Riddled With Errors: Health Care, Dodd-Frank Implementation Challenges

Administration Issues 214 Regulatory Corrections

Dodd-Frank and the Affordable Care Act (ACA) have already imposed tremendous burdens on states and the private sector.  Two of this administration’s biggest legislative achievements also carry the weight of the largest regulatory burdens.  Combined, they will generate $46.2 billion in costs and more than 135 million paperwork burden hours. But an American Action Forum (AAF) analysis found that nearly half of the Affordable Care Act’s (ObamaCare) deadlines missed their scheduled implementation date.  The law firm Davis Polk, which tracks Dodd-Frank implementation, concluded in their latest report that regulators missed “59.5% of the 398 total rulemaking requirements” statutory deadlines.  In sum, the administration has created a lot of work, and they routinely fail to meet their own implementation schedule.   

New AAF research has also found numerous technical and substantive errors with the implementation of Dodd-Frank and the Affordable Care Act. In Dodd-Frank’s 125 new rules, there have been 65 corrections filed and 149 corrections to the ACA’s 59 rules.

To date, regulators implementing Dodd-Frank have issued 14 corrective documents in the Federal Register (an error rate of 11 percent).  Those documents contained 65 separate corrections to previous regulations.  Some of the corrections are minor typographical errors; others are substantive changes that fundamentally alter the interpretation of a rule.

For example, corrections to the Federal Reserve’s “Truth in Lending” regulation contained 23 corrections, namely changing erroneous dates and incorrect section citations.  Other corrections are more substantive: in one, the Commodity Futures Trading Commission added more than 900 words of text to clarify misleading language. 

The new Consumer Financial Protection Bureau (CFPB) isn’t immune to bureaucratic mistakes either.  During its implementation of Regulation E, which would impose 6.2 million hours of new paperwork, CFPB had to issue a 20-page correction that conceded, “The Final Rule inadvertently did not reflect certain technical and conforming changes made by the interim final rule.”  CFPB then issued another amendment to Regulation E, attempting to limit the rule’s burden by including a safe harbor provision.  Those corrections were not sufficient, as CFPB has formally stayed the effective date of the rule that will never apparently be “perfect.”

The ACA is even more prone to error.  The administration has published 59 prescriptive regulations and has issued 16 corrective documents (an error rate of 27 percent).  Those documents contained 149 separate corrections to previous regulations.

One correction to the controversial menu labeling rule listed 21 different amendments to the original proposal, including multiple section changes and alterations to initial capital costs.  That proposal would cost restaurants more than $750 million, with 2.6 million paperwork burden hours.  Regulators also expanded the proposal to include grocery stores, even though it appears that Congress never intended to sweep all food vendors under a new regulatory apparatus.

Regulators issued 16 corrections to the qualified health exchange final rule, including a portion that “incorrectly implies that establishing any licensure standards would not be allowed.”  That final rule imposes $3.4 billion in costs and more than 1.1 million paperwork burden hours, but no corrections were made to the compliance cost section.

Finally, the administration made 24 corrections to its “Medical Loss Ratio” (MLR) requirements rule, which determines how much money insurance companies devote to patient coverage.  Embarrassingly, the administration also had to correct an earlier correction.  The other changes fixed text that was “technically inaccurate and [conflicted] with language elsewhere.”  The final MLR rule imposed $228 million in cost and 1.2 million paperwork burden hours.

Conclusion

Combined, Dodd-Frank and the Affordable Care Act will impose $46.2 billion in new regulatory costs and 135.2 million paperwork burden hours.  To put that paperwork hour figure in perspective, assuming a 2,000-hour work year, it would take 37,900 employees simply to fill out red tape for the health care law, and 29,738 employees to comply with Dodd-Frank. 

Despite these enormous costs, the implementation isn’t on time, and it’s often incorrect.  There’s a great deal of debate about the public policy benefits of these two laws, but missing deadlines and 214 errors during implementation isn’t good policy, or good government.