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HHS, DOL, Treasury
Rule title:
Dependent Coverage for Children up to Age 26
0991-AB66                                                                     RIA                    No
Stage                                                                         Publication Date
Interim Final Rule                                                            5/13/2010
Rule summary:
This document contains interim final regulations implementing the requirements for group health plans and
health insurance issuers in the group and individual markets under provisions of the Patient Protection and
Affordable Care Act regarding dependent coverage of children who have not attained age 26.

Openness                                                                      Score     Comments
1. How easily were the RIA, the proposed rule, and any supplementary
materials found online?                                                       5         1A
2. How verifiable are the data used in the analysis?                          2         1B
3. How verifiable are the models and assumptions used in the analysis?        2         1C
4. Was the Regulatory Impact Analysis comprehensible to an informed
layperson?                                                                    2         1D

Total Openness (Sum of 1-4)                                                   11

Analysis                                                                    Score       Comments
5. How well does the analysis identify the desired outcomes and demonstrate
that the regulation will achieve them?                                      2           2A

6. How well does the analysis identify and demonstrate the existence of a
market failure or other systemic problem the regulation is supposed to solve? 1         2B
7. How well does the analysis assess the effectiveness of alternative
approaches?                                                                   1         2C
8. How well does the analysis assess costs and benefits?                      2         2D

Total Analysis (Sum of 5-8)                                                   6

Use                                                                           Score     Comments
9. Does the proposed rule or the RIA present evidence that the agency used
the Regulatory Impact Analysis?                                               1         3A
10. Did the agency maximize net benefits or explain why it chose another
alternative?                                                               0   3B
11. Does the proposed rule establish measures and goals that can be used
to track the regulation’s results in the future?                               0        3C

12. Did the agency indicate what data it will use to assess the regulation’s
performance in the future and establish provisions for doing so?               1        3D

Total Use (Sum of 9-12)                                                        2

Total Score                                                                        19
Criterion                     Score Com. No. Comment
                                             The Federal Register notice appears
                                             readily in using a RIN
1. How easily were the RIA,                  or keyword search. The RIA is in the
                                             notice. A keyword search on
the proposed rule, and any                   turns up a link to a "regulations and
supplementary materials                      guidance" page that has a link to the
found online?                 5     1        regulation.

                                               Data from Kaiser Family Foundation
                                               are sourced and linked, but internal
                                               government data are not sourced very
                                               transparently: "The Departments’
                                               estimates in this section are based on
                                               the 2004–2006 Medical Expenditure
                                               Panel Survey Household Component
                                               (MEPS–HC) which was projected and
                                               calibrated to 2010 to be consistent
                                               with the National Health Accounts
                                               projections." Data sources for
2. How verifiable are the data                 paperwork cost estimate are given
used in the analysis?          2    2          and usually linked.

                                               Calculations of the number of people
                                               affected are clear. Calculations of
                                               increased premium costs are not
                                               transparent enough for the reader to
                                               verify. No justification presented for
3. How verifiable are the                      assumed take-up rates; they do not
models and assumptions                         appear based on studies of take-up
used in the analysis?         2     3          rates reported in the RIA.
                               RIA is reasonably readable. The
                               change in insurance costs was
                               apparently calculated from data, but
4. Was the analysis            the analysis does not show the
comprehensible to an           calculations so these results are pretty
informed layperson?    2   4   opaque.
                                Score   Com. No. Comment

5. How well does the
analysis identify the desired
outcomes and demonstrate
that the regulation will
achieve them?                    2
Does the analysis clearly
                                                  Improved health outcomes, greater job mobility,
identify ultimate outcomes                        reduced cost-shifting attributable to
that affect citizens’ quality of                  uncompensated care. Two of the three are final
life?                            4      5A        outcomes; job mobility is a means to an end.

Does the analysis identify                        Additional number of individuals who receive
how these outcomes are to                         coverage is estimated. Ultimate effects on health
be measured?                    1       5B        outcomes or other benefits are not calculated.

