ObamaCare’s Second Birthday Carries High Regulatory Costs

The Patient Protection and Affordable Care Act (ObamaCare) turns two today and next week the Supreme Court will decide if it can celebrate another birthday.  The legal and fiscal highlights of ObamaCare garner plenty of headlines, and rightfully so, but there are literally billions in untold regulatory costs that continue to impose hidden burdens on the U.S. economy.

In an ongoing project, the American Action Forum tracks all ObamaCare implementation costs.  Any rule that contains a private-sector, state, or paperwork burden is recorded.  To date, ObamaCare has imposed $9.7 billion in private-sector burdens, $2.7 billion in state costs, and more than 50.4 million paperwork burden hours. 

To put this burden in perspective, assuming a 2,000 hour work year, it would take approximately 25,200 employees simply to comply with federal red tape.  Obviously, doctors, hospitals, and administrative staff would probably rather focus on patient care than bureaucratic compliance.  The White House even admits that its signature domestic achievement has already produced at least 18 economically significant regulations (rules with an impact of $100 million or more). 

Much like the midnight, strong-armed passage of the law itself, implementation of ObamaCare has hardly been transparent.  Shortly after passage in 2010, the administration released eight interim final rules, mainly to avoid any public scrutiny or defensible cost-benefit analyses. 

For example, one regulation read: “These amendments to the interim final regulations are not subject to the Unfunded Mandates Reform Act because they are being issued as interim final regulations.”  Why bother with formalities when you have a healthcare system to remake?  

Combined, these eight interim final rules yielded $383 million in private-sector costs and more than 3.7 million paperwork hours, according to the administration.  One regulation, the Early Retiree Reinsurance Program, was initially projected to cost $39 million, with more than 854,000 paperwork burden hours. 

In a surprise to no one, actual research reveals the White House grossly underestimated the costs of implementation.  According to Jerry Ellig and Christopher Conover of George Mason University’s Mercatus Center, the Retiree Reinsurance Program understated costs by $9 to $10 billion. 

Reviewing data from White House records, it appears that the administration was unconcerned with the shoddy analysis.  Ellig and Conover found that the White House spent an average of just five days reviewing the early regulations.  By comparison, EPA’s greenhouse gas regulations for stationary sources have been at the White House since November 4, 2011.

Barring a significant victory for those challenging ObamaCare at the Supreme Court, it appears the future of implementation is just as bleak as the past. 

In fact, there are currently eight more “economically significant” ObamaCare regulations under review.  In the coming months, the healthcare industry can expect new rules on state exchange requirements, Medicaid eligibility, and primary care payment reform.

On March 27, the administration will formally release its final rule on exchange plans for employers.  During the implementation period, the rule will cost states and the private-sector more than $3.4 billion, roughly $690 million annually.  These costs never appeared in a CBO report but their regulatory burdens will persist years into the future.  

Long-term, Americans can expect significant rules on grandfathered health plans (“If you have insurance that you like, then you will be able to keep that insurance.”) and preventative services regulations from the Department of Labor.  Both will impose millions more in costs on consumers, providers, and healthcare professionals.   

Projecting ObamaCare costs into the future, based on current trends, Americans could witness an additional $6 billion in implementation costs and 20 million more paperwork burden hours.  This would yield $23 billion in total implementation costs and nearly 70 million burden hours. 

As ObamaCare turns two, it has already imposed tremendous regulatory costs on the nation, with many significant implementation hurdles on the horizon.  The major fiscal provisions of this now-infamous law don’t begin until 2014.  However, $12 billion in regulatory costs have already made their mark on the U.S. economy.