What the Pandemic Can Teach the US About Smart Regulation
The COVID-19 crisis required the waiver of many regulatory policies across the economy, but perhaps most urgently and most importantly in health care, one of the most heavily regulated sectors. It also brought into effect new regulations in an attempt to meet the demands of the crisis.
Today, the important question of which of these changes should stay and which should go provides a unique opportunity for US policymakers and business leaders to reevaluate not only approaches to healthcare regulation, but regulatory policy more broadly, and determine the scope of regulatory policy going forward.
One of the basic foundational principles for government regulation is that it should achieve the purpose for which it is implemented with the greatest possible benefits and the lowest possible cost. Smart regulations are well designed and must be reviewed, revised, or sunsetted, particularly given the rapid pace of technological change. Regulation has tremendous social benefits but can also have significant costs—costs to business, to customers, and to American competitiveness.
Three case studies from the pandemic—waivers from the Centers for Medicare and Medicaid Services (CMS) of many regulations covering physician practice and hospital care in particular, the FDA’s regulatory flexibility to speed approval of COVID-19 vaccines, and the vaccine mandates for businesses with more than 100 employees—provide important insights that show both the benefits and negatives of regulation and lessons for a pathway forward.
Regarding the first case: As the pandemic spread rapidly in early 2020, the Department of Health and Human Services (HHS) used its flexibility to grant over 100 waivers to facilities which accept Medicare and Medicaid funding (virtually all US health care facilities). These permitted doctors to resume practice and practice more efficiently, and for hospitals to expand the facilities at which they offered much-needed care. Without the waivers, each change would have required a time-consuming review by CMS.
The changes were essential: They added space for patients to be treated, as hospitals reconfigured to treat additional patients both to keep up with volume and separate COVID-19 patients from those with other conditions. The changes also allowed for the provision of telehealth—greatly expanding healthcare access. In the pandemic’s first year, over 28 million Medicare beneficiaries—43 percent of all such recipients—used a telehealth service of some kind, an 88-fold increase over 2019. According to one study, 73 percent of telehealth users want it to continue after the pandemic waivers expire. Telehealth should remain a vital part of the US health care system.
Many private insurers aligned their reimbursement policies with the waivers, broadening their effect. For many Americans who desperately needed care, this flexibility was a bright spot in the pandemic.
As a part of its regulatory review, CMS should evaluate which of its many changes should remain permanent since a number of them have already improved efficiency and effectiveness while maintaining appropriate safety levels.
A related issue is that of licensing of medical professionals. In the context of looming physician and nursing shortages, particularly in rural areas, states that are not members of interstate physician and nurse licensing compacts should join them. Some states allow cross-licensing, but more should, reducing barriers and expanding access to healthcare.
With respect to the second case study, the Food and Drug Administration (FDA) also exercised significant regulatory flexibility, permitting work on different stages of clinical trials in parallel rather than sequentially, thus shaving months off vaccine development time—and saving lives, The FDA also used this authority for antivirals and other products. Now, the FDA should consider whether a broader application of these principles, potentially leading to faster approval of new therapies, is warranted, without compromising safety and efficacy.
There was one major area of federal regulatory overreach: the decision by the Department of Labor to require, through an emergency temporary standard, that companies with more than 100 employees require COVID vaccination. Even with exemptions for medical and religious reasons, the Supreme Court found that the proposed rule far exceeded the department’s statutory authority. Even a public health emergency should never mean that an agency can act beyond the powers Congress has explicitly granted.
The pandemic may have been a unique event, but the lessons we can take away from it are broadly applicable. So, how can we take these lessons and put smart regulation into practice more generally?
There are three basic principles in adopting regulations:
Public-private sector collaboration on regulatory policy was essential for meeting the challenge of the pandemic. The deregulatory actions were largely positive and allowed for the provision of health care to more underserved communities. And, the close cooperation between the private sector and FDA to bring new products to market at an unprecedented pace was vital. An example where regulatory policy action was inappropriate: the government’s new regulation to require vaccination in companies with over 100 employees, however well-intentioned for the safety of employees, lacked input from the private sector and failed on constitutional grounds because it exceeded the limits of the authority granted by Congress.
Now, the government should take these lessons from the pandemic, work with business leadership and subject matter experts to plan now for the next public health or other emergency, and use them to make our regulatory system smarter.
Michael Archbold is the former CEO GNC Holdings, Inc. Hollis Hart is the former President, International Franchise Management, at Citi. Both are Trustees of the Committee for Economic Development, the public policy center of the Conference Board (CED), and Members of its Smart Regulation Committee.
