O’Neill Institute for National and Global Health Law O’Neill Institute for National and Global Health Law Legal Issues in Health Reform

— This site is no longer active and is for archival purposes only. —

How to Finish up Health Care Reform: There is Only One Way

The way forward for health care reform at this moment seems rather murky, indeed, one might say grim. Both the House and the Senate had adopted reform legislation prior to Christmas and the game plan going into January was to try to work out an informal agreement between House and Senate leadership that could be run back through both houses to work out a final legislative package to be sent to the President (the “ping-pong” strategy), hopefully before the State of the Union address.

It was understood that the final bill would look more like the Senate than the House bill because there were no votes to spare in the Senate, while the Democrats hold a comfortable majority in the House where presumably a majority could be persuaded in the end to vote for a compromise. Indeed, some members who had initially voted against the bill in the House might have found a version closer to the Senate version more acceptable. It was clear, however, that there would have to be compromises on issues of great importance to the House, such as the excise tax on high-cost health plans, the allocation of the affordability credits to give more support to lower income families, and the reallocation of responsibility for enforcement and for exchanges to give more authority to the federal government, with perhaps even a national exchange.

Then came the Massachusetts special senatorial election. The impact of Scott Brown’s victory in the election was two-fold. First, the Democrats lost their filibuster-proof majority in the Senate, taking a ping-pong strategy off the table. Second, the fact that a Republican took Ted Kennedy’s seat in Massachusetts left many Democrats in Congress scared to death, believing that there are few safe seats anywhere and that members of Congress up for election in 2010 had better figure out which way the wind is blowing on health care reform.

Many analysts believe that reform faces a pretty strong headwind. It is clear that support for reform in the opinion polls has dropped substantially and opposition grown. But it is hard to know exactly what that means. How much of the opposition, for example, comes from those who are disappointed that Congress abandoned the public option, or, indeed, never took up a single-payer approach? How much of it comes from those who believe that the legislation will create death panels, or “put the government between you and your doctor,” or other lies and distortions? How many Americans are really completely satisfied with the status quo? Presumably not many of the 50 million Americans who are uninsured or the 25 million more who are underinsured. Education is clearly necessary, but it is less clear that the public is overwhelmingly opposed to reform.

So what is the way forward? The simplest option would be for the House to adopt the Senate bill and send it to the President. Some of the provisions of the Senate bill, however, are highly objectionable to some House members, and the Speaker has made it clear that this strategy is not going to fly. There is nothing close to a majority of the House in favor of simply adopting the Senate bill.

Another option, proposed by Senator McCain and other Republicans is for the Democrats to sit down with the Republicans and come up with bipartisan legislation. It is hard to take this offer as anything other than a cynical insult. From the beginning of the health reform effort, President Obama invited the Republicans to participate. Senator Baucus spent precious months negotiating with Grassley, Enzi, and Snowe. Legislation would have been on the President’s desk weeks ago had it not been for these negotiations. According to Senator Durbin, Congress adopted 170 amendments offered by the Republicans. Indeed, the entire bill is much closer to traditional Republican proposals based on managed competition among insurers and tax credits for purchasing private insurance than traditional Democratic social insurance-based proposals. Unless McCain means, “We’re ready to talk if you are ready to limit health care reform to insurance deregulation and barring malpractice suits,” it is hard to understand what the Republicans want to talk about.

There has been some discussion of starting over with piecemeal reforms. This is, of course, what happened after the 1993-1994 debacle. We got the State Children’s Health Insurance Program and HIPAA. SCHIP has expanded health insurance coverage for millions of children. Indeed, children are the one group of Americans for whom the percentage of the population that is uninsured has been going down rather than up. HIPAA also helped at the margins in dealing with some of he worst insurance abuses. But incremental reforms at this point–covering children regardless of pre-existing conditions or allowing parents to keep their adult children on their policies up to age 26, would do very little to help millions of Americans who could have obtained health security from the proposed legislation. It would also mean months of further debate over health care reform at a time when Congress is ready to move on to other topics.

The most realistic strategy, therefore, is for the House to adopt the Senate bill in tandem with moving a budget reconciliation act that would address the issues that the House and Senate were working out before the Massachusetts election. These differences would be worked out by concluding the negotiations already well underway between the House and Senate and then incorporating the compromises into reconciliation legislation. It is my understanding that the House would have to adopt the Senate bill before the reconciliation legislation was adopted, a risk that House members may bridle at. This is true because, in the absence of a health reform bill that had been adopted and is ready to be amended, it is likely that reconciliation act provisions simply amending currently existing legislation would fail the Byrd rule or budget tests discussed below. There may be some way around this under the House rules, but I have not heard of it if there is.

