Early Retiree Reinsurance Program
Interim Final Rule
Score: 13 / 60
This interim final rule with comment period (IFC) implements the Early Retiree Reinsurance Program, which was established by section 1102 of the Patient Protection and Affordable Care Act (the Affordable Care Act). The Congress appropriated funding of $5 billion for the temporary program. Section 1102(a)(1) requires the Secretary to establish this temporary program no later than 90 days after enactment of the statute, which is June 21, 2010. The program ends no later than January 1, 2014. The program provides reimbursement to participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses and dependents. The Secretary will reimburse plans for certain claims between $15,000 and $90,000 (with those amounts being indexed for plan years starting on or after October 1, 2011). The purpose of the reimbursement is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans than they would otherwise be without this program.
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.
|1. How easily were the RIA , the proposed rule, and any supplementary materials found online?|
The interim final rule shows up on regulations.gov with a RIN or keyword search. There is an RIA section in the Federal Register notice. A keyword search on the HHS website turns up a press release with a link to a page of information about the program, which has a link to the regulation.
|2. How verifiable are the data used in the analysis?|
One data source linked. No data for key claims. The only part of the analysis using data is the calculation of the paperwork burden. Most of the figures (e.g., hours to complete a task) are not sourced at all.
|3. How verifiable are the models and assumptions used in the analysis?|
Very little analysis was done, and so there really are no significant models or assumptions.
|4. Was the analysis comprehensible to an informed layperson?|
The three-page analysis is fairly readable, but only because there is so little content. A lot of awkward grammar. The conclusion is that more early retirees are likely to have insurance coverage, but there is little substantive analysis or measurement that shows how the government arrived at this conclusion.
|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?|
Stated benefits are increased insurance coverage, greater access to health care, lower costs for hospitals, and less debt related to medical expenses. None of these are ultimate outcomes, except perhaps reduced hospital costs. The analysis does not even claim that increased access to health care will improve early retirees' health outcomes.
|Does the analysis identify how these outcomes are to be measured?|
No benefits measured. An increase in the number of people with insurance might be one measure of an intermediate outcome, but the RIA did not measure this.
|Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?|
Subsidies will encourage employers to retain health benefits for early retirees, and so more early retirees will have coverage. It is not clear how strong this incentive is, given that the money might run out before everyone is reimbursed. To the extent that subsidies are for plans that already exist for the current plan year, they are simply transfers. No explicit theory linking increased coverage to ultimate outcomes.
|Does the analysis present credible empirical support for the theory?|
The claim is believable but there is no supporting evidence at all.
|Does the analysis adequately assess uncertainty about the outcomes?|
Some language suggests a range of possible benefits for plan sponsors and employees, but the sentence in both cases is incoherent.
|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?|
Analysis asserts that early retirees often have trouble obtaining insurance because of age or chronic health problems. This may be true, but the analysis does not link it to any systemic problem. Is this perhaps just a sign that some early retirees cannot really afford to retire?
|Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?|
Federal Register notice states that early retirees have trouble obtaining health insurance because of age or chronic conditions, but does not elaborate. No real discussion of a theory of a systemic problem(s) that led to this result. Is this a natural market outcome, or a result of inflated health care costs, or some other factor?
|Does the analysis present credible empirical support for the theory?|
No relevant content. Not even an estimate of the number of early retirees who lack health care coverage.
|Does the analysis adequately assess uncertainty about the existence or size of the problem?|
No relevant content.
|7. How well does the analysis assess the effectiveness of alternative approaches?|
|Does the analysis enumerate other alternatives to address the problem?|
Different application requirements and provisions for chronic and high-cost conditions were considered.
|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)?|
Very small tweaks on the program.
|Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?|
No relevant content. Alternatives are dismissed in one or two sentences.
|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?|
No baseline established—not even a count of the number of early retirees who either have or lack health insurance.
|8. How well does the analysis assess costs and benefits?|
|Does the analysis identify and quantify incremental costs of all alternatives considered?|
Paperwork burden and appropriated funds for the chosen alternative were calculated. No analysis of the costs of other alternatives.
|Does the analysis identify all expenditures likely to arise as a result of the regulation?|
No consideration of whether the program will give rise to expenditures on health care that accomplishes little.
|Does the analysis identify how the regulation would likely affect the prices of goods and services?|
The Federal Register notice claims hospitals will have lower costs and urges plan sponsors to use the subsidies to reduce premiums and out-of-pocket costs. But there is no analysis of the extent to which these things are likely to happen.
|Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?|
No. The analysis ignores the possibility that more people will retire early due to the availability of subsidized health insurance.
|If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?|
No relevant content.
|Does the analysis identify the alternative that maximizes net benefits?|
Benefits were not measured, so net benefits were not calculated.
|Does the analysis identify the cost-effectiveness of each alternative considered?|
Benefits were not measured, so cost-effectiveness was not calculated.
|Does the analysis identify all parties who would bear costs and assess the incidence of costs?|
Parties who bear paperwork costs are identified, and taxpayers obviously pay for the subsidies. No discussion of how costs may be distributed.
|Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?|
Analysis mentions that employers and employees may both benefit. Since benefits were not measured, there was no further discussion of incidence.
|9. Does the proposed rule or the RIA present evidence that the agency used the analysis?|
There is an RIA section, but there are no further references to the RIA or claims that it was used. Notice says an interim final rule is necessary to implement the program by the June 21, 2010 statutory deadline.
|10. Did the agency maximize net benefits or explain why it chose another alternative?|
Benefits were not calculated in any way that would permit calculation of net benefits. Therefore, decisions proceeded without cognizance of net benefits.
|11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?|
No measures or goals established, and there was not enough analysis to derive goals or measures.
|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?|
No data relevant to outcomes.
|Total||13 / 60|
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