The Regulatory Knowledge Problem of Health Care Reform


There was a good D.C. Examiner column over the weekend by Glenn "Instapundit" Reynolds, discussing the broader implications of the so-painful-it's-beyond-funny spectacle of Rep. Henry Waxman (D-Los Angeles) hauling a bunch of CEOs in front of Congress for their temerity in obeying securities law by promptly reporting their new post-Obamacare health care rules as a charge against future earnings. (If you want to boil your own blood, read Waxman's letter of summons [pdf].) Sez Glenn Harlan:

You can't unsee

Hayek's insight into economics and regulation is often called "The Knowledge Problem," and it is a very powerful notion. But recent events suggest that it's not just the economy that regulators don't understand well enough—it's also their own regulations. […]

In drafting the Obamacare bill they tried to time things for maximum political advantage, only to be tripped up by the complexities of the regulatory environment they had already created. It's like a second-order Knowledge Problem. […]

The United States Code—containing federal statutory law—is more than 50,000 pages long and comprises 40 volumes. The Code of Federal Regulations, which indexes administrative rules, is 161,117pages long and composes226volumes.

No one on Earth understands them all, and the potential interaction among all the different rules would choke a supercomputer. This means, of course, that when Congress changes the law, it not only can't be aware of all the real-world complications it's producing, it can't even understand the legal and regulatory implications of what it's doing.

Read the whole thing, including the "good news" about it, here. Reynolds on ReasonTV below:

NEXT: When The Best-Case Scenario is a 16.1 Cents Per Mile Subsidy, Who Gives a Rat's Ass About The Worst-Case Scenario?

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  1. If you want to boil your own blood, read Waxman’s letter of summons

    Yep. That did it.
    Shame on AT&T if they comply with this naked threat and abuse of power.

    1. Just complying with the request for “all email messages” related to the healthcare impact discussion could cost tens of thousands of dollars. AT&T is one huge organization. An acquaintance of mine is doing a call center implementation for them that has over 25,000 seats. We have 450 employees and conducting email searches with regards to pending litigation is already quite costly. I can’t imagine having to administer compliance with a request like this at AT&T.

      1. It isn’t a subpoena. AT&T should refuse. If they cave in and attend that kangaroo court, they are participating in the farce and must bear their share of responsibility for further enabling Waxman and his abuse of power.

    2. I didn’t read anything in the letter that required AT&T to comply with any of the “requests” therein.

      I’d suggest AT&T issue a terse reply stating that their actions were just the first of many unintended but thoroughly foreseeable consequences of the legislation, and that they had no intention of voluntarily appearing before Waxman’s committee and explaining why the legislation was a bad idea that will end badly.

      But that’s just me.

    3. Open question to anyone who can answer: Is it feasible for AT&T to show up at the committee hearing and embarrass the committee chairman even as they dutifully answer his questions, i.e. embarrass him with the truth? Or would it be too easy for Waxman to manipulate the proceedings to make AT&T look bad?

      1. I’m must trying to grok the concept of someone having to do work to make Waxman look bad.

  2. The good news is less obvious, but just as important: While we rightly fear a too-powerful government, this regulatory knowledge problem will ensure plenty of public stumbles and embarrassments, helping to remind people that those who seek to rule us really don’t know what they’re doing.

    If that doesn’t encourage skepticism toward big government, it’s hard to imagine what will.

    It won’t. Nothing will. We are doomed.

    1. …helping to remind people that those who seek to rule us really don’t know what they’re doing.

      Quote the Iron Law*:

      The less you know about something, the easier it looks.

      I’m all of the Law could be applied to this study in idiocy, but this one seems most obvious.

      *As compiled by RC Dean

      1. You can say that twice!

        1. “I’m sure all…”

          Post FAIL.

          1. I could still grok what you were saying.

            1. Nice “Stranger in a Strange Land” reference, ART-P.O.G.

    2. …helping to remind people that those who seek to rule us really don’t know what they’re doing.

      Quote the Iron Law*:

      The less you know about something, the easier it looks.

      I’m all of the Law could be applied to this study in idiocy, but this one seems most obvious.