Budget reconciliation is a fearfully complex process. The best short publicly-available description that I have found was written by Jeff Davis on The New Republic’s The Treatment blog. A longer description, provided by the CRS, can be found here. The Center on Budget and Policy Priorities has also released an excellent paper on the reconciliation process, drafts of which have proved helpful to me in understanding the role of reconciliation. Legislation governing the budget reconciliation process is located at 2 U.S.C. §§ 631, 632, 636, 641 and 644.

Although the budget reconciliation process is complicated and unfamiliar to most Americans, it is neither underhanded, overbearing, nor uncommon. Indeed, it has been used every year or two in the decades since it was established in 1974 as a means of passing major legislation by majority vote. Republicans have used it repeatedly to adopt their major policy initiatives, the Bush tax cuts of 2001, which added more than $1.35 trillion to the deficit, the 2003 Bush tax cuts that cost nearly $1 trillion, and the 1996 Republican legislation that eliminated the Aid to Families with Dependent Children program were all adopted through budget reconciliation. In the health care arena, the Children’s Health Insurance Program, the Medicare Advantage program, the COBRA provisions continuing employer-sponsored coverage, and the Emergency Medical Treatment and Active Labor Act were all established through reconciliation.

Reconciliation is a multiple-step process. It begins in the spring with a concurrent budget resolution, which includes instructions to various House and Senate committees to prepare reconciliation legislation. For health care reform, this step took place in April of 2009, when Congress adopted, as part of its 2010 concurrent budget resolution, instructions to the House Energy and Commerce, Ways and Means, and Education and Labor Committees and the Senate Finance and Health, Education, Labor, and Pensions Committees to prepare health care reform legislation. The committees were instructed to enact legislation that would reduce the deficit by $1 billion.

The next step is for the jurisdictional committees to follow these instructions. The House Ways and Means and Education and Labor Committees complied with this instruction by sending their health reform bills to the Budget Committee as reconciliation recommendations. The Energy and Commerce Committee did not vote out its reform bill as a reconciliation bill. Under 2 U.S.C. § 641(b), the Budget Committee of the House is to combine the bills it receives from the committees and report it out “without substantive revision.” It is clear, however, that the Budget Committee can act even if all committees do not follow the reconciliation instructions, because 2 U.S.C. §641(d)(5) provides that the House Committee on Rules can order amendments to achieve changes specified by the reconciliation directives if a “committee or committees of the House fail to submit recommended changes.”

The House Rules Committee could, pursuant to this authority, report a rule providing for consideration of the reconciliation bill that would make in order a substitute amendment to put in place of the legislation reported out of the jurisdictional committees the changes in the Senate legislation agreed to by the House and Senate. The substitute amendment would have to comply with the initial budget resolution instructions, which are that it would have to reduce the deficit by at least one billion dollars between 2009 and 2014. The baseline would probably be that provided by the Senate health reform bill (H.R. 3590), since the Senate bill would in all likelihood have to be adopted by the Senate before the reconciliation bill. Debate on a reconciliation bill in the House is usually handled under a special rule under strict time limits and few amendments, although the Republicans would be given a couple of days to consider the bill before debate began. Often, only one substitute amendment is permitted.

Before the rule on the reconciliation bill was reported in the House, the substitute amendment would have to be carefully vetted with the Senate Parliamentarian to make certain that it would comply with the Senate reconciliation rules, which are much more complex than those in the House. In particular, it would need to comply with the “Byrd Rule,” 2 U.S.C. 644, which provides that an “extraneous” provision in a reconciliation act can be challenged. A provision is extraneous under the Byrd Rule if it does not produce a change in outlays or revenues, is inconsistent with the committee’s instructions, outside the jurisdiction of the committee that submitted it, produces a change in outlays or revenues that is “merely incidental” to the provision, increases the deficit for a fiscal year beyond the “budget window,” or changes Social Security. If a challenge to a provision is upheld by the Senate Parliamentarian, it must be overridden by a 60 vote margin. According to Davis, any provision must also be upheld by a 60 vote margin that is successfully challenged as increasing the deficit over a five- or ten-year period, increasing the deficit by more than $10 billion in any one year over the next five years unless covered over the five year period, or increasing the deficit by more than $5 billion in any ten year period over the next 50 years. The CBO will need to score reconciliation amendments to assure compliance with these requirements.