                                                  Making individuals younger than 26 eligible for their
                                                  parents' insurance will reduce the number of
                                                  uninsured. Having more people covered by
                                                  insurance will produce the benefits described
Does the analysis provide a                       above. (It is not clear that this regulation will really
                                                  reduce cost-shifting; it appears to be just another
coherent and testable theory
                                                  form of cost-shifting.) It is unclear how the rule will
showing how the regulation                        generate most of the claimed outputs let alone
will produce the desired                          whether these outputs will lead to the eventual
outcomes?                    1          5C        outcome of a healthier population.
                                                  Cited research on take-up rates suggests that
                                                  some new people will receive coverage as a result
                                                  of the regulation. The analysis mentions but does
                                                  not cite studies of similar state laws, then asserts
                                                  that these studies may not be a good guide to the
                                                  quantitative impact. No research cited
Does the analysis present                         demonstrates that increased insurance coverage
credible empirical support for                    improves health outcomes, increases job mobility,
the theory?                    2        5D        or reduces cost-shifting.
                                                  Low, mid-range, and high estimates of the number
                                                  of new insured are based on different assumptions
                                                  about take-up rates, which are acknowledged to be
                                                  uncertain. It is not clear from where the
                                                  assumptions about take-up rates came. The low
                                                  range does not appear to be as low as the studies
Does the analysis
                                                  of state programs might indicate, so it is not clear
adequately assess                                 the analysis captured the full range of
uncertainty about the                             uncertainties. No uncertainty analysis of ultimate
outcomes?                       1       5E        outcomes.
6. How well does the
analysis identify and
demonstrate the existence of
a market failure or other
systemic problem the
regulation is supposed to
solve?                       1

                                        Sole justification given under "Need for Regulatory
                                        Action" is that the regulation is necessary to
                                        implement the law. It would expand insurance
                                        coverage for individuals aged 19-25, but nowhere
                                        does the analysis explain whether these individuals
                                        lack coverage due to some type of systemic
Does the analysis identify a            problem. The departments say that too few people
market failure or other                 are insured but not why the number of people is
systemic problem?              1   6A   above or below the optimal amount.

Does the analysis outline a
coherent and testable theory
that explains why the
problem (associated with the
outcome above) is systemic
rather than anecdotal?       0     6B   No theory of a systemic problem offered.
                                         Data show how many young people are uninsured,
                                         but no empirical analysis demonstrates why this is
Does the analysis present                not merely their choice. No evidence presented
credible empirical support for           showing that the uninsured individuals lack
the theory?                    1    6C   insurance due to some kind of systemic problem.
Does the analysis
adequately assess
uncertainty about the                    The problem itself is not well-defined in the
existence or size of the                 analysis, and there is no assessment of uncertainty
problem?                       0    6D   about the problem.
7. How well does the
analysis assess the
effectiveness of alternative
approaches?                    1

Does the analysis enumerate              The departments considered whether to define
other alternatives to address            who is considered a child, but opted to allow plans
the problem?                  2     7A   to make this decision themselves.

Is the range of alternatives
considered narrow (e.g.,
some exemptions to a
regulation) or broad (e.g.,
regulation vs. command and
control, market mechanisms,
nonbinding guidance,
information disclosure,
addressing any government
failures that caused the                 This is a tweak, not a fundamentally different
original problem)?              1   7B   regulatory alternative.
Does the analysis evaluate
how alternative approaches               No relevant content. The alternative is dismissed
would affect the amount of               with a couple sentences that do not seem related
the outcome achieved?           0   7C   to the topics in the regulatory analysis.
Does the analysis
adequately address the
baseline? That is, what the
state of the world is likely to
                                         Baseline number of uninsured is assumed to be
be in the absence of federal             the number in the most recent year for which data
intervention not just now but            are available. No discussion of how this number
in the future?                  1   7D   might change in the absence of this regulation.
8. How well does the
analysis assess costs and
benefits?                    2
                                      Analysis calculates cost of notifying people about
                                      eligibility. The increase in premiums needed to pay
                                      for the increase in coverage is calculated but
Does the analysis identify
                                      characterized as a transfer from families without
and quantify incremental              dependents aged 19-25 to families with
costs of all alternatives             dependents aged 19-25. No cost calculation for the
considered?                  2   8A   sole alternative mentioned.
                                        The analysis likely captures the major expenditure,
                                        which is the cost of covering people who are
Does the analysis identify all          currently not covered. Hard to judge how well this is
expenditures likely to arise            done because the per participant costs are simply
as a result of the regulation? 2   8B   stated, not calculated or sourced.
                                        Total change in premium costs is calculated.
Does the analysis identify
                                        Analysis notes that this will likely result in transfers
how the regulation would                between families covered by group policies, but
likely affect the prices of             buyers of individual policies will likely cover the full
goods and services?            3   8C   costs themselves.

