NCPA - National Center for Policy Analysis


November 2, 2004

Health care regulations, which impose rules on every aspect of health care from physicians to pharmaceuticals, cost the country $256 billion per year. Even when factoring in the benefits of such regulations to patients, the cost/benefit ratio is still 2 to 1, says researcher Christopher Conover.

Moreover, he says:

  • Health services regulations are responsible for pricing about seven million Americans out of the health insurance market.
  • About 22,000 Americans die each year from costs associated with health care regulations, even more than the 18,000 Americans who die from lack of health insurance.
  • Health care regulation costs exceed total annual expenditures on gas and oil by consumers in the United States.

Among the examples of regulatory costs, says Conover:

  • Food and Drug Administration (FDA) regulations cost society about $49 billion annually while providing only $7.1 billion worth of benefits.
  • The medical liability system costs society $113.7 billion, which trumps the $33 billion provided in benefits.
  • Mandated coverage rules cost about $15 billion, while providing benefits of only $13.5 billion.

Health care regulations for facilities include uncompensated care obligations, hospital accreditation standards, privacy mandates regarding medical records, organ transplant regulation and pharmaceutical price regulation, among others.

Health care professionals face an onslaught of regulations as well, including professional accreditation and licensure requirements, Medicare reimbursement restrictions, privacy mandates and limits on the working hours of medical residents.

Moreover, private health insurance carries are burdened by rules that mandate coverage of specific medical procedures and services, as well as continuation-of-coverage mandates, says Conover.

Source: Christopher J. Conover, "Health Care Regulation: A $169 Billion Hidden Tax," Policy Analysis 527, October 4, 2004, Cato Institute.

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