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What would be the effect(s) of a licensing law which did NOT outlaw unlicensed competition, but ONLY gave the licensed professionals the privilege to bill the state’s (tax funded) heath care system for reimbursement?
Would such a distorted market make it more difficult for the unlicensed professionals to compete, and why?
How would it affect consumers of the service provided by these professionals who did NOT qualify for the state aid, but were paying out of pocket? Would it raise prices for them, and how?
I’m trying to settle a debate with someone arguing in favor of such a measure, thank you.
Disclaimer: Layperson - don't assume anything I say on economics is true.
It would have the same effect as any other subsidy to industry.
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Ah, thank you. Do you have any articles/sections of larger works, etc., you can point me to that explain how subsidies distort prices and affect other participants in the market? I'm looking on my own, but some decent recommendations would be very helpful. Thanks.
Would such a measure be much better than what we have now? Yes. Would it still be far from perfect? Yes.
What you're proposing is essentially a subsidy: you pass this test and pay a few fees and you'll be able to get more customers with deep pockets (the state). It would allow for greater competition as unlicensed doctors and nurses could compete with licensed ones to a limited extent, but it's rather obvious that licensed professionals would be disproportionately benefitted. In fact, such a system would not allow the state to have the most efficient state-run health care possible, since the state's health insurance fund would have to pay a premium for licensed professionals.
P.S. I'm a licensed professional - to KILL.
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