December 6, 2011

Dependent Coverage for Children up to Age 26

Interim Final Rule

Score: 19 / 60

Additional details
Department of Health and Human Services
Regulatory Identification Number
Agency Name
Department of Health and Human Services, Department of Labor, Treasury
Rule Publication Date


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.


There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score


1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
The Federal Register notice appears readily in using a RIN or keyword search. The RIA is in the notice. A keyword search on turns up a link to a "regulations and guidance" page that has a link to the regulation.
2. How verifiable are the data used in the analysis?
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 paperwork cost estimate are given and usually linked.
3. How verifiable are the models and assumptions used in the analysis?
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 assumed take-up rates; they do not appear based on studies of take-up rates reported in the RIA.
4. Was the analysis comprehensible to an informed layperson?
RIA is reasonably readable. The change in insurance costs was apparently calculated from data, but the analysis does not show the calculations so these results are pretty opaque.


5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
Improved health outcomes, greater job mobility, reduced cost-shifting attributable to uncompensated care. Two of the three are final outcomes; job mobility is a means to an end.
Does the analysis identify how these outcomes are to be measured?
Additional number of individuals who receive coverage is estimated. Ultimate effects on health outcomes or other benefits are not calculated.
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
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 above. (It is not clear that this regulation will really reduce cost-shifting; it appears to be just another form of cost-shifting.) It is unclear how the rule will generate most of the claimed outputs let alone whether these outputs will lead to the eventual outcome of a healthier population.
Does the analysis present credible empirical support for the theory?
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 demonstrates that increased insurance coverage improves health outcomes, increases job mobility, or reduces cost-shifting.
Does the analysis adequately assess uncertainty about the outcomes?
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 of state programs might indicate, so it is not clear the analysis captured the full range of uncertainties. No uncertainty analysis of ultimate 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?
Does the analysis identify a market failure or other systemic problem?
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 problem. The departments say that too few people are insured but not why the number of people is 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?
No theory of a systemic problem offered.
Does the analysis present credible empirical support for the theory?
Data show how many young people are uninsured, but no empirical analysis demonstrates why this is not merely their choice. No evidence presented showing that the uninsured individuals lack insurance due to some kind of systemic problem.
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The problem itself is not well-defined in the analysis, and there is no assessment of uncertainty about the problem.
7. How well does the analysis assess the effectiveness of alternative approaches?
Does the analysis enumerate other alternatives to address the problem?
The departments considered whether to define who is considered a child, but opted to allow plans to make this decision themselves.
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
This is a tweak, not a fundamentally different regulatory alternative.
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
No relevant content. The alternative is dismissed with a couple sentences that do not seem related 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 be in the absence of federal intervention not just now but in the future?
Baseline number of uninsured is assumed to be the number in the most recent year for which data are available. No discussion of how this number might change in the absence of this regulation.
8. How well does the analysis assess costs and benefits?
Does the analysis identify and quantify incremental costs of all alternatives considered?
Analysis calculates cost of notifying people about eligibility. The increase in premiums needed to pay for the increase in coverage is calculated but characterized as a transfer from families without dependents aged 19-25 to families with dependents aged 19-25. No cost calculation for the sole alternative mentioned.
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The analysis likely captures the major expenditure, which is the cost of covering people who are currently not covered. Hard to judge how well this is done because the per participant costs are simply stated, not calculated or sourced.
Does the analysis identify how the regulation would likely affect the prices of goods and services?
Total change in premium costs is calculated. Analysis notes that this will likely result in transfers between families covered by group policies, but buyers of individual policies will likely cover the full costs themselves.
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Alternative take-up rates are simply assumed for the purpose of calculating a range of possible costs, but no other effects on behavior are analyzed. For example, there is no estimate of the number of people who might drop their coverage due to the increased premiums or changes in the amount of insurance coverage offered.
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Alternative take-up rates have different implications for premium costs; analysis provides a range of estimates.
Does the analysis identify the alternative that maximizes net benefits?
Since benefits were not estimated, net benefits could not be calculated.
Does the analysis identify the cost-effectiveness of each alternative considered?
Since ultimate outcomes were not estimated, cost-effectiveness could not be calculated. The analysis does report costs per new insured person, which could be viewed as a cost-effectiveness calculation for an intermediate outcome.
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Principal parties who bear costs would be insurers, insured people who do not have eligible children (in group plans) and insured people who do have eligible children (in individual plans). Analysis notes that costs/transfers would be distributed among these groups but does not calculate how.
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Principal beneficiaries are new recipients of insurance. In a few cases, the analysis asserts that people who lack insurance but have high medical costs would be the most likely to benefit. No further discussion of incidence of benefits.


9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
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 interim final rules because there would be insufficient time to conduct a notice-and-comment rulemaking to meet the Sept. 23, 2010 deadline.
10. Did the agency maximize net benefits or explain why it chose another alternative?
The analysis did not calculate net benefits, so the departments made their decisions with no cognizance of net benefits. The notice asserts that the benefits will outweigh the costs, but the analysis does not even really marshal the qualitative evidence to make this point.
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
No measures and goals established. The projections of increases in the number of insured individuals could be used to establish at least intermediate outcome goals, but it is not clear from the RIA whether the low, medium, or high scenario would be the most likely/appropriate goal.
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?
Data on insurance coverage for the target groups could be used to measure intermediate outcomes. It would take a lot of work to get from the RIA to reasonable quantitative goals.
Total 19 / 60