Understanding the Policy Process at the Federal Level

By Ted Gotsch, Policy Content and Publications Manager 

In the world of inside-the-Beltway organizations, the Academy is unusual in how it views its role when it comes to public policy. Many, if not most, associations representing different industries or professions will lobby lawmakers and regulators in an attempt to craft policy they deem favorable to their members. But that is not the Academy’s goal. 

Since its founding 60 years ago, the Academy’s main mission has been to assist public policymakers on all levels by providing leadership, objective expertise, and actuarial advice in our members’ areas of practice—retirement, life insurance, casualty insurance, health insurance, financial reporting, and risk management. Getting that point across in an increasingly partisan nation can be challenging. 

That doesn’t mean, though, that Academy staff and volunteers are oblivious to relevant discussions or debates around us. In fact, it is essential to understand all the machinations that could result from a particular piece of legislation or regulation. To do that, however, one needs to understand the process—and that can be complicated. 

What follows is a primer on how the legislative and regulatory process generally works at the federal level. [We’ll explain how it works in the states in a future blog.] Hopefully this serves as a useful refresher for many readers. 

How a Bill Becomes a Law 

Some may be old enough to remember the “Schoolhouse Rock” cartoon that taught viewers how federal legislation progresses on Capitol Hill. I recently watched it again after many years and it’s actually a good, if simplistic, explanation of the process. Truthfully, I’m tempted just to wrap this part up right here and move on. 

But I’m not going to do that because in the decades since that short was created, Washington has changed how it works—or doesn’t work. Yes, a lawmaker (or several) still drafts a bill, which is assigned to a committee. If approved, it moves to the full chamber (either the House or Senate) for a vote. If it passes, the process is repeated in the other chamber before the bill reaches the president’s desk for approval. 

The reality, however, is that very few standalone bills ultimately make it through Congress. Yes, plenty of post offices will be named after local figures, but substantial issues—including many that matter to the Academy and its membership—are often folded into one-time annual reconciliation bills. Why? Because reconciliation bills require only a bare majority to clear the Senate, unlike most legislation, which needs 60 votes to end debate (called cloture) and proceed to a final vote. 

How a Proposed Rule Becomes Regulation 

Sadly, there is no nostalgic video to explain this process. Most Americans have little understanding about what a regulation is or how it works, which is unfortunate. 

In short, regulations are the rules and guidelines issued by federal agencies to implement laws passed by Congress. These regulations help ensure the law is applied and enforced correctly. The process through which a proposed rule becomes regulation is distinct from the legislative process but is still highly structured. 

At the federal level, the rulemaking process begins when an agency identifies the need to develop or revise regulations based on the authority granted to it by Congress. Before drafting a rule, agencies often issue an Advance Notice of Proposed Rulemaking (ANPRM) to solicit input and suggestions from the public, stakeholders, and experts. 

After reviewing the feedback from the ANPRM, the agency drafts the proposed rule. This proposed rule is then published in the Federal Register—the official daily publication that announces proposed and final regulations. The Notice of Proposed Rulemaking (NPRM) outlines the rule, explains the legal and policy basis for the rule, and solicits public comments. 

After reviewing the comments, the agency may revise the proposed rule before publishing the final rule in the Federal Register. The final rule includes responses to public comments and explains any changes made to the original proposal. 

Taken together, it is easy to see why most Americans, including actuaries, may not be fully familiar with the policy process. While implementing legislation and regulation might be complex, it’s important for all of us to educate ourselves so we can better understand the Academy’s role in its mission of educating policymakers.