When Regulation Is Bad—Except for Abortion

Selling homemade baked goods without a license can get you six months in Wisconsin. In Iowa, braiding hair without a year of cosmetology school is punishable by up to a year in prison. So is the unlicensed practice of interior design in Florida.

Conservatives have long argued that legislators use ridiculous licensing requirements to restrict market participation under the pretext of protecting health and safety. Such regulations are really intended to protect their cronies by limiting competition from newcomers. But protectionist business lobbies aren’t the only political powers serving their own interests by limiting consumer options: Abortion opponents have found that licensing requirements are an effective way to artificially deplete the market for abortion services as well.

Like laws that require a baker to install a $50,000 commercial kitchen or a funeral director to build a nonfunctional embalming room, making an abortion provider’s license dependent on whether she can buy or build a multimillion-dollar ambulatory surgical center—an unnecessary and inappropriate facility for a simple and extremely safe office procedure, according to medical experts—keeps qualified service providers out of the market. Similarly, states mandate abortion providers obtain hospital admitting privileges—ratcheting up physician qualifications for a procedure that is perfectly safe for nurse practitioners to perform—for the same reason they require florists to be hyper-credentialed: It artificially limits the availability of the service.

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Conservatives and libertarians are up in arms about “anti-entrepreneur, anticompetitive” occupational-licensing laws. And rightly so. Markets serve consumers best when participants have to compete with price and quality—not under the dictates of state-imposed cartels. Unjustified barriers to entering or staying in the market leave consumers with fewer choices and higher prices.

Big government driving up the price of artisanal baked goods and floral arrangements may not seem like pressing issues, but overregulation of professional services can cause real harm. There is a crisis in the United States over the cost and availability of medical care, but many states actively prevent a full array of services and cost options from being made available to their residents. States allow medical boards controlled by doctors to prohibit nurse practitioners and other qualified medical professionals from making the services they are qualified to provide more available and less costly. Likewise, lawyers charge rates poor people cannot afford, but they enjoy a monopoly on desperately needed legal services—services they aren’t even providing. In fact, paralegals could be trained to take on some of these duties—like representing tenants in eviction proceedings, a high-demand area where the vast majority of tenants are unrepresented and where being unrepresented correlates with losing one’s home. Unsurprisingly, though, the lawyer and doctor cartels, which wield considerable power, seem safe for the time being.

Meanwhile, efforts to challenge the most absurd licensing laws keeping the little guy from making a living have had mixed results. The Institute for Justice and other libertarian law firms have challenged the constitutionality of regulatory barriers on behalf of would-be bakers, braiders, casket makers, florists, veterinary masseuses, tour guides, taxi drivers, eyebrow threaders, teeth whiteners, and more—but success is hard won. That’s because laws that restrict “the right to economic freedom” or “the right to make a living” receive the lowest level of scrutiny in court: rational-basis review. That standard requires courts to uphold a law unless it lacks a rational relationship to a legitimate state interest.  So, to win under rational-basis review, plaintiffs must show that either the law is meant to further an illegitimate purpose (like, say, expressing animosity toward gay people) or that, although the state has a legitimate interest (like the protection of health), the law isn’t rationally related to furthering that interest. The standard is very deferential to states and plaintiffs, who seldom win when it is applied—and courts can’t strike down a law just because it’s stupid.

Courts of appeal have split over whether or not protecting favored groups from economic competition is a legitimate state interest. The Institute for Justice recently asked the Supreme Court to answer this question in a challenge to Connecticut’s regulation of teeth whitening—a simple, safe cosmetic procedure that can be performed at home. But state dental boards across the country, unhappy with competition from salons that offer low-cost teeth whitening, have barred anyone but licensed dentists and hygienists from providing the service. Connecticut’s dentist-controlled Dental Commission wrote the regulations, which subject salon operators to up to $25,000 in fines or five years in prison for providing services the consumer is free to perform on himself.

The U.S. Court of Appeals for the Second Circuit, however, upheld the law, ruling that it was rationally related to protecting health and that, even if it wasn’t, economic protectionism is a legitimate state interest. The Supreme Court declined to take the case last month, so the circuit courts’ split on the economic-protectionism question remains unresolved. But the lower court’s dual holding illustrates that even if the Supreme Court ultimately does rule that economic protectionism is not a legitimate state interest, the anti-cartel crusade will still have a big problem with rational-basis review: Legislators after all don’t announce they are protecting cronies from competitors; they say they are protecting health and safety.  

