Health Reform & Budget Reconciliation – It’s not as simple as it seems! – Say Ahhh! A Children’s Health Policy Blog

Edwin Park, Senior Fellow, Center of Budget and Policy Priorities

Even as each day brings new details about House and Senate health reform legislation and we all gird ourselves for the race to pass health legislation in each chamber before the August recess, a question might be lingering in the back of your mind:  what about the use of budget reconciliation to pass health reform?  If you remember, we heard a lot of debate about reconciliation this spring when Congress considered the FY 2010 budget resolution and whether to include the option of reconciliation for health reform (which the budget ultimately did).  So, you might be wondering about the likelihood of actually using the reconciliation process to pass health reform.  More important, is it truly a way – as Republicans charged – for Democrats to speed passage of comprehensive health reform legislation without needing any Republican support?  Some of these issues were discussed in a recent segment of MSNBC’s The Ed Show but here are some more details. 

What is Reconciliation?

First, the basics.  A reconciliation bill is a single piece of legislation that typically includes multiple provisions (generally developed by several committees) all of which affect the federal budget — whether on the mandatory (or entitlement) spending side, the tax side, or both.  Under House and Senate rules implemented when the Democrats took control of Congress in 2007, reconciliation cannot be used for legislation that would increase the deficit so any reconciliation bill must be fully offset, that is it must include mandatory savings and/or revenue increases that pay for any higher spending and/or tax cuts in the bill.  Reconciliation, of course, can also be used, as it was originally, to reduce the deficit.  Reconciliation is generally used to speed passage of legislation through the Senate by providing special procedures that make it easier for a bill to pass.

Most importantly, reconciliation bills only require 51 votes to pass. Under the Senate’s regular rules, 60 votes are needed to prevent a minority of senators from blocking legislation through a filibuster (i.e., by refusing to stop debating the measure), but reconciliation legislation cannot be filibustered.  Accordingly, the use of reconciliation makes it easier for the party in charge of the Senate to pass a bill and thus can be seen as a partisan procedural tool.  In fact, reconciliation was used to help Presidents Reagan, Clinton, and George W. Bush (with his 2001 tax cut legislation, which increased the deficit) overcome opposition and enact important legislation in their first year in office.  But it also has been used to facilitate passage of legislation that enjoyed strong bipartisan support, as was the case for the big deficit reduction package enacted in 1990.
Reconciliation and the FY 2010 Budget Resolution

Reconciliation instructions to the House and Senate Committees with jurisdiction over health care reform were included in the FY 2010 budget, but only as a fallback if the Senate is unable to pass health reform under regular floor procedures.  Including reconciliation instructions was a compromise.  The House budget resolution included reconciliation instructions but the Senate version did not given objections from Republicans and some moderate Democrats that reconciliation would preclude any bipartisan collaboration on health reform.  So, reconciliation was included as a backup in case a minority of senators tries to block consideration of a health care reform bill this summer (based either on policy grounds or on the mechanisms used to pay for health reform).  A decision can be made in the fall about whether to use reconciliation for health reform or just for other policy changes (under the Budget Act, the reconciliation instructions must consist only of general instructions to make changes in law that will affect spending and revenues and cannot direct the reconciled committees which policy area, much less which specific policies, should be addressed in the reconciliation legislation).

For now, the looming October 15th deadline is keeping the pressure on Congress to produce bipartisan legislation that can secure 60 votes in the Senate.  As we’ve seen in recent weeks, Senate Finance Committee Chairman Max Baucus is taking bipartisanship seriously, attempting to craft a bill that can secure Senate Republican support in advance of the reconciliation deadline.    

Is Reconciliation a 51-vote Panacea for Health Reform?
As Congress debated its budget resolution this year, budget reconciliation often was described as a way for Democrats to guarantee that they could pass legislation with only a simple majority.  It is true that reconciliation affords a major advantage once legislation gets to the Senate floor but the process also entails very strict limits about what types of legislative provisions can be included in a reconciliation bill.

A key limitation is the “Byrd rule,” named after Senator Byrd of West Virginia.  This rule dictates that all provisions in a reconciliation bill must have a fiscal impact.  If they don’t, they are deemed “extraneous” by the Senate Parliamentarian and dropped from the bill unless 60 Senators vote to waive the prohibition against such provisions.  The Byrd rule therefore gives those who oppose the bill an opportunity to reject any waivers and thereby force key pieces of the legislation to be dropped.  

Many policy changes that are necessary to truly reform our nation’s health care system may not pass this fiscal impact test.  For example, insurance market reforms, which are a critical element of guaranteeing access to affordable coverage, may not have an impact on the federal budget and could be dropped from the bill (though they may have an effect on other elements of the bill, such as subsidies for the purchase of health insurance, that do have a fiscal impact).  As a result, Congress would likely need to package together the needed reforms that are determined to not have a fiscal impact and move them in a separate piece of “sidecar” legislation.  

This companion legislation, however, would be considered under regular Senate rules and could be easily filibustered.  In other words, even though reconciliation legislation can pass with a simple majority, to truly accomplish health reform, the Senate would likely need to consider a second piece of legislation that would need 60 votes.  Securing such support could be difficult; even with Al Franken seated and Senate Democrats having 60 seats, there are no guarantees that all Democrats would vote for a package that could be perceived as partisan.

Moreover, as noted earlier, under the rules adopted by the Democrats, the reconciliation process cannot be used to increase the deficit.  Yet the mandatory savings and revenue increases that are needed to offset the cost of health reform are turning out to be some of the most controversial elements of the legislation to both Republicans and Democrats, even though other provisions such as the public health insurance option have garnered more public attention.  While a reconciliation bill would require only 51 votes, there does not appear yet to be a firm consensus even among Senate Democrats about how to pay for the bill.  While a divided caucus could still pass a health reform reconciliation bill, that may prove to be difficult for the Senate Democratic leadership to do.  

So, while it is true that reconciliation could speed the way to pass health legislation, reconciliation is not a panacea.  If bipartisan efforts this summer fail to produce a Senate bill that can garner 60 votes, reconciliation doesn’t mean that we’re home free.  Difficult considerations and limitations will remain if Congress sets out to craft legislation that complies with reconciliation’s rules.  Reconciliation gives us a welcome “Plan B”, but the hope is to secure a good health reform bill that enjoys bipartisan support.

The views expressed by guest bloggers do not necessarily reflect the views of the Center for Children and Families.

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