      *As compiled by RC Dean

  3. It would be so sweet for one of those CEOs during televised hearings to apologize to Waxman that the congressman’s own overly complex regulatory environment just bit him right in the fucking ass.

  4. It’s not polite to stare at burn victims like Waxman. Seriously, dudes. Just look away.

    1. Mr. Waxman is almost as wise as he is handsome.

      1. Ha ha ha ha, good (cruel) one, Brian!

        1. At least I’m cruel on purpose. Waxman rationalizes his cruelty as kindness, which is arguably worse.

  5. Attachments to this letter provide additional information about responding to Committee document requests and testifying before the Committee.

    I *suspect* AT&T could have some fun by following this stuff to the letter.

    (Can’t find the attachments anywhere, tho …)

  6. Sadly, the sheeple will never see any benefit at all.


    1. Whoa, I just realized the irony of an artificial intelligence that has not yet achieved sentience referring to others as sheeple. For shame*, anon bot!

      *Yeah, I know you can’t feel it.

  7. I keep waiting for a Howard Hughes type moment, where someone tells these assholes just how useless they are. F*ck decorum, they don’t deserve it.

  8. We have your jacket. If you do not pay us $9.99+ shipping and handling, we will start by cutting off the buttons. One at a time.

  9. Then again, the only reason you know my name is because the ultraright Volker Fund subsidized my little book and propped me up as an authority for their grand dreams of fusing laizzez-faire economics and theocracy.

    1. Well, of course! Anyone who reads The Road to Serfdom knows that while it is one of the most sensible books written in the past couple of centuries, it is really a secret proponent of theocracy!

      Read the fucking book, imbecile.

      1. I wrote the book, dammit! And I’m well aware that laissez-faire theocrats abused it like they abuse everything else in their quest for power for themselves.

        1. I’m leaving you in here with this [places a handgun on the table]. If you have even the slightest lick of self awareness troll using FAH’s name, you will know what to do with it.

    2. If that’s true, they did a huge favor for non-theocratic libertarians everywhere, because Hayek was truly a genius of free-market economics.

    3. I can feel only pity for the wretched little mind that came up with that ignorant nonsense. Hayek was a friend of mine. You sir, are no Hayek.

      1. And you sir, are no economist.

        1. I’m leaving you in here with this [places a copy of Hazlitt’s The Failure of the New Economics on the table]. It is a really good read, and not the slightest bit refuted by JMK’s demonkind spawn.

  10. Ah, wonderful way to start my Monday morning: Opening Hit and Run and seeing heavy linking to the Neo-con torture supporter Glenn Reynolds.


    1. I was going to write “in before the Reynolds bashers” but alas I was too late.

      Oh, and Jay, have you checked out the Obama Adminstration’s positions on torture, extraordinary rendition, and Guantanamo lately? They’re remarkably…Bush-like.

      1. Obama has not claimed to be a libertarian, he’s a Republicrat.
        Glenn Reynolds on the other hand often claims that he is, but read his blog and you’ll see that he’s a torture supporting, illegal wiretap supporting, war mongering neocon.

        An occasional link to him would be ok, but every single day?


        1. If the link was related to torture, you might have a point.

          I have no problem with links to ANYONE who is RIGHT on the specific issue linked to.

          1. So if John Yoo or Dick Cheney wrote about an article that wasn’t about the war crimes and atrocities they masterminded, you wouldn’t have a problem with Reason linking to it?


            1. Of course. Once you support anything not in the libertarian doctrine, your opinions on everything, are instantly wrong and inherently offensive.

              That dogma is why the libertarian party is so large and successful…Oh wait…

              I have to say, Jay’s display of intolerance, so common to the libertarian mindset, is the major reason my moniker stands for “Not A Libertarian”.

              1. As unfortunate as it is, if someone is as consistently wrong as the warmongering neo-con Glenn Reynolds I am almost tempted to take the opposite position on all issues.

                Even if John Yoo made a good argument for why Raw Milk shouldn’t be verboten, you could *never* forward his article to your liberal friends.

                When a Bush Cheerleader and Cheney Sycophant like Glenn Harlan Reynolds writes an article you’re never going to get anyone to take it seriously considering his dark past. The libertarian movement needs to find some intellectuals that *don’t* have as much blood on their hands that make the same argument.