This review would not be unusual. It is customary to review reconciliation act provisions with the Senate Parliamentarian before they are introduced. The Parliamentarian reviews the provisions, hearing arguments from staff representing the Democratic and Republican leadership and relevant committees. This process is likely to take several days. If a provision is approved by the Parliamentarian and his judgment is not overruled with 60 votes, it cannot be subsequently challenged in litigation, as Congress is responsible for its own rules under Article 1, section 5 of the Constitution.

The House will want the best assurances it can obtain that at least 50 Senators, plus the Vice President, if necessary, will vote to support the agreed upon reconciliation provisions. It may even want to get an assurance from the President that he will veto the health reform bill if the Senate reneges on its promise. The House will be taking a leap of faith in enacting the Senate bill before reconciliation, but it is hoped that 50 Democrats in the Senate can be trusted to get this done.

The Senate will also have to act on the reconciliation legislation. Normally, either or both of the Senate Finance or HELP committees would have to report a bill to the Budget Committee, which would then forward the bill to the full Senate. Neither committee has yet acted on the reconciliation resolution, but if a majority of at least one committee is in support of the negotiated reconciliation provisions, the committee ought to be able to reject all amendments and proceed expeditiously to report its bill. The committee action will be much more focused than it was over the summer, as only a limited number of changes to the bill will be in play. It may also be possible, however, for the Senate to simply consider the House bill without committee action. In both 2001 and 2003, the Senate merely took up the House reconciliation bill and considered it under its own reconciliation process.

Debate in the Senate is limited by law to 20 hours. But at the end of the debate the Senate moves to one of its most bizarre procedures, “votearama.” An unlimited number of amendments can be offered to the reconciliation bill at this point, with 2 minutes of debate on each amendment. Given the degree to which the Republicans have gone to obstruct this legislation, dozens, perhaps hundreds of amendments could be expected. (In 2003, 65 amendments were considered to the reconciliation act). Eventually, however, the process would end and a final vote will be taken.

If the bills passed by both chambers are not identical, the bills would proceed to conference committee, and the conference report would again have to be voted on by both Houses, again subject to limited debate but also to the Byrd Rule in the Senate. If discipline held in both chambers, however, it should be possible to avoid a conference committee, or at least to process any differences very expeditiously through a limited conference.

The entire process could be completed in a few weeks, with the major hold-ups after negotiation of the reconciliation provisions being the scoring of the proposals by the CBO, the process of vetting the provisions with the Senate Parliamentarian, and, most importantly, the Senate committee process, unless it can be avoided.

A number of the provisions of the Senate bill that have been most troubling to House members could clearly be handled through reconciliation. Modifying the tax on high-cost health plans or replacing it with another revenue source, eliminating the “cornhusker kickback,” further closing the Medicare donut hole, reducing payments for Medicare Advantage plans, and modifying the eligibility rules for the premium subsidies in a budget-neutral fashion would all seem to be possible. It may also be possible to institute a national exchange, although this would be a harder sell. Establishing a national exchange would eliminate the start-up funds for the state exchanges and could arguably reduce the outlay for affordability subsidies. It would even arguably be possible to reinstate public plan choice, which the CBO could score as resulting in substantial savings to the federal government, although I am not sure that a majority of both houses have the stomach for that battle at this point. I don’t see how, a provision adopting the House rather than the Senate approach to abortion coverage would survive a Byrd Rule challenge, since both approaches expressly prohibit the expenditure of federal funds for abortion and thus neither would affect federal expenditures.

The most significant barriers to use of the reconciliation process are first, that negotiations between the House and Senate would have to result in modifications to the Senate bill acceptable to a majority of House members, the House would probably have to adopt the Senate bill in trust that the Senate would agree to change it, the CBO would have to score the reconciliation provisions as complying with the reconciliation act requirements, the Parliamentarian would have to rule that the provisions were not “extraneous,” and, most importantly, a majority of both the House and Senate would have to hold together over a several week period of intense pressure from the Republicans, elements in the media, and many of their constituents. There is, however, no better alternative. Reconciliation is doable, and it should be done.

One Comment

  1. RedDog
    Posted February 3, 2010 at 2:22 PM | Permalink

    Yes it is a process that would get what the Democrats want, but what about what the America people want?

One Trackback

  1. By Time to Reconcile with Reconciliation : Organon on February 25, 2010 at 11:39 PM

    […] with a reconciliation bill, in whatever order, is compliance with the Byrd Rule (2 U.S.C. 644), as Tim Jost explains here: Before the rule on the reconciliation bill was reported in the House, the […]