                                        Alternative take-up rates are simply assumed for
Does the analysis examine               the purpose of calculating a range of possible
                                        costs, but no other effects on behavior are
costs that stem from
                                        analyzed. For example, there is no estimate of the
changes in human behavior               number of people who might drop their coverage
as consumers and producers              due to the increased premiums or changes in the
respond to the regulation? 2       8D   amount of insurance coverage offered.

If costs are uncertain, does
the analysis present a range            Alternative take-up rates have different implications
of estimates and/or perform             for premium costs; analysis provides a range of
a sensitivity analysis?      3     8E   estimates.
Does the analysis identify
the alternative that                    Since benefits were not estimated, net benefits
maximizes net benefits?      0     8F   could not be calculated.

                                        Since ultimate outcomes were not estimated, cost-
                                        effectiveness could not be calculated. The analysis
Does the analysis identify              does report costs per new insured person, which
the cost-effectiveness of               could be viewed as a cost-effectiveness calculation
each alternative considered? 2     8G   for an intermediate outcome.

                                        Principal parties who bear costs would be insurers,
                                        insured people who do not have eligible children (in
Does the analysis identify all
                                        group plans) and insured people who do have
parties who would bear costs            eligible children (in individual plans). Analysis notes
and assess the incidence of             that costs/transfers would be distributed among
costs?                         2   8H   these groups but does not calculate how.

                                        Principal beneficiaries are new recipients of
Does the analysis identify all
                                        insurance. In a few cases, the analysis asserts that
parties who would receive               people who lack insurance but have high medical
benefits and assess the                 costs would be the most likely to benefit. No further
incidence of benefits?         1   8I   discussion of incidence of benefits.
Criterion                        Score Com. No. Comment
                                                The notice makes no claim to use the analysis,
                                                and it appears the major decisions were
                                                determined by the law. The one alternative tweak
                                                was dismissed with reasoning unrelated to the
                                                regulatory analysis. Notice states that these are
9. Does the proposed rule or
                                                interim final rules because there would be
the RIA present evidence                        insufficient time to conduct a notice-and-
that the agency used the                        comment rulemaking to meet the Sept. 23, 2010
analysis?                        1     9        deadline.
                                                The analysis did not calculate net benefits, so the
                                                departments made their decisions with no
                                                cognizance of net benefits. The notice asserts
10. Did the agency maximize                     that the benefits will outweigh the costs, but the
net benefits or explain why it                  analysis does not even really marshal the
chose another alternative?       0     10       qualitative evidence to make this point.
                                                No measures and goals established. The
11. Does the proposed rule                      projections of increases in the number of insured
                                                individuals could be used to establish at least
establish measures and
                                                intermediate outcome goals, but it is not clear
goals that can be used to                       from the RIA whether the low, medium, or high
track the regulation's results                  scenario would be the most likely/appropriate
in the future?                   0     11       goal.
12. Did the agency indicate
what data it will use to
assess the regulation's
                                                    Data on insurance coverage for the target groups
performance in the future                           could be used to measure intermediate
and establish provisions for                        outcomes. It would take a lot of work to get from
doing so?                      1        12          the RIA to reasonable quantitative goals.
Rule Title RIN                                                 Openness
                      Agency Pub Date RIA separate? Total (G+H+J)              Analysis
           0991-AB66 Treasury to Age 26
            HHS, DOL,
Dependent Coverage for Children up5/13/2010 No              19            11              6
Quality (G+H) Use       1   2   3   45       5A       5B
             17     2   5   2   2   2    2        4        1
5C       5D       5E       6       6A       6B       6C       6D       7
     1        2        1       1        1        0        1        0       1
7A       7B       7C       7D       8       8A       8B       8C       8D
     2        1        0        1       2        2        2        3        2
8E       8F       8G       8H       8I       9       10       11       12
     3        0        2        2        1       1        0        0        1

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