B. Health Care Regulation

VII. Key Issues: Regulation & Reform >> B. Health Care Regulation (last updated 5.22.17)

Overview

• Field, Robert. A Taxonomy of American Health Care Regulation: Implications for Health Reform. 17 Temple Political and Civil Rights Law Review 605 2007-2008.
  • “Health care is one of America’s largest industries and is among the most highly regulated” (p. 605).
  • “The functions of regulatory bodies can be grouped into four broad categories
    • There are rulemaking activities through which they set standards. In health care,
      these determine, for example, the criteria for achieving professional or institutional
      licensure and for conducting ongoing practices and operations.
    • There are adjudications through which they resolve disputes. These may involve
      enforcement actions or license denials or restrictions.
    • There are administrative activities, such as the management of public hospitals.
    • Finally, there is the role of administering funding, as in the implementation of the Medicare and Medicaid programs” (p. 607).
  • “In its historical sweep, American health care regulation is a series of programs layered one on top of another over the course of the past 150 years” (p. 608).

General Regulation

Major Categories of Health Care Regulation

Health Facilities Regulation

Health Professionals Regulation

Health Insurance Regulation

Medical Tort System

Pharmaceutical Regulation

Medical Device Regulation

Antitrust in Health Care

Nonprofit Tax Exemption

Total Costs of Health Services Regulation

2016 Estimates. 

• Duke University. The 2002 figure shown below is in the process of being formally updated. A back-of-the-envelope calculation shows that if total health services regulation costs had grown at the same rate as GDP, they would amount to $572 billion in 2016 ($281 billion federal); if they grew at the same rate as national health expenditures, they would amount to $663 billion ($326 billion federal). Neither estimate would account for the cost of new health services regulations, including the ACA.
• Wayne Crews. Wayne Crews estimates the total cost of federal health services regulation to be $194.4 billion in 2016. This includes the Duke University figure of $166.7 billion (without any adjustment whatsoever for inflation) plus the costs of various DHHS rules adopted since then plus a $5 billion “placeholder” for the ACA (even though several estimates have placed the cost at tens of billions; this figure does not include, for example, the CBO estimate that the law will eventually shrink the total number of full-time-equivalent workers by at least 2 million each year).

2002 Estimate. A Duke University study found that in 2002, the total cost of health services regulations amounted to $339.2 billion, of which $166.7 billion was related to federal regulations and $172.6 billion was related to state and local regulations. This study included all the major domains of regulation listed above with the exception of antitrust and nonprofit tax exemption. A detailed breakdown by category of regulation is here. The same study estimated that after accounted for the benefits of such regulations, the net cost of health services regulations amounted to $169 billion.

Resources

• Legal/Regulatory Issues (Health Affairs topic page)
• RegData is the first database to count the actual number of restrictions in the Code of Federal Regulations, as opposed to the former method of simply counting total pages. The interactive tool enables a far more focused view of the regulatory burden by measuring the growth of regulation by industry. While previous methods provided an idea of the growth of overall regulation, they told nothing about how those regulations affected specific sectors in the economy. 3-digit industry codes related to health care include 621-Ambulatory Health Services; 622-Hospitals; and 623-Nursing and Residential Care Facilities.  From 1997 to 2010, federal regulations increased by 170.5%  in ambulatory health services, 53.8% in hospitals and 36.2% in nursing homes according to this index.