Association for Public Policy Analysis & Management

U.S. healthcare costs are rising at an alarming rate. The demand and supply effects are briefly mentioned but the focus of this paper is on the supply side, specifically regulations that affect the number of healthcare staff. Currently, the United States has much variation in state nursing regulations. Through licensing regulations, the states control the supply of nurses, which may influence healthcare costs. The hypothesis is that states with more restrictive licensing requirements for nurses have higher healthcare costs as a percentage of the state’s GDP compared to states that allow full authority and scope of practice. Current trends show states restricting nursing authority to practice within a physician-nurse framework tend to have higher health care services and products costs as a percentage of GDP than states not restricting nursing authority to practice independently. After running a fixed-effects model, there are inconclusive results that do not fully support this hypothesis but there is a chance this is due to omitted variable bias. Further research needs to be done with additional variables and observations. This is not a final paper and it is still being revised.