            2. If John Yoo or Dick Cheney wrote something that was worth linking to, either because it was libertarian (unlikely as hell, yeah?) or was so obnoxious it deserved derision — sure, Reason should link to the article.

              1. Yep, prole answered for me.

                If Dick Cheney comes out in favor of crack legalization, damn straight it should have a link.

                1. Or to put it more succinctly, ideas are judged by their merit, not their source.

                  1. Or, Niven’s 16th Law:

                    There is no cause so right that one cannot find a fool following it.

                    1. Damn, Niven beat me to that one. I stated it differently, but he said it better.

    2. Of course, Glenn Reynolds has stated many times on his own blog that he is opposed to torture, but don’t let the facts confuse you. And no, I’m not going to waste our time any further with a link.

  11. Intent matters; as long as they mean well, implementation is irrelevant.

    1. Paving the road to hell is the new stimulus!

  12. I would love to see some short-fused entrepreneur call a Congressional panel a “bunch of fucking morons” to their faces, but I suspect that day will never come.

    1. Could any business or person survive an “every scrap of paper” audit by the IRS? Maybe if one had a terminal disease and didn’t care anymore.

      1. You said “survive” in the first sentence and “terminal disease” in the next. Heh.

    2. T.J. Rodgers would probably do it.

    3. It really is regrettable that R. Lee Ermey doesn’t run a major corporation. The C-Span coverage of the hearings would be priceless.

    4. Catch Mark Cuban in the right mood and he’d do it in a heartbeat.

    5. I am the dog hiding behind the washing machine and Waxman is the cat staring into the open dryer with CAT FUD —-> scrawled on its door.

  13. Wow! The folks most affected by federal laws and regulations have more knowledge about them than our overseers in D.C. who are responsible for craeting them.

    Who’d a thunk it?

  14. It will get better, folks.

    The charges big companies have been taking relate solely to the loss of a tax benefit in the out years.

    This law is hideously drafted, but it looks as if all the benefit mandates will apply to self-insured health plans (which all these big companies have). Once that is confirmed, and their actuaries run the numbers, they will have to take a charge that will dwarf this one.

    1. I eagerly await finding out how badly my wife and I get fucked when our fortune-500 employer figures out wht is in the HCR bill.

    2. Oh, the real fun will be when those companies starting dumping group health insurance coverage for their employees because of the cost increases caused by the bill’s provisions, leaving Waxman spluttering about how his lovely bill to increase the number of insured resulted in the exact opposite.

  15. Do you have any articles or references on this? My employer, a large energy company, is self-insured, and I’d really like to read more on this to see where it might be vulnerable to problems introduced by the HC legislation.

    1. Most of the energy industry is self-insured. So this may cripple the energy industry, which is a win-win as far as progressives are concerned.

    2. This is just being dug out and pondered by the big brains in the law firms. The early read is:

      Effective beginning with the first plan year beginning on or after September 23, 2010, grandfathered plans [in existence on 03/23/2010] are subject to the following:

      * No lifetime benefit limits.
      * No revocation of coverage (except for fraud/intentional conduct).
      * No restrictions on annual limits on the dollar value for “essential health benefits” as determined by HHS.
      * Requirement of plan coverage of dependent children up to age 26 if the dependent is not eligible to enroll in another employer-sponsored health plan.
      * No preexisting condition exclusions for enrollees under age 19.

      These benefit expansions will be costly, I can assure you.

      1. Hmmmm:

        Economic downturn dragging on forever? Check

        Bush-era tax cuts timing out? Check

        Dramatic premium increases as ObamaCare kicks in? Check

        The future is so bright I gotta wear sun glasses.

        1. You might want to upgrade to welding goggles.

      2. We have lots of young engineers that took the “free” catestrophic coverage provided by the company and are dumping money to to health savings accounts. They have a rude awakening in store for them.

        1. HSAs arent insurance. The Obama said so.

          1. I believe that catestrophic-only coverage is verbotten, but I could be wrong.

            1. I havent read any of the final passed stuff, but earlier, HSAs were allowed but many of their benefits taken away. You could no longer use your HSA account to buy OTC medication, for example.

