ObamaCare's Regulations: Overstate the Benefits, Understate the Costs


Does Judge Dredd do regulatory analyses? I don't think so.

When federal regulators prepare regulations, they're required to perform cost and benefit analyses prior to releasing the final rules. New rules are only supposed to go into place if regulatory agencies have considered other alternatives and determined that the benefits provided are worth the cost. In theory, this requirement is supposed to serve as a check on excessive, inefficient regulation. In practice, though, it sometimes becomes a way for agencies to justify regulations they are already determined to implement.

Case in point, the health policy regulations the Department of Health and Human Services and other agencies have drafted as a result of ObamaCare. As part of a multipart study of the law's regulations, Christopher Conover, a health policy researcher at Duke University's Center for Health Policy and Inequalities Research, and Jerry Ellig, a senior research fellow at the Mercatus Center, looked at eight of ObamaCare's major regulations and found that "that the regulatory impact analyses (RIAs) for these regulations were seriously incomplete, often omitting significant benefits, costs, or regulatory alternatives."

For one thing, the analyses tended to overstate the potential benefits. For example, based on state insurance data, the authors report that the number of children projected to benefit from the law's pre-existing condition limitations was overstated by a factor of three to five. And in preparing the high-risk pool rules, regulators cherry-picked studies to inflate the mortality benefit of being insured far beyond minimal to nonexistent improvement most comprehensive reviews and syntheses report.

Meanwhile, an easy way to prove that the benefits are worth the cost is to downplay the cost. And that seems to have gone on too. The authors also conclude that the analyses were also "more likely to understate the magnitude of costs than to overstate them. All eight regulations appear to have understated the costs. In some cases, costs are understated by billions of dollars. The net effect of this pattern is to further contribute to the bias favoring regulation." Regulators who've decided to pursue certain rules have probably already decided that those rules are a good idea, and end up using the required analyses mostly to justify what they're already planning to do. 

NEXT: Blueseed: The Googleplex of the Sea

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I don’t think Obamacare is the first legislation, nor the last, to do it this way. I don’t see why the nitpicking; there has to be all sorts of legislation created in similar fashion to how Obamacare was created. Please. (And I don’t support Obamacare.)

  2. Just about every bureaucratic bullshit document overstates the benefits and understates the cost. As does just about every public proposal for infrastructure development.

    It’s built into government. Yet, we still hear all the proponents saying “Look at the numbers! It’s going to work!”

    1. So do used car salesmen, telephone solicitors and streetwalkers.

      The difference, of course, is that I don’t have to deal with the three I’ve named.

      1. No common street trash hookers for Aresen. He demands top-shelf strange.

        1. TOP. Shelf.

  3. Onetime I flew in a helicopter and we went real high into the air and I fell asleep and when I woke up it was a elevator instead.

  4. New rules are only supposed to go into place if regulatory agencies have considered other alternatives and determined that the benefits provided are worth the cost.


    OMG – good one!

    1. We’ll tell you what’s good for you, pal.

  5. Suderman, address this, if you please. I’m interested in your counterarguments…..ate-plans/

    1. Doesn’t look like Peter is going to reply. I will in proxy. To me the article is complete crap.

      It’s another strawman argument:

      Public Insurance is better because dollar for dollar, it has a greater effect on sick, poor kids than private insurance does on healthy, wealthy kids.

      Really? That’s a no shit, Sherlock type thing.

      So kids who’s mothers smoked, drank, ate crap and in any other way influenced their low birth weight get a bigger bang for their our buck and use services that kids who have intelligent caring mothers don’t likely even need but may or may not have covered under their private insurance if they were needed.

      Dollar for dollar preventative care is almost always going to be more cost effective that trying to fix the problem after it begins. And the sooner you begin (e.g. as infants), improvements can come faster.

      The argument isn’t whether those who are currently on public insurance gain a benefit from it. The question is whether those that are going to be forced private insurance and onto public insurance via ObamaCare will be better off.

