Michael Busler discusses the detrimental effect of increasing state regulations on economic growth, particularly in the healthcare sector. He highlights how excessive mandates can hinder business expansion, job creation, and overall economic stability.
1. State Competition for Investment: States compete to attract business, residents, and jobs. Economic growth is adversely affected by increased taxes and regulatory burdens.
2. Regulatory Accumulation: New regulations can accumulate without evaluating the impact of previous ones. A 10% increase in regulatory restrictions can lower annual GDP growth by 0.37 percentage points.
3. Healthcare Regulations on PBMs: Pharmacy Benefit Managers (PBMs) are under scrutiny for their roles in drug pricing and benefits management. Some states have started regulating PBMs by prohibiting their operations in certain pharmacy sectors.
4. Legislative Actions: Arkansas and Tennessee have enacted laws affecting how PBMs function, which Busler criticizes as unnecessary economic micromanagement without clear justification.
5. Existing Federal Reforms: Federal laws, such as the Consolidated Appropriations Act of 2026, are already set to address problems in the PBM industry, highlighting the risks of states overregulating when federal reforms are not yet fully implemented.
6. Consequences of Overregulation: Duplicative state regulations could lead to business burdens, limiting options for employers and disrupting employee access to pharmacies.
7. Lessons from California: California's high regulation has resulted in poor economic rankings and population decline, illustrating the potential negative outcomes of overregulation.
States should wait for the effects of federal reforms before enacting new regulations on PBMs. Overregulation can harm both the economy and public health by disrupting lawful business operations and reducing competitiveness in attracting investments and residents.
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