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Conservative support for the anti-protectionist effort has been tremendous. George Will decried this “politically connected faction bending public power for its private benefit” to punish consumers. Senator Mike Lee of Utah penned an op-ed explaining the larger problem of occupational licensing, which burdens consumers with $200 billion in extra costs each year without improving the quality of services. And Ted Cruz was an early leader in the fight against state-created market cartels, too, first taking on a dental board more than a decade ago during his tenure as policy planning director at the Federal Trade Commission.

So what happens when many of these conservative supporters of economic liberty are also anti-abortion and these two principles are in tension? Too often it seems like conservatives don’t connect the two—at their own peril. Conservatives are free to keep challenging the right to an abortion if that’s their goal, but obscuring the path to accessing one on the basis of fabricated health assertions delegitimizes their claims to economic liberty. That’s why proponents of economic liberty should be very concerned about how abortion clinics fare at the Supreme Court (Whole Women’s Health v. Hellerstedt) in their challenge to the licensing regime that Texas put in place to distort the market for abortion services on the pretext of protecting health. Unlike the split over economic protectionism, it is black-letter law that blocking women from obtaining pre-viability abortions is not a legitimate state interest. So if the Court upholds anti-competitive regulations on the basis of bogus health claims when a fundamental right—which gets a higher standard of review—is at issue, the libertarian campaign to open the markets in interior design and eyebrow threading is definitely doomed.

But I don’t think the Court is going to uphold Texas’s anti-competitive regulations—they are a flagrant attack on the Court’s abortion precedent. The Court is likely to strike down the law on the grounds that it is an “undue burden” on a woman’s right to access abortion—because a woman seeking an abortion in Texas will have to travel hundreds of miles, go out of state, or have the procedure later than she wants. But striking down the law without also clearly rejecting the lower court’s rational-basis analysis, in which it held that courts cannot even look at evidence that a law lacks medical validity, will leave a bad precedent in place for those fighting the market cartels.

There is reason to suspect abortion cases have already caused libertarian litigators to lose ground. The Institute for Justice won a Fifth Circuit challenge to a law that prohibited anyone other than licensed funeral directors from selling caskets in 2013. The Fifth Circuit looked at the evidence and rejected the claim that the law was rationally related to protecting health—all it was rationally related to was protecting the funeral industry, which that court held is not a legitimate interest. The decision explained that courts are not required “to accept nonsensical explanations for regulation.” And yet, when the Fifth Circuit had abortion restrictions before it, the court held that rational-basis review “is not empirical basis review” and ruled that courts are thus foreclosed from determining whether a law is or isn’t likely to advance health. When the Institute for Justice argued in a subsequent Fifth Circuit case that a ban on Internet veterinary consultations wasn’t rationally related to protecting health, the court refused to even consider evidence demonstrating that the law did not have any health benefit and was only meant to protect veterinarians from more innovative competitors.

Thus, leading licensing foes like Cruz and Lee risk harming their own cause by arguing—in an amicus brief filed with other Republican legislators in Whole Woman’s Health—that the Court must defer to the state’s assessment that the burdensome regulations it enacted would advance health, even in a case where the plaintiffs introduced voluminous evidence that the law had no health benefits. Texas isn’t asking for a ruling allowing it to restrict abortion to protect fetal life; it is claiming the authority to regulate anyone out of the market so long as it has some story about protecting health, no matter how laughable. Conservatives who understand the harms of occupational licensing should be loath to see them succeed.

Liberals, on the other hand, would do well to take the broader licensing problem seriously. (The Obama administration has.) Overregulation will always cause the greatest harm to the poor and disenfranchised, which is why after Roe v. Wade made abortion “safe and legal,” poor women and women of color kept dying—legal abortions performed in hospitals weren’t affordable and accessible. But overregulation more generally—which makes it more difficult to start a business, get a job, vote, or afford goods and services—also hits people in need the hardest, as they lack the time and resources to overcome the regulatory obstacles in their path.

There is no reason to assume any regulation is good regulation. Recognition of the economic liberty of eyebrow threaders is not a first step toward a Lochnerian dystopia where no health and safety regulation is permissible. Principled liberals and conservatives should be able to agree that pretexts meant to keep people from providing or receiving services that are safe and legal shouldn’t fly under any standard of review.