Death by Regulation

We need to acknowledge an uncomfortable reality: it's possible for certain regulations to inadvertently take lives.

President Trump and numerous states are following the lead of countries like Canada and the United Kingdom by scaling back regulations that have accumulated over the years.

That's not especially controversial when it comes to ordinary, outdated regulatory clutter. But what happens if these efforts target regulations that originally sought to save lives?

To answer that question, we need to acknowledge an uncomfortable reality: that it's also possible for certain regulations to inadvertently take lives.

The idea sounds controversial — even conspiratorial — but there is evidence to back it up, as my new research shows.

Some policies clearly do save lives. Take the successful phase-out of lead from gasoline decades ago. Some estimates suggest this policy postponed thousands of deaths a year in the 1980s, in large part by lowering male blood pressure levels.

On the other hand, not all policies work as we hope. Fuel efficiency regulations, despite similar good intentions, have led to smaller cars on the road that are more dangerous in an accident.

Beyond unique circumstances like this, there is another, more general, way that policies can increase mortality risk. When the government addresses risks publicly through regulation, people curtail their own spending on things that keep them safe and healthy.

How? Businesses have to spend money complying with regulations, leaving less take-home pay for workers and business owners, as well as higher prices for customers.

A wide swath of people winds up with slightly less income to spend on healthcare, safer products for their kids or housing in a secure neighborhood.

Strange as it may sound, there is a point whereby otherwise life-saving laws and regulations cause private health spending to fall enough that they increase, rather than decrease, mortality risk.

In a new study, Vanderbilt University professor Kip Viscusi and I attempt to determine that point.

The key question is how much of an economy-wide income drop will lead to one expected death. Using data on what people are willing to spend to reduce their own risk of death, as well as their overall propensity for new health spending, we estimate that number to be around $99.3 million.

Therefore, we should be especially wary of policies that cost more than about $100 million for each life saved. We can expect these policies to cause more deaths than they prevent.

Identifying who pays the price is tricky, as costs are often spread across the American population. The poor and young people, especially children, are groups for whom health spending goes the furthest to reduce mortality risk.

This line of research is not new. For decades, academics and even federal analysts have been aware that a counterproductive cutoff for life-saving policies exists. The Office of Management and Budget, for example, used similar analysis in the early 1990s.

So how can we apply this in practice? Consider Affordable Care Act (ACA) regulations and programs, long subject to claims about lives taken or saved. Senator Bernie Sanders, I-Vt., for example, said that "thousands will die" if portions of the ACA were repealed.

Evidence from several pre-ACA Medicaid expansions suggests they reduced mortality for between $327,000 and $867,000 per life saved, well below the roughly $100 million cutoff. So one part of the ACA may indeed have potential to lower mortality risk.

Yet other parts of the ACA make consumers spend more on similar (or worse, by their own judgment) health insurance coverage than they previously had.

Subjecting those provisions to close scrutiny is likely to show increased mortality risk for some segments of the population. Determining which effect on mortality is bigger remains an important open question.

More research can help to identify and weed out regulations that are counterproductive with respect to mortality. In general, they will be extremely costly relative to their benefits, or they will target very small risks.

Nine major Obama-era air quality regulations cost an estimated $18.6 billion, which translates into 187 expected deaths. According to studies relied on by the EPA, the rules will delay thousands of deaths — but a 2015 study in the Journal of Benefit-Cost Analysis showed that there is so much uncertainty surrounding these benefits that the rules could realistically save no one.

Senator Shelly Moore Capito, R-W.Va., recently echoed the sentiments of Sen. Sanders and other lawmakers when she said, "I did not come here to hurt people."

Yet all laws help some people while hurting others. This unavoidable truth is why policymaking is so controversial.

Acknowledging these tradeoffs involves carefully assessing the outcomes we can expect from policies — outcomes that unfortunately include death.