The Rise and Impact of Nurse Practitioners and Physician Assistants on Their Own and Cross-Occupation Incomes
Perry, John J., Contemporary Economic Policy
Health care is a large, dynamic, and growing segment of the economy. Of its many interesting facets is the fact that its occupations are nearly universally regulated. A mandatory condition to work in a regulated occupation is to hold the appropriate license or certification. Typically, these licenses not only authorize a practitioner to practice but also give parameters of that practice: what the occupation can and cannot do. Any change in these parameters has the potential of dramatically altering the occupational landscape as there are direct and indirect impacts on the occupation experiencing the change as well as on other related occupations. These impacts are of interest generally, but especially for an industry as large and prominent in public policy concern as health care.
There has been a dramatic change in occupational regulation in the health-care industry leading to nurse practitioners (NPs) and physician assistants (PAs) rising as primary health-care providers. Both NPs and PAs have experienced authority expansions at different times in different states that has resulted in their practice authority resembling that of traditional general care physicians. This change has gone largely uninvestigated in the literature. This lack of attention coupled with the importance of the health-care industry in which these changes have taken place motivates this research. It is found that the changes NPs and PAs have experienced have had economically significant impacts on their own and physician incomes.
There has been a significant amount of attention in the larger academic literature concerning NPs and PAs. Nearly all the developed literature can be grouped into three broad categories. The first traces the rise of NPs and PAs as primary caregivers, chronicling their histories and the role each plays in the medical care system today. (1)
A second category, and of particular importance to this research, is a literature on the quality of care provided by NPs and PAs as compared to that of physicians. The research consistently finds that care given by NPs, PAs, and physicians is generally indistinguishable, a result that is robust to how quality of care is measured. (2) In addition to objective quality of the care measures, the research investigating patient satisfaction finds that NP and PA care scores at least as high as that provided by a physician. (3)
A third branch of the literature has examined the impact of NP and PA regulatory changes on the populations of NPs and PAs. In 1994, Sekscenski et al. (1994) examined the relationship of state practice environments and the number of NPs, PAs, and nurse-midwives in a state. The authors constructed an "index" of state practice environments and found that higher index scores (more favorable practice environment) were positively correlated with the relative number of NPs, PAs, and nurse-midwives.
Wing et al. (2004) expanded on Sekscenski et al. (1994) and looked at the relationship of state practice environments and provider populations for years 1992 and 2000. They used the basic framework developed by Sekscenski et al. (1994) but made some modifications to the practice index value. They found that the differences between states' index values narrowed over the time period, implying that practice environments became similar between states over time. They also found that provider populations were positively correlated with state practice environments. In related research using a more sophisticated, regression approach, Kalist and Spurr (2004) found that in states where NPs had greater practice authority, enrollments in masters nursing programs were higher. (4)
A fourth, undeveloped category of the literature, and where this research seeks to expand the body of knowledge, concerns the effect of NPs and PAs gaining greater practice authority on their own incomes as well as that of physicians. …