NU Online News Service, Jan. 29, 2004, 5:11 p.m. EST, Washington – The net burden of health services regulation may exceed the annual cost of covering all 44 million uninsured Americans.[@@]
Christopher Conover, assistant research professor of public policy studies at Duke University, presented that conclusion at a recent hearing on the problems of the uninsured and the factors driving up the cost of health insurance that was sponsored by the Senate Committee on Health, Education, Labor and Pensions.
“A legitimate policy question is whether the benefits of regulation outweigh the benefits of coverage for all Americans,” Conover said.
Noting recent Institute of Medicine findings that 18,000 uninsured people die every year due to lack of coverage, Conover asked, “Is maintaining our current regime of health regulation worth letting that continue?”
Conover said his analysis is based on more than 2 years of research conducted in part under a contract with the U.S. Department of Health and Human Services.
Conover said he examined the literature for about 50 different kinds of federal and state health services regulations, including regulation of health facilities, health professionals, health insurance, pharmaceuticals and medical devices. He also looked at the medical tort system.
The regulations ran the gamut from mandated health benefits to state certificate of need requirements for hospitals and nursing homes, Conover said.
Then, he said, he systematically tallied both the benefits and costs associated with such regulations and found that the expected cost of the regulations came to about $335 billion in 2002.
The estimate of benefits came to about $207 billion, leaving a net cost of $128 billion, Conover said.
Conover said 3 areas account for the lion’s share of this net burden: the tort system, U.S. Food and Drug Administration regulation and health facilities regulation.
The medical tort system, including litigation costs, court expenses and defensive medicine, costs $81 billion, Conover said.
FDA regulation adds another $42 billion in costs, and health facility regulation adds $29 billion, Conover said.
The net burden on the health industry is 6.4%, meaning that health expenditures, and health insurance premiums, are at least that much higher than they would be if the burdens were gone, Conover said.
Conover said this increased cost implies a 2.2% reduction in demand for coverage, meaning that regulatory costs might be responsible for 5 million people lacking insurance.