Beyond Physicians: The Effect of Licensing and Liability Laws on the Supply of Nurse Practitioners and Physician Assistants

Abstract

The increased use of nurse practitioners (NPs) and physician assistants (PAs) represents an important option for increasing access to healthcare. I explore the effect of two types of laws on the supply of NPs and PAs: (1) occupational licensing laws that limit the practices of NPs and PAs and (2) caps on noneconomic damages. I find that relaxing licensing laws to allow NPs to practice with less physician oversight increases the supply of NPs in areas with few practicing physicians by 60 percent — though the size of this increase decreases as the supply of physicians increases. I find a similar effect of licensing laws that grant greater PA autonomy on the supply of PAs, but this effect is not consistently statistically significant. Noneconomic damages caps increase the supply of both NPs and PAs by about 60 percent at the lowest levels of physician supply, but the size of this increase decreases as the physician supply grows. I also examine the effects of these laws on the probability that a county contains a health professional shortage area. The results of this analysis indicate that licensing laws have meaningful effects on access to care.

Keywords: nurse practitioner, physician assistant, occupational licensing, scope of practice, malpractice

JEL Classification: Ill, I18, J44, K13