slightly more toward public protection, but it is easy to imagine that the sign-off often acts as a rubber stamp. If states are to wrest regulation away from the professionals themselves, they may have to do so in a more robust way.

We should, of course, be aware of the downsides of bureaucratizing professional licensing. Regulating the professions through the political process may address the problems identified in this book, but it also creates new ones. Issues that once seemed like ethical or scientific debates internal to the professions have become explicitly politicized. There are many examples in medicine, from Covid-19 vaccine safety to the ethicality of abortion or gender-affirming care.

Law, too, has seen its share of political controversy over bar rules about nondiscrimination in client selection and mandated antiracism trainings for new lawyers. Likewise, psychologists have clashed with state governments over whether the profession can ban gay conversion therapy as a matter of professional ethics. Giving the licensing system a more direct line of accountability to the legislature risks taking these questions out of the professions’ hands and putting them in the hands of the electorate.

Whether you think this is a good or a bad thing in the individual case probably depends on which professional rule we’re talking about and what state you live in. But the current state of professional licensing is bad enough that some tradeoffs would seem appropriate. It is also not clear that the system we have isn’t already subject to political influence of the kind we might worry about in a more bureaucratized system.

In 2021, as licensed physicians were pushing a social media campaign spreading misinformation about the safety of the Covid-19 vaccine (that it would “magnetize” your body, for example), the Tennessee Medical Board posted to its website a policy that such misinformation was grounds for professional discipline. After my state legislature pressured them to take it down (under threat of “dissolving” the medical board), they did so.

It is also not clear that the risks of politicization are as high for other professions as they are for law and medicine, nor that they couldn’t be mitigated through proper regulatory design. For example, licensing agencies could be designed as “independent” agencies – not subject to removal and reappointment with every change in leadership, or financially independent from the legislature.

Old problems die hard. For more than a century, we have put the professions on a pedestal, defined their identity as one of exclusion, and then given them legal authority to decide who is in and who is out of their club. We defined the value of a profession by whether it has a state licensing board, and as a result their number and the percentage of workers organized under them has exploded. We gave these ostensible state agencies power without accountability, with higher costs to the public than most people realize.

There is no silver bullet for a problem this complex and longstanding. Easy solutions will help a little, but real change will take hard work. The first step is to realize that our experiment of giving the professions unfettered autonomy over their regulation has been a failure. The next is to see that we need to use licensing as a regulatory last resort and to administer it in the public interest. Convincing the people in power that these things are true will be difficult, but not impossible. Indeed, if we want a system that does more than protect the public in name only, then it is essential.