Last Updated on April 23, 2026 by Chicago Policy Review Staff
Why is it so hard to see a healthcare provider in America? The US has fewer doctors per person than most developed countries and too few to meet growing demand, according to projections. Most Americans have felt the symptoms of this longstanding shortage: higher prices and difficulty finding care. But what is less well-known is that this scarcity is a product of deliberate policy choices.
In the 1980s, growing competition for patients was squeezing doctors’ inflation-adjusted incomes. Public and private actors, including the American Medical Association (AMA), the US’s largest organization of physicians, were predicting that the country was headed for a doctor surplus or was even already in one. These fears inspired a moratorium on new medical schools and enrollment caps that lasted until 2005. For similar reasons, a provision in the 1997 Balanced Budget Act capped Medicare funding for residencies. The number of residency positions plateaued for five years and afterwards remained insufficient for the number of applicants. This, in effect, restricted entry into medicine since physicians cannot obtain a license without completing residency.
These examples are part of a nearly two-century history of policies intentionally restricting the number of medical professionals. Advocates for stricter licensing and education requirements often admitted they saw the country’s “very large number of physicians” as an “evil” that “must be corrected”—as the AMA’s committee on educational standards put it at the association’s founding in 1847.
Some argue that, because consumers lack the knowledge to evaluate medical care, regulation that restricts entry into medicine is necessary to ensure quality. However, supply and demand create an incentive for established doctors to excessively restrict entry: Fewer competitors means higher incomes. Some nuances complicate this picture: Many progressive-era licensing advocates did not have such conflicts of interest, and medical organizations have sometimes supported expanding the number of doctors. But numerous historical quotes show that organized physicians had their wallets in mind—from complaints that a “surplus” of graduates was “steadily reducing the opportunities of those already in the profession to acquire a livelihood”—to statements that it made sense from “a common business standpoint” to advocate stricter enforcement of medical laws.
Indeed, most economists who have studied licensing laws think they were created to benefit doctors. Certain facts suggest organized medicine’s influence on policy. The AMA has spent over $500 million on lobbying since 1998—more than other organizations widely considered politically influential (for example, Boeing and the AARP). Most states require medical schools to be approved by an educational committee co-sponsored by the AMA for graduates to be eligible for a license. Furthermore, licensing boards are often packed with current or former medical society officers, and some states give medical organizations the power to nominate board candidates or even directly select them. The most blatant example of organized medicine influencing policy was in Alabama: After a near-majority of doctors was elected to the legislature, the state passed a law in 1875 declaring the state medical association and its county affiliates to themselves be the state and county health boards—a situation which is still in place.
US healthcare regulations have features that are hard to explain from a patient protection standpoint. We require a bachelor’s degree before medical school—unlike most other developed countries. We also make it difficult for doctors to immigrate here, such as by requiring them to repeat their residencies—even if they have years of experience and come from nations with advanced healthcare systems. And scope-of-practice restrictions in many states limit the kinds of care that nonphysician healthcare providers—such as nurse practitioners (NPs) and physician associates (PAs)—can provide, mandating that only doctors can perform tasks such as prescribing drugs. While advocates for these laws argue (with little evidence) that they are necessary to protect patients’ safety, an abundance of studies shows that expanding NPs’ and PAs’ scope of practice does not worsen care quality.
Some would try to solve regulatory conflicts of interest by improving the impartiality of regulatory bodies, for example by reforming how licensing boards are selected or insulating regulators from outside forces. But it’s not obvious that independent regulators would make more-optimal decisions. The fact that these policies benefit doctors, and that doctors have lobbied for them, does not prove that this is the causal reason why these policies were put in place. Even insofar as it is, it shouldn’t be surprising if these policies are also good for the public to some degree: Policies that help the economy are easier to enact, all things considered, because they create less pushback. The influence of special interests can sometimes be a win-win.
For example, one historical argument for increasing doctors’ incomes has been that economic difficulties may encourage physicians to perform unnecessary care to stay afloat. Today, the AMA argues that expanding nonphysicians’ scope of practice will lead to overutilization, increasing costs and health risks. There is some evidence of this, but it is ambiguous. For example, a 2024 study found that NPs with expanded autonomy did not prescribe more opioids, antibiotics, or other drugs than NPs under doctor supervision. And while the AMA has highlighted a study showing that NPs and PAs order more diagnostic imaging than doctors—the gap is less than one percentage point, and the authors note they “cannot discern whether the differential in ordering represents overuse […].” Similarly, the AMA has noted that “skeletal x-ray ordering increased over 400% among non-physicians” from 2003 to 2015—but this increase only brought these providers to a similar level as primary care doctors. Furthermore, the study did not specifically look at independently practicing nonphysicians, so, as its authors note, the increase may reflect primary care doctors delegating tasks to NPs and PAs.
Although the status quo may in principle deliver better outcomes than the most likely alternatives, the evidence suggests room for improvement, such as by considering market-based quality signals and repealing or relaxing restrictions that excessively constrain provider supply. Although international comparisons are complicated by other differences between healthcare systems, the fact that many developed countries with less restrictive training requirements achieve superior health outcomes suggests that American-style restrictions are not necessary for high-quality care. State-level policies are already successfully expanding access—as of 2023, 34 states have granted NPs authority to practice without formal relationships with physicians.
Reducing these barriers would benefit multiple stakeholders: nonphysician providers through expanded career opportunities, healthcare organizations through greater operational flexibility and reduced costs, and patients through improved access. The significant concern that medical costs represent to many voters raises the question of why this concern remains largely unresolved. But the economic theory of regulatory capture predicts that, precisely because of their smaller numbers, special interests tend to prevail. While these concentrated groups face high per-capita rewards from advocating for policies that benefit them, the costs of these policies are diffused over wider sections of society. Because of this, each consumer has smaller incentives to spend time and effort learning about these policies and working to change them. Also, the larger a group is, the harder its members will find it to coordinate. These dynamics could impede reform efforts.
But although regulatory capture theory shook up consensus assumptions that regulators were public-interested, some of the foundational work on this topic is backed by minimal empirical evidence. Indeed, some economists have found results that suggest some regulations are not due to capture. Overall, assessing the causes of regulation is complicated by unobserved confounders, overlapping causes, and limited, ambiguous data.
And in any case, the theory does not mean that special interests will always get everything they want, but rather that policymakers will seek to optimize support from all stakeholders, among whom concentrated groups will have disproportionate influence.
Although the regulatory capture model says that physician groups will act to stop their privileges from fading into the ether, it also suggests that deregulation could itself alter the underlying incentives in ways that would reduce risks of future capture. First, increasing the physician supply would dilute the benefits that each doctor gets from lobbying and increase coordination costs. Second, a group doesn’t achieve its political goals by being influential in an absolute sense, but rather from being effective relative to its competitors; therefore, expanding nonphysician healthcare providers’ scope of practice may empower these groups and create countervailing pressure against physician lobbying. Third, policymaking exhibits status quo bias, so once barriers are dismantled, they become more difficult to rebuild. These factors indicate that, though reforms may be politically difficult, they could be durable once implemented.
The choice at hand is not between healthcare quality and access. It is about whether or not healthcare policy will be determined by the very interests who benefit from artificial scarcity.