The Obamacare regulatory rush.

Batkins, Sam ; Brannon, Ike

There is plenty of evidence that rushing through the rulemaking process results in poor analysis and shoddy policy outcomes. Nowhere is that more clearly manifested than in the Patient Protection and Affordable Care Act (PPACA, also known as Obamacare), the Obama administration's signature policy achievement. Since its passage in early 2010, the administration has rushed PPACA regulations through the Office of Information and Regulatory Analysis (OIRA)--the entity tasked with reviewing regulations for soundness--at a breakneck pace, often with merely perfunctory analysis. The result of those pell-mell efforts is displayed almost daily before the public with corrections, delays, and botched rollouts.

When the administration began implementing PPACA, it issued a set of interim final rules that sailed through OIRA, which typically serves the White House by anticipating costly or problematic details in proposed regulations. However, when it came to PPACA, OIRA review apparently was perfunctory. Mercatus Center scholars Christopher Conover and Jerry Ellig documented in their 2012 paper "The Poor Quality of Affordable Care Act Regulations" how six prescriptive ACA regulations fared poorly on critical analytical metrics compared to other health care and Homeland Security regulations. Conover and Ellig suggested that the poor PPACA analysis was rooted in presidential priorities: the administration wanted the regulations out the door, and there was little OIRA--considered a minor agency in the Executive Office of the President--could do to ensure proper analysis. Now the administration is paying the price for that lax oversight.

PPACA's rollout has had more than its share of flubs and failures: a dysfunctional website, broken regulations, higher premiums, and cancelled plans. It has led some commentators to wonder how so many mistakes could pile up. The answer to that lies in the OIRA review data, which indicate that White House fast-tracked many PPACA regulations, including rushing through 27 rules without any formal review.

Since 2010, the average OIRA review time for a typical rule has been 74 days. But the average review time for a PPACA final rule was just 29 days. "Economically significant" PPACA final rules (those with an annual compliance cost of $ 100 million or more) got even less scrutiny--just 20 days.

No other executive branch agency has review times anywhere near that brief. For example, Environmental Protection Agency proposed and final rules averaged 95 days of review; even Department of Education final rules averaged 47 days (the second fastest of all the sets of rules, behind the PPACA rules). Put bluntly, the administration--as a matter of course--spent noticeably less time scrutinizing PPACA regulations than other rules.

Perhaps more worrisome, the disparity in review times between PPACA regulations and all others has widened in the last several months. Since 2012, the average rule was under OIRA review for 110 days, and 97 days for those deemed economically significant. Yet PPACA reviews took on average between 20 and 33 days. It is clear the administration greased the tracks for many health care regulations.

White House inattention / The PPACA rollout has resulted in numerous missteps. For example, approximately one-third of all PPACA regulations contained errors, forcing the administration to issue corrective documents. Some of the errors that have come to light so far have been typographical in nature, but others have been substantive. In total, 286 errors in original PPACA regulations have been identified, requiring 140 pages of amended rulemakings solely devoted to correcting rushed regulations.

It is easy to see how those errors occurred. The White House appears to have given little if any oversight of the rulemakings. The average review time for an erroneous proposed health care rule was just eight days; the median time was zero days. Some 18 proposed rules and 16 final rules that subsequently needed fixing received no official White House review.

There have been more than 100 PPACA regulations issued since the law's passage, so perhaps we can cut the administration some slack. However, the data reveal the administration failed to review seven significant PPACA proposals, including measures to amend Medicare Advantage and to implement Medical Loss Ratios. The administration also failed to review six significant PPACA final rules, including amendments to the Medicare Prescription Drug Benefit Program. The troubled health care exchange rollout bears special scrutiny. The Department of Health and Human Services submitted for review four significant proposed rules concerning exchanges. OIRA review of those proposed rules averaged a mere 16 days. (Final exchange rules averaged 36 days of OIRA review, which is better than 16 but still much shorter than average.) For an example of the poor exchange analysis, the administration initially estimated that individuals navigating the federal health care exchange would spend less than 30 minutes on the website. Obviously, that estimate hasn't fared well.

The White House has also failed to release any documents suggesting changes or material alterations to the exchange regulations. Under Executive Orders 12866 and 13563 (the latter issued by President Obama himself), agencies must "Identify for the public those changes in the regulatory action that were made at the suggestion or recommendation of OIRA." In all instances, OIRA listed exchange regulations as "Consistent with Change," indicating that OIRA did make suggestions or recommendations. Yet the White House and HHS have failed to release redline documents of any amendments to exchange regulations. For a White House that criticized its predecessor for a lack of regulatory transparency, such behavior is disappointing.

Conclusion / Passing a law does not conclude the policymaking process. For legislation as complex as PPACA, there are literally hundreds of regulations that an administration must issue in order to ensure that the law does what it is intended to do. It can be tedious, unexciting work, but an administration must give it full attention in order for the law to operate.

Concerning its signature policy achievement, the Obama administration has been surprisingly careless in that work, at least until the full magnitude of the exchange failure came to light and a political price had to be paid for the inattention. We expect that more regulatory failures will emerge as PPACA continues to be implemented.

SAM BATKINS is director of regulatory studies at the American Action Forum. IKE BRANNON is a senior fellow at the George W. Bush Institute and president of Capital Policy Analytics, a consulting firm based in Washington, D.C.

TABLE 1
AVERAGE REVIEW TIME FOR
PPACA REGULATIONS
2010-2013

Type                          AVERAGE       AVERAGE
                            REVIEW TIME    TIME FOR
                                          SIGNIFICANT
                                             RULES

All Rules                       74            70
EPA Rules                       95            63
PPACA Proposed Rules            33            30
PPACA Final Rules               29            20
PPACA Corrected Proposals        8            N/A
PPACA Corrected Rules            4            N/A