Growth vs. Gimmicks Part V: Eliminating onerous red tape
Long-term Growth vs. Short-term Gimmicks is a seven part series examining the impact of the COVID-19 pandemic on Maine’s economy, the corresponding effects on the state’s biennial budget, and reforms lawmakers should pursue to achieve real budget savings. Check back tomorrow for Part VI.
CUTTING UNNECESSARY OCCUPATIONAL LICENSING
Any regulation that hinders the entrance of workers or entrepreneurs into the marketplace, without significant public health or safety benefits, should be abolished. Lawmakers should heed the recommendation of the governor’s Economic Recovery Committee to review regulatory barriers and streamline processes where those barriers inhibit prosperity.
For instance, over-burdensome regulations on caregivers and rules for child care facilities have distorted the availability of affordable child care in Maine. Child care is a foundational service to ensuring a stable economy for Maine’s working parents and dual-income households. Early in the pandemic, Governor Mills eased some rules on Maine’s child care providers by allowing family child care providers to watch three (instead of two) children, aside from those living in their home, without certification. By making these changes permanent in statute, lawmakers can do much to cut red tape and aid struggling young families in the post-lockdown economic slump.
Occupational licensing reform is not a new idea for Maine. In 2013, the OPM highlighted numerous professional licenses that the state could repeal with only “minimal” financial impact, since licensing fees do not flow to the General Fund. OPM also noted that doing away with these programs and boards “would not jeopardize the health, safety and welfare of Maine citizens.” Ending needless licensing for jobs like arborists, dieticians, interior designers, soil scientists, cosmetologists, and other occupations would substantially lower barriers to work for thousands of Mainers.
In March 2020, the Commissioner of Professional and Financial Regulation submitted a report to the legislature upon studying barriers to licensing and credentialing for foreign and out-of-state workers. The report noted the “need to simplify in language in licensing statutes…for those who may wish to use their skills at a lower level while earning the credentials or experience necessary to earn a Maine license.” Lawmakers should pursue more ways to help workers moving to Maine from inside or outside the United States to practice their occupation as easily as possible.
Repealing rules that do not markedly enhance consumer health and safety, but rather delay or restrict opportunity, will likely stimulate significant economic growth. Research from the Cato Institute found that occupational licensure “has significant negative effects on occupational mobility when switching both into and out of licensed occupations,” noting that “licensing can account for at least 7.7 percent of the total decline in occupational mobility over the past two decades.” Holding on to outworn licensing regimes can stifle the economy. Workers and entrepreneurs will be better equipped to redirect their resources when onerous rules no longer get in the way of their pursuit of happiness.
Cutting down Maine’s overall occupational licensing regime to a reasonable size will not affect expected General Fund revenues since licensing offices are operated through fees obtained from licensure. The state could achieve some cost savings by reducing total staff needed to administer its various licensing programs. For instance, eliminating licensure for dietitians, barbers and cosmetologists, transient salespeople, funeral attendants and directors, massage therapists, and occupational therapists, taxpayers could realize at least $1 million in immediate savings from state employee salary cuts. Far from the only benefit, cutting needless licensing regimes will spur more opportunities for Mainers to start successful careers and contribute to the tax base.
In her spring 2020 emergency orders, Governor Mills also suspended physician oversight requirements for advanced practice nurses and physicians assistants, and expanded the ability of healthcare workers to provide telehealth services. With these actions, the governor greatly helped Maine people get access to needed care during the pandemic. If these temporary changes did not lead to negative patient outcomes, these rules on medical providers should be permanently undone as well.
ELIMINATING CERTIFICATE OF NEED
During the spring of 2020, Governor Mills issued various executive orders that loosened healthcare regulations during the Civil State of Emergency in response to COVID-19. For instance, she allowed for an expedited process for Certificate of Need (CON) applications, a usually lengthy and costly process required of any hospital seeking to significantly expand its capacity. Lawmakers should consider ending the process altogether, as doing so would ensure greater responsiveness in the health care sector in the event of a drastic public health crisis.
Eliminating Certificate of Need in Maine would not amount to significant budgetary savings. A manager at the Division of Licensing and Certification (DLC) within DHHS estimated that processing CON applications requires about one full-time employee in the office. While sparing Maine’s medical providers from this costly process wouldn’t help the biennial budget, it could accelerate growth in the supply of healthcare. Myriad research supports the view that CON laws depress competition and lead to worse outcomes for patient health and satisfaction.
Not only that, eliminating CON would Maine save hospitals, nursing homes, and other healthcare providers millions of dollars in application fees. From 2018 to 2020, DLC processed 18 CON applications, accumulating a total of $348,786 in fees, an average of nearly $20,000 per application. Without this added cost, these facilities will be better equipped to invest in their workers and services over the next biennium and beyond.
In a pandemic or public health emergency where hospital capacity is closely watched, government should get out of the way of medical providers and allow them to offer care where and when the need arises.
Check back tomorrow for Part VI, which focuses on cost-saving reforms to K-12 education and the University of Maine System.