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Reducing Barriers to Health

By Ryan Jackson

According to the Center for Disease Control, 65 year old adults have lower life expectancy in Arkansas than in the vast majority of other states.

Given the plight of our elderly, our state’s seniors would benefit from policies that improve the healthcare they receive.  For instance, a state policy that reduces the occupational licensing barriers for nursing home administrators would provide an improvement in the healthcare outcomes for seniors.

Occupational licensing is a form of government regulation that requires an individual to get a license to work in a particular profession. Advocates for occupational licensing generally claim that licensing ensures quality within an industry, and protects consumers from under-qualified providers. Critics argue that occupational licensing creates barriers, which restrict employment, reduce competition, and raise prices in these industries. These critics claim that restricted employment and higher prices lead to poor healthcare outcomes.

Because the nursing home industry plays a major role in providing healthcare, occupational licensing in this industry will influence the quality of healthcare seniors receive. Nursing home administrators are licensed in all 50 states.  They direct and coordinate all nursing home services. According to the Directory of Licensed, Certified, and Registered Occupations, they are responsible for marketing and safety, as well as compliance with federal and state laws, and overseeing the resident care program. They are also in charge of recruiting and training personnel.

To obtain a nursing home administrator’s license, every state requires payment of fees, passage of exams, experience, and education.  However, the burden of each of these requirements varies drastically from state to state. For instance, to become a licensed nursing home administrator, Arkansas requires a $100 initial application fee, and 520 hours of experience along with a bachelor’s degree. Neighboring state, Louisiana, requires an initial fee of $700 and a bachelor’s degree, while Texas requires a bachelor’s degree along with 1,000 hours of experience.

Research by Alexander Kanode, a policy analyst for the Arkansas Center for Research in Economics, and myself shows that stricter licensing requirements for nursing home administrators either have no impact on or diminish the care offered by nursing homes.  We examine the occurrence of bed sores.  With better care, fewer residents will get bed sores. Interestingly, our study actually finds that a $71 increase in the initial fees required to obtain a nursing home administrator license leads to one more case of bed sores per 100 nursing home residents. These results contradict the common claim that stricter licensing leads to better quality.

Licensing requirements have been shown to reduce the number of employees and increase the wages of the workers in an industry. UCA Associate Professor of Economics and Arkansas Center for Research in Economics Scholar Dr. Thomas Snyder has found that every additional 10 jobs that are licensed decreased the number of jobs in Arkansas by 4,725. A 2010 study by Dr. Morris Kleiner and Dr. Alan Krueger found that workers with an occupational license have a 15% higher hourly wage than comparable unlicensed workers. The case is clear that licensing helps those who are able to find a job in the regulated industry.

By increasing the wages of nursing home administrators, licensing requirements leave nursing homes with less money to spend on nurse assistants.  With less of these workers on the job, bed sores, a measure of neglect, increases. My research with Kanode finds that when there are three fewer hours per-day worked by certified nurse assistants (CNAs), there is one additional case of bed sores for each 100 residents in nursing homes.

To improve health care outcomes, policymakers in Arkansas should reduce the licensing requirements for nursing home administrators. My research shows that licensing has only negative effects on the quality of care received by nursing home residents.

Ryan Jackson is an ACRE Undergraduate Research Fellow at the University of Central Arkansas. His views do not represent those of UCA.