Universal medical licensing for doctors—a good idea that will never happen

Some well-intentioned people at the Center for American Progress say that the concept of individual state medical licenses is outdated, and states should recognize each others' licenses.

On the Health Affairs Blog, they listed many convincing reasons for this plan such as the streamlining of some requirements—many of which are unique to each state, the consolidation of such things as background checks and paperwork, decreasing costs to physicians, the fact that individual licensing has hindered the development of telemedicine, difficulty in credentialing physicians trying to help out in disasters, delays at best averaging 2 to 3 months to obtain a license in another state, and others.

On Twitter the idea was endorsed by Dr. Ashish K. Jha, a health policy researcher at Harvard. However, he wondered whether state boards would tolerate the loss of income. To me, the answer is simple. No.

To give you an idea of the magnitude of income the states receive, consider these figures.

According to the Federation of State Medical Boards (FSMB) as of 2012, there are approximately 878,000 MDs and DOs with active licenses in the United States. This includes 142,423 (16.8%) who have active licenses in two states, and 50,454 (5.9%) with licenses in three.

The average cost of a medical license and yearly renewal in each state is about $400. I was unable to determine exactly how many states require yearly renewal, but a spot check suggests that it is well over half.

I'll do the math. Using the FSMB data, there are about 192,000 doctors with active licenses in two or three states. If states recognized valid licenses from other states, they would lose about $100,000,000 in yearly revenue. (142,423 docs would no longer have to pay for one additional license and 50,454 for two additional licenses [50,454 x 2] x $400.) And to yield all medical licensing to the feds, the states would lose another $351,200,000 (878,000 x $400) every year.

The state medical boards probably couldn't even make the decision independently. Another figure which I could not obtain is how many states funnel medical licensing income into their general funds instead of using the money to investigate complaints about doctors. I know some states do so for sure, including Connecticut and Texas.

It seems many of these fees are really taxes disguised as licensing costs.

Yes, universal medical licensing is a great idea, but the states will never give up this money.