      I’d like to see Ms. Roy or Ms. Allen back up the claims in the article that “Public health insurance provides insured infants better, less costly care than private plans”.

      Where are the figures on how much of a given private plan goes towards infants? I don’t think my plan breaks down how much of my premium goes towards each piece that it covers. It’s listed as “Family Coverage”.

      For those of you interested in reading her actual research instead of the idiot’s guide (by an idiot not for them) here is a link:

      1. “Roy says she can only speculate why infants from advantaged and disadvantaged families differ in their health outcomes. It’s possible, however, that infants from families that are better off have access to better nutrition, a healthier lifestyle and possibly safer, cleaner neighborhoods than those from poorer backgrounds”

        She can’t argue the absolute results, only the relative ones.

        In my opinion, every conclusion drawn is pure speculation.

        1. Thanks for your reply Google user; I intend to follow the research as the application of Obamacare gives credence, or refutes her findings.

          Yes, I agree the research seems counterintuitive to both pro-public healthcare, and private only but I think your focus on the poor children supersedes her theory: children of the well-off do better under public care.

          Personally, I’m not sure if it is productive to argue why poorer children are most likely to have disease or sickness; they exists.

          Family coverage, and infants care is costly in the first few years of their life, as opposed to a healthy adult. I could only find the stats for psychiatric inpatient/outpatient medical care and to care for an adult VA. a child under 5 was over X the expense. Whereas a health adult may skip a scheduled yearly visit, children require several in their first years

  6. Question out of curiosity:
    Is it possible for individuals or groups of private citizens to file a lawsuit against the federal government regarding the individual mandate?

    The reason is, I currently have a high-deductible health insurance plan, which I kind of like, which was grandfathered in. But of course, with the law’s new provisions, I can’t change it or upgrade or anything. I would have to get at least their “bronze” level plan, which would lower the deductible more than I need to and add also sorts of benefits for thins I can afford to pay for anyway. That would substantially raise the ocst of health insurance for me. Plus I would like to get a partner or future spouse in under my plan and I can’t do that either. Grandfathered plans are locked in. As soon as you switch or change anything you have to upgrade to comprhensive care.

    The reason is the government is so focused on saying that by not having health insurance I would impose emergency room costs on others. But I have health insurance and I can afford to pay up to my deductible already. There is no way I would be a burden to the system by not having a lower deductible. Might there be some basis for makign a legal argument against the government because they are requiring me to buy more insurance than their rationale (uncompensated care) financially justifies?

    1. You rebel scum.

  7. “But of course, with the law’s new provisions, I can’t change it or upgrade or anything.”

    I haven’t had that issue; and you have tried to do so?

    1. Not yet. But what would be the point of the law if everyone on a grandfathered plan could switch ot a slightly better plan from the same company, or add new people in under their plan? That would be a gargantuan loophole, would it not?

  8. “and add also sorts of benefits for thins I can afford to pay for anyway”

    Benefits are state-mandated; I understood they are inclusive whether you are using them or not.

    1. That’s not exactly accurate. PPACA has requirements for so called “Bronze” “Silver” and “Gold” category plans with requirements as to what they include and limits as to how high the deductible can be, and so forth. There is some room for variation at the state level, but not much.

      1. I have switched from a low to higher deductible both in the HSA and recently in just a catastrophe/high deductible/hospital only plan.

        Notwithstanding the name, “hospital only”, sate law requires the insurance company to cover some doctor visits when they fall under mandated care

        1. Right well, the highest deductible PPACA allows is $2,000 under the “bronze” plan.

  9. Sounds like business as usual to me dude.

  10. “infants care is costly in the first few years of their life”

  11. Whoops. I accidentally posted a comment without finishing. I meant to say that the quote above is exactly right. Rates (health insurance) for children under age 1 is MUCH higher than children over that age. In some areas, the difference is about 40%.

Please to post comments

Comments are closed.