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Public choice analysis of interim final rules march 2012
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Public choice analysis of interim final rules march 2012


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  • 1. A Public Choice Analysis of theAffordable Care Act’s Interim Final Rules Christopher J. Conover Research Scholar Center for Health Policy and Inequalities Research Duke University Jerry Ellig Senior Research Fellow Mercatus Center George Mason University
  • 2. 2010 ACA Interim Final Regulations• Dependent Coverage for Children up to Age 26• Pre-Existing Condition Exclusions, Limits, etc.• Coverage of Preventive Services• Claims Appeals and External Review Processes• Medical Loss Ratio Requirements• Grandfathered Health Plans• Early Retiree Reinsurance Program• Pre-Existing Condition Insurance Program
  • 3. Major Elements of Regulatory Impact Analysis1. Define and identify the root cause of the systemic problem the regulation is supposed to solve2. Define and measure the desired outcome and show how the regulation will achieve it3. Develop a wide variety of alternatives and assess their effectiveness4. Assess costs, benefits, cost-effectiveness, and net benefits of alternativesNote: Each step should include cause-and-effect theory and systematic empirical evidence
  • 4. Major Omissions from the Analyses• Benefits overestimated for 4• Costs underestimated for all• Alternatives ignored• “Equity” not defined – rhetoric rather than analysis
  • 5. Numerical Scoring• Qualitative evaluation with numerical scores• 12 criteria from E.O. 12,866 and Circular A-4• 5 points per criterion, 60 points maximum• 3 categories: Openness, Analysis, Use• 8 ACA regs compared with all major regs from 2008 and 2009• Includes RIA and entire Federal Register preamble
  • 6. Score Results
  • 7. Why? 2 Intertwined Factors• Presidential policy priorities• Congressional politics
  • 8. Executive Branch Rulemaking
  • 9. Interim Final Rules
  • 10. Interim Final Rules for Presidential Priorities
  • 11. Presidential Priorities and Incentives for Good Analysis• Decisions made at White House and top of agency (Kagan)• Decisions made before analysis – Reduced incentive to do good analysis – Pressure to support the decision• OMB review function curbed
  • 12. Congressional Politics and Incentives for Good AnalysisAgencies respond to committees (Weingast et. al., Moe)But there are principal-agent problems• “Legislative drift” (Epstein & O’Halloran; Gersen & O’Connell)• Divided government impairs rulemaking (Yackee and Yackee)• Political salience (Shapiro & Morrall, Carpenter)• Tight deadlines mitigate these problems – Ensure agencies write regs while current coalition is in power – Deliver benefits before 2012 elections
  • 13. Deadlines and ACA Rules• All had to be implemented 3, 6, or 9 months after passage• 7 of 8 met or exceeded deadlines• Average OMB review time: 5 days• Longest review: 13 days – 2008 average: 56 days – 2009 average: 27 days
  • 14. More than a “Just So” Story