Many Parallels Between Finance and Health Reform Bills

Although targeting different industries, the finance and health reform bills share a number of similarities. Both  bills impose regulations that aim to align corporate incentives with consumer interests. These 2000-page bills also provide stern guidelines without many specifics.

Two weeks ago, Congress passed the Wall Street Reform and Consumer Protection Act. Goals of this regulation include aligning Wall Street bankers' interests with those of Main Street consumers. Stricter restrictions on trading of risky derivatives, a new regulatory agency, and stricter rules on banks' capital requirements are among the reforms.

The health reform bill passed earlier this year has similar goals. For example, the Patient Protection and Affordable Care Act (PPACA) aims to limit insurance companies' ability to refuse coverage. Health reform regulations also require more transparent insurance company websites and reporting of dollars spent on clinical services compared to other costs.

These two ambitious bills are also similar in how many details remain undetermined. For example, the financial industry reforms impose the first controls over derivatives trading yet specific limits have not been finalized. An analyst quoted by the NY Times and speaking about the financial industry reforms "estimated that Congress had fixed in place no more than 25 percent of the details of that vast expansion."

Likewise, the specifics of the health reform bill will evolve over time. For example, the legislation provides $5 billion for "high-risk" insurance pools. These risk pools started last week, but no one knows for certain how many will participate and how much they will cost. Other state and national regulations are pending that will further define health insurance rates, health promotion programming, health IT adoption, and health care policy research agendas, among other initiatives. In fact, there are over 1,000 "the Secretary shall," statements in the health reform bill that instruct Secretary of Health and Human Services Kathleen Sebelius to design and implement changes in the health care system.

The US Congress recently passed two bills that enact sweeping changes in the finance and health care industries. These bills share a number of parallels including a focus on aligning corporate and consumer interests. They also leave room for evolution and adaptation. Although the late night legislative sessions and posturing on C-SPAN are over, the reforms have just begun.

What reforms are you looking forward to/nervous about? Post your comments below.

Photo credit: flickr (jcolman)