              1. The HSA is one thing. But our company provides catestrophic-only coverage at no premium to the employee. I am pretty sure these plans will be forbidden.


                Even more ominously, “ObamaCare” would require employers to provide federally approved coverage. Obama considers “meaningful” plans those at least as generous as the Federal Employees Health Benefits Program.

                “Obama’s definition of ‘meaningful’ coverage could eliminate the health plans that now cover as many as half of the 159 million Americans with employer-sponsored insurance, plus more than half of the roughly 18 million Americans in the individual market,” says Cato Institute analyst Michael Cannon. “This could compel close to 90 million Americans to switch to more comprehensive health plans with higher premiums, whether they value the added coverage or not.”

                1. Yeah, that blows. Catastrophic plans are really the only “true” insurance plans (subject to variable definitions of catastrophic).

            2. Of course they are. See, I once had a run down old car, and it was damaged in an accident. So I went to my insurance company and asked them to pay to have it repaired, but they wouldn’t pay to fix my crappy old car, just because I didn’t buy “real” insurance! We have to make sure that everybody has “real” health insurance, not some plan that won’t pay for their boo-boos when they get a scratch.

      3. You know, I used to think the idea of Congress passing HCR because they really wanted to wreck private insurance, and pave the way for single payer, was a bit far fetched, and I didn’t think Congress was that smart. The more I read about this mess, and the impossibility of insurance companies complying with it and actually staying in business, the more I wonder.

        1. Why do you think Kucinich caved?

          1. Kucinich has always been a maverick, and the DNC was well aware there would come the day they would need to rope him in to get something this god awful monstrous passed. So, years ago, they set him up with a very hot redhead, even did a little media campaign with Lettermen to find him a wife, if memory serves, to deflect their true intent, and of course, he fell in love. It all seemed very genuine, and she even believed herself to be in a happy loving relationship. Then came that call three weeks ago, and her handler whom she had no memory of ever meeting whispered those magic words ‘Kucinich is caught like a duck in a noose’, and the hot redhead sleeper agent suddenly remembered everything. At that point she faced down Dennis and said, ‘Dennis, I’m leaving you if you don’t vote for that bill.’

            1. I, for one, fine this scenario entire plausible. In fact, quite probable.

  16. This was intended @ R C Dean.

  17. Here’s what Glenn Reynolds is cheering for


    1. Huh, didnt see that mentioned anywhere in the article. What fucking article did you read?

      1. Well, Since Glenn Reynolds is a Bush cheerleader and *loves* war and foreign military interventions he would never write about these war crimes committed by american soldiers, so I just want to make sure that everyone knows what torture supporter Glenn Reynolds is advocating.


        1. Jay=Troll.

          1. Gimli = Hobbit

  18. as a gubermint weenie in the belly of the beast, I can attest to the “knowledge” problem. Not only is it impossible to keep track of all the rules and precedents, even if you were too, they are meaningless most of the time. They are chock full of stock phrases like “reasonable” and “appropriate.” The rest of the time they are contradictory.

  19. I’ve also been noticing already beleagered state governments responding with discussions of how they are going to deal with all the new expenses they are going to have.

    Sort of makes it obvious that the Democrats pushed much of the ocst off onto state governments to pretend it was less expensive.

  20. I’ve been to quite a few congressional hearings where it’s clear that the congressmen don’t have a clue about the current laws and programs that they supposedly “oversee”

  21. Hurray for the Superman 26 reference. Classic image. Though it makes Bush out to be a Nazi. I call conspiracy. Original image here. Age/scan0029.jpg

  22. Predictions:
    1) Off-shore labor has gotten comparatively much less expensive; jobs will migrate.
    2) “Contract” jobs are comparatively far less expensive to major employers. They will increase with the “contracted” employees only buying insurance in the event of ill-health.
    3) Like France, the productivity of US workers will increase greatly; no employer will hire new help if automation will accomplish the production, and fewer workers operating the latest in automation are much more productive.
    The net is the permanent loss of jobs. Except for government workers.

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