By: Dan Bartkowiak
There are many concerns with the highly controversial regulations being proposed by Governor Josh Shapiro’s Department of Health, one of which is the potential costs of such widespread changes and the lack of regulators quantifying its financial impact.
A new independent analysis by the Pennsylvania Small Enterprise Foundation (PSEF) and the Pennsylvania Family Institute (PFI) examines the economic impact of these proposed regulations. Here are three takeaways from this new economic analysis.
1. The proposed regulation could cost Pennsylvania more than $100 million annually.
Using reports from the Pennsylvania Department of Health (PA DOH), including case counts, vital statistics, and federal wage data, this new analysis estimates approximately $106 million a year in recurring costs and $12 million in one-time implementation costs.
The majority of these costs fall on families, patients, and their insurers. From the analysis:
- Proposed § 27.71a adds eighteen conditions to the school and child care exclusion chart and, for the first time, excludes close contacts of cases.
- Proposed § 27.72 lowers the fever threshold for exclusion from 102°F to 100.4°F and revises the symptom list.
- The Department concedes these changes will produce “more frequent exclusion of children” and “an increase in staff and student absences” requiring substitute teachers.
- Applying national illness-absence rates to Pennsylvania’s 1.98 million school-age children and 350,000 children in licensed child care, and assuming the new rules increase exclusion-days by 10 percent in both schools and child care, the Commenters estimate $65 million per year in costs from § 27.71a and $19 million from § 27.72.
This cost analysis is a conservative estimate. “We consider this estimate of 10 percent to be conservative given the number of new exclusions conditions added by the rule, and at 20 percent the rule would add $168 million in cost.” (Pg 4)
One thing is clear: “No overall fiscal impact” does not mean the Department determined the cost was zero. In numerous instances, the Department acknowledges potential costs but says it cannot quantify them.
2. The Department did not adequately consider less costly alternatives.
In the 502 pages of proposed regulations, the Pennsylvania Department of Health (PA DOH) repeatedly concluded that costs “vary” or that it lacked sufficient data to estimate costs. They consequently reported “no overall fiscal impact” for numerous provisions.
Effectively, PA DOH is reporting no overall fiscal impact despite acknowledging costs it chooses not to quantify.
This new analysis identifies alternatives that the Department’s review does not appear to evaluate in comparable detail, including narrower school exclusion rules, targeted rather than statewide testing mandates, exemptions or flexibility for smaller providers, and greater use of existing electronic databases.
3. Questions have arisen about the regulatory review process.
PA DOH cannot justify the costs or necessity of these proposed regulations if it has not actually calculated its costs or compared less burdensome alternatives.
“The Department did not underestimate the cost of this regulation; it declined to estimate it entirely.” (Pg 9)
Decades ago, the PA General Assembly passed into law the Regulatory Review Act, in part to “require the executive branch to justify its exercise of the authority to regulate before imposing hidden costs upon the economy of Pennsylvania” and because “[s]mall businesses bear a disproportionate share of regulatory costs and burdens.”
The proposed regulations report “no overall fiscal impact” even as the Department acknowledges costs that it says vary and cannot be estimated. Calling an unquantified cost “no fiscal impact” is misleading, and it raises precisely the kind of concern the Regulatory Review Act was intended to address.
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Bottom line: The Pennsylvania Department of Health admits that it “did not rely on data as the basis for this regulation.” PSEF and PFI “have undertaken the analysis the Department did not.”
We are not asking regulators to adopt our figures. We are asking them to require the Department to produce one.
