The net burden of health services regulation likely exceeds the annual cost of covering all 44 million uninsured Americans, says a health care researcher.
“A legitimate policy question is whether the benefits of regulation outweigh the benefits of coverage for all Americans,” says Christopher J. Conover, assistant research professor of public policy studies at Duke University.
Noting recent Institute of Medicine findings that 18,000 uninsured people die every year due to a lack of coverage, Conover asks “is maintaining our current regime of health regulation worth letting that continue?”
Conover spoke at a hearing on the problems of the uninsured and the factors driving up the cost of health insurance sponsored by the Senate Committee on Health, Education, Labor and Pensions.
Conover says his analysis is based on more than 2 years of research conducted in part under a contract with the Department of Health and Human Services.
The research, he says, examined the literature for nearly 50 different kinds of federal and state health services regulations, including regulation of health facilities, health professionals, health insurance, pharmaceuticals and medical devices, and the medical tort system.
The regulations, Conover says, covered the gamut from mandated health benefits to state certificate of need requirements for hospitals and nursing homes.
Then, he says, his research systematically tallied both the benefits and costs associated with such regulations and found that the expected costs of the regulations came to nearly $335 billion in 2002.
The estimate of benefits, Conover says, came to about $207 billion. This leaves a net cost of $128 billion.
Conover says 3 areas account for the lions share of this net burden, namely, the tort system, Food and Drug Administration regulation and health facilities regulation.
The medical tort system, he says, including litigation costs, court expenses and defensive medicine, totals $81 billion. FDA regulation, he says, adds another $42 billion in costs while health facility regulation adds $29 billion.
The net cost of regulation borne by the health industry is 6.4%, he says, meaning that health expenditures, and health insurance premiums, are at least that much higher than they would be absent regulation.
This increased cost, Conover says, implies a 2.2% reduction in demand for coverage, translating into nearly 5 million uninsured whose plight might be attributed to excess regulatory costs.
However, Conover says, there is another way to look at this burden.
Researchers have estimated that it would cost betweeen $34 billion and $69 billion in added health spending to cover all the nations uninsured, he says.