The Case for Regulatory Reform in the Business and Healthcare Environments

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INTRODUCTION

Regulatory reform is not only a need, it is necessary! There are a great many of these restrictions, and although regulation is an important tool in handling the problems of modern industrial economy, many of these have placed heavy burdens on those subject to them. The cost of compliance with regulations has forced some businesses to close their doors and has erected a formidable barrier to entry for new firms. At the same time, some regulations conflict with others, placing citizens in a position of having to violate one or the other. In addition, the financial burden imposed by the filing of forms, the hiring of staff to complete forms, and the cost of changes in methods of operation required by some regulations have most certainly added to inflation. Finally, some regulations have been poorly developed without a careful consideration of alternative and less burdensome approaches to the problem. (U.S.97th Congress, 1982).

Public Concern

As early as the first part of this century, increasing concern was expressed about the role of unselected officials in the making of the laws governing private industries and society. Legislators have little time to follow the trails of expert inquiry and so we turn the whole business over to a few with broad authority to make the actual rules which control our conduct. (Hugh, 1946)

However, a range of serious problems in the federal regulatory process has become increasingly apparent in the last fifteen years. Growing public dissatisfaction with the burdens of federal regulation has forced Congress to take action. The burdensome regulations of ours are the concern of a society as much as are economic and energy problems. In fact, the three problems are interrelated.

The public support in favor of major reform of government regulation and "regulatory reform" was one of the issues of the 1980 political campaigns. For example, Ronald Reagan included regulatory reform as part of his plan for the economic recovery of the nation. President Reagan gave a speech in Youngstown, Ohio in October of 1980 (before he became President) to promote changes in government over regulations:

We must help protect the health and safety of workers and consumers, and the quality of our environment. These are areas where federal regulation is not only appropriate, but necessary. But we must recognize that many regulations impair the ability of industries to compete, reduce workers' real income, and destroy jobs. Therefore, we must have a balanced regulatory approach in which we recognize that regulations have costs as well as benefits. We must ensure that regulations are limited to those necessary to protect health, safety, and environment (President Ronald Reagan, 1981).

With the election of the Reagan Administration, the impulse for reform was translated into government policy. Regulatory reform was one of the top priorities of this administration.

The Growth of Regulation

Since 1887, when the Interstate Commerce Commission (ICC) was formed to regulate the American railroads, the government has taken an increasingly active role in regulating the economy. The last fifteen years have witnessed a rapid rise in regulatory activity. For example, in 1965, 8.3% of the gross national product was under some form of regulation. By 1975, this figure had almost tripled to 23.75% of the gross national product (President Ronald Reagan, 1981).

This recent growth of regulation is remarkable by almost any standard. Since 1824, when the first regulatory agency was established, fifty-six major agencies have been created. About 35% of those were created between 1970 and 1979. The number of full-time agency personnel has escalated from almost 28,000 in 1970 to over 87,000 in 1979, an increase of 216%.

Even with budget cuts of almost $400 million, federal expenditures for regulatory activities in the fiscal year 1982 are estimated to be 7.4 billion (President Ronald Reagan,1981). In the 1960s and 1970s, the government responded to public pressure by increasing its role in health, safety, and environmental protection and gave the agencies a broader role to control business.

The Costs of Regulation

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