Obamacare regulations and hidden costs

By now we all know that the Affordable Care Act contains thousands of pages of new legislation mostly unread by those who enacted the law. It also contains about 1500 references to discretion to be exercised by the Secretary of Health and Human Services. Since enactment, various government departments have issued a flood of regulations, including in some cases changing provisions of the law (although for the better).

Medicare has initiated scores of pilot programs designed to change the way Medicare operates, pays for services and the way health care is practiced. Rules for employers are in process and of course, the biggy will be the rules operating the health insurance exchanges beginning in 2014. That’s a lot of rules and regulations for a lot of people to comply with.

On December 27, 2011 the Wall Street Journal published an editorial about regulations and this section caught my eye.

Then there’s the Affordable Care Act. Christopher Conover and Jerry Ellig of the Mercatus Center at George Mason University, in a trio of forthcoming papers, systematically examine every rule issued to date to create the new health-care entitlement. They conclude that “the federal government used a fast-track process of regulatory analysis that failed to comply with its own standards, and produced poorly substantiated claims about the ACA’s benefits and costs”—including an upward bias for benefits, a downward bias for costs, and numerous material omissions. Little wonder for a law that contains the phrase “the Secretary shall” 1,563 times. The Mercatus Center evaluates all major rules that cost over $100 million a year on a composite score of a dozen regulatory best practices. The Health and Human Services Department’s highest-scoring ObamaCare rules came in at 25 out of 60 points, the lowest at 13. These are not merely bad grades. They are relative Fs on the regulatory curve—about 35% to 40% lower than the averages for the other rules that the executive branch put out in 2008 and 2009. The ObamaCare rules score lower than other HHS rules in 2009.

You can think what you like about the ACA, but the fact remains it is a complex law and growing more so each day. It is not at all clear that the benefits outweigh the costs nor do we know the true costs, especially those hidden in employer and other entity compliance. The bottom line is that for good or bad the ACA is only the start of what must be done to manage health care costs in America.

We can only hope that first expanding coverage and enhancing benefits does not make the real task impossible to achieve.