Medical care practitioners, lawyers, and many other professionals are licensed by the states, rather than the federal government. Historically, the federal government had little or no role in the licensing of professionals, with the exception of patent agents and persons involved in shipping and, later, aviation. This made sense because, at one time, there were substantial differences in medical practice among the states. With the advent of modern medical training, national certification of medical schools and residencies, and national licensing exams, state standards for medical practice and for licensing have become very uniform, weakening the rationale for state licensing. (States do differ on whether physicians who have been out of school for more than 10 years have to retake a certifying examination and in certain other requirements that can make getting a license much more time consuming in some states than in others.)

The best rationale for continuing to license physicians at the state, rather than national, level is that the practice of medicine has been a very local activity and that local regulators are in a better position to supervise it. This is certainly true as regards consumer complaints. It is less true for professional review actions, since the information available to the state licensing agency is usually provided by reports to the National Practitioner Databank. There is also a strong component of trade regulation in the licensing of medical care practitioners, which is expressed through the legislature’s and the licensing agency’s definition of the scope of each license. Each licensed group seeks to expand their license, usually at the expense of other licensed and unlicensed groups. A recent example is the fight over the licensing of acupuncture practitioners. If acupuncture is restricted to physicians, then the traditional healers will be unable to practice unless associated with a physician. Although this has the benefit of ensuring that the patient receives the full spectrum of medical care, it increases the cost of such care. (It also raises the issue of how physicians can supervise an activity that they know nothing about.)