Health Care Costs and Barriers to Entry: Do Labor Market Regulations for Nursing Have a Relationship with State-Level Health Care Costs?

Abstract

U.S. healthcare costs are rising at an alarming rate. While this paper mentions healthcare market effects, the focus of this paper is on the supply side, specifically regulations that affect the number of healthcare staff. Currently, the United States has many variations in state nursing regulations. Through licensing procedures, the states control the supply of nurses; this may influence healthcare costs. The hypothesis is that states with more restrictive licensing requirements for nurses have higher healthcare costs as a percentage of the state’s GDP compared to states that allow full authority and scope of practice. Current trends show states restricting nursing authority to practice within a physician-nurse framework tend to have higher health care costs than states not confining nursing authority to practice independently. However, regression analysis yields inconclusive results that do not fully support this hypothesis, which may be due to omitted variable bias. There needs to be further research with additional variables and observations concerning what may affect income with health care costs and nursing regulations.