The U.S. Department of Health and Human Services (HHS) and other agencies responsible for implementing the Patient Protection and Affordable Care Act of 2010 (PPACA) may not be doing such a great job of analyzing the effects of the PPACA regulations they are developing.
Christopher Conover, a researcher at the Center for Health Policy and Inequalities Research at Duke University, and Jerry Ellig, a researcher at the Mercatus Center at George Mason University, give that assessment in a PPACA implementation working paper distributed by Mercatus.
Conover and Ellig focus on implementation of 8 major PPACA regulations that were issued as interim final rules in 2010, including the Coverage of Preventive Services, Medical Loss Ratio Requirements and Preexisting Condition Insurance Plan regulations.
An interim final rule is a regulation that takes effect without going through the full public comment process. The agency goes through the public comment process after the rule is already in effect, then may revise the regulation in response to public comments.
Federal law requires agencies to analyze the cost of implementing regulations and other possible effects, and to also look at alternatives to the regulations.
The researchers found that benefit estimates were biased upward in connection four of the interim final regulations and downward in connection with three.
"Costs were underestimated for all eight regulations," the researchers say. "In general, downward biases in estimated costs arose to due to a failure to consider an entire category of costs."
None of the cost estimates took into account the "efficiency losses associated with the higher taxes required to finance regulations or subsidize some activity, despite the sizable potential magnitude of such costs," the researchers say.
The agencies also ignored alternatives that likely would have been less expensives than the regulations adopted, the researchers add.
The drafters of one regulation, for Dependent Coverage for Children Up to Age 26, might have been able to save employers and others a great deal of money by simply using the existing Internal Revenue Service (IRS) rules for defining dependency for tax purposes, the researchers say.
But, when the team that drafted the young adult coverage regulations analyzed the regulation and possible alternatives, it "did not even evaluate the IRS definition as an alternative," the researchers say.
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