Licensing and Liability: The Effects of Scope of Practice Laws and Tort Reform on Nurse Practitioner and Physician Assistant Income

Nurse Practitioners and Physician Assistants, like all healthcare providers, are governed by a variety of laws that determine how they may practice. This paper considers the effect of two legal regimes—scope of practice laws and tort law—on the income of NPs and PAs. Scope of practice laws limit the services NPs and PAs may provide to patients, and tort law determines the extent to which they may face legal liability for adverse outcomes. Using data from the National Sample Survey of Registered Nurses, this paper exploits variation by state in the timing of different scope of practice laws and tort reforms to explore the effects of these two legal regimes on NP income. Broader scope of practice laws, which allow NPs to provide more services independently of physicians, are associated with higher income. Tort reforms, which limit the legal liability of providers, are also associated with increased NP income. Using data from the American Academy of Physician Assistants, this paper will exploit state variation to estimate the effect of different licensing and liability regimes on PA income. I hypothesize that broader scope of practice laws, which provide greater latitude in the physician-PA relationship, will be associated with an increase in PA income. I also hypothesize that, similar to NPs, tort reforms will be associated with higher PA income.