Tuesday, June 20, 2017

Health Care and Reconciliation

David Super

     Last December, I wrote about how the strange world of congressional procedure, and particularly budget reconciliation, was likely to shape the agendas of Speaker Ryan, Majority Leader McConnell, and President Trump.  Quite a bit has happened since then, but budget process rules remain pivotal.  It therefore seemed time for an update.

     Shortly after the new Congress convened, it passed a budget resolution for Federal Fiscal Year 2017 – the one that was already about one-third completed.  This budget resolution was a necessary prerequisite to moving health care legislation through the Senate under special “reconciliation” rules that preclude Democrats from filibustering it. 

     Initially, Republicans planned to repeal the Affordable Care Act now, with a two- or three-year delay, and pass replacement legislation later, likely after the mid-term elections.  A simple repeal of the Affordable Care Act would have been procedurally straightforward, although passing a replacement bill in a subsequent Congress might have been problematic.  In any event, broad criticism of that approach, as well as Members and the President making costly promises about what would be in that legislation, forced the congressional leadership to shelve that plan and move a single repeal-and-replace bill. 

     The House of Representatives, after several tries, passed its repeal-and-replace legislation last month with a two-vote margin after the Leadership and most moderates bowed to the Freedom Caucus’s demands to allow states to reduce or eliminate insurance rules prohibiting bare-bones policies and protecting people with pre-existing conditions.  Because House rules do not allow filibusters, the bill’s status as reconciliation legislation did not matter much there. 

     The legislation then moved to the Senate.  With the ability to lose only two of his senators’ votes, Majority Leader McConnell elected to have the House bill held at the desk for consideration by the full Senate rather than referred to committee.  The final Senate bill was likely to be a McConnell substitute in any event, but a committee mark-up would have forced release of the Senate bill’s details much earlier and would have allowed Democrats to force Republican senators to take embarrassing votes or to commit themselves to positions that could make compromise within the Republican caucus difficult. 

     What has happened since then has been marathon negotiating sessions, initially among a task force of thirteen Republican senators, more recently with others becoming engaged, seeking a version of the bill that can gain fifty Republican votes.  In tandem with these negotiations, and also in deep secrecy, three other processes have been proceeding.  First, staff from Senator McConnell’s office and the chairs of the key committees have worked with Senate Legislative Counsel to draft legislation.  Second, the drafts have been shared with the Congressional Budget Office (CBO) to enable CBO to produce a cost estimate for the legislation as quickly as possible.  And third, Republican and Democratic staff have been meeting with the parliamentarian, Elizabeth MacDonough, to determine which provisions in the House bill, or which provisions that might be in the McConnell substitute, comply with Senate rules.  This last process, which is crucial to the final legislation, deserves some elaboration. 

     To prevent the evisceration of the filibuster, Senate rules strictly limit the content of bills granted “reconciliation” status to those whose primary impacts are budgetary.  Anything else, including a provision that has fiscal impacts “which are merely incidental to the non-budgetary components of the provision”, is deemed extraneous and subject to a point of order.  2 U.S.C. § 644(b)(1)(D).  Because points of order under this “Byrd Rule” can only be overruled with sixty votes – the same number required to end a filibuster – this nullifies the benefits of proceeding under reconciliation rules.  It would appear that many provisions of the House bill, as well as many provisions that various Republican senators have said that they want in the McConnell substitute, would have little or no fiscal impact and hence would be “Byrdable”.  Most obviously, the loosening of insurance regulations might have enormous impacts among private parties, but it would have little if any impact on the federal fisc.  (This assumes that the McConnell substitute, like the House bill, does not vary the subsidies households receive for buying coverage by the cost of the insurance policy.)  Even if one could conjure up some indirect fiscal impacts, regulatory changes ought to fall to a “merely incidental” point of order.  Yet they may not.

     Lawyers are accustomed to using judicial analogies to persons deciding legal questions.  In this case, however, those analogies may be misplaced.  Ms. MacDonough is by all accounts a smart and capable lawyer.  Nonetheless, she serves at the pleasure of the Majority Leader, Senator McConnell.  A prior Republican Senator Majority Leader fired one of her predecessors for making unwelcome rulings, and some current Republican senators have already called for Ms. MacDonough’s firing.  This year, she has departed from longstanding practice by meeting with Republican staff ex parte to discuss parliamentary objections rather than allowing Democratic and Republican staff to argue their points before her in a joint meeting.  Therefore, Republicans may know which items she will hold violate the Byrd Rule – and how to modify those items to achieve a favorable ruling – but Democrats do not and may not until the very last moment. 

     If the parliamentarian allows Republicans to change insurance rules in a reconciliation bill, that would set up an odd asymmetry.  The Affordable Care Act, which established those rules, passed the Senate through the regular legislative process, before the special election in Massachusetts deprived Democrats of their 60-vote majority.  Those rules included drafting errors as well as other features that soon drew criticism, but with Republicans prepared to filibuster any regular legislation and the Byrd Rule barring any correctives through reconciliation bills, the Democrats could not fix them and paid the price in public support.  If the parliamentarian reinterprets the Byrd Rule to allow Republicans to amend those same rules without getting sixty votes, they will have a far easier time crafting a deal that can pass.

     Several other points of order under the Byrd Rule depend on a bill’s estimated fiscal effect.  Senate Republicans, unlike their House counterparts, therefore will have to release a CBO score of their legislation prior to final passage.  But they may release that score, and the text of the final McConnell substitute, very much at the last minute.  Senate debate on reconciliation bills, including all amendments to those bills, is limited to a total of twenty hours.  2 U.S.C. § 641(e)(2).  Once time for debate is exhausted, any remaining amendments are disposed of through a series of back-to-back votes, commonly known as a vote-a-rama.  Senators typically grant unanimous consent for supporters and opponents of each amendment to speak for one minute each, essentially just identifying the amendment and offering a few soundbites.  Senator McConnell could unveil his final substitute, and the CBO scoring of that substitute, just as the Senate is about to enter vote-a-rama.  That would give Democrats, as well as Republicans uncomfortable with the bill, little practical opportunity to propose amendments. 

     Because Senator McConnell elected to bring the House bill directly to the Senate floor, rather than follow the usual path through the Senate Budget Committee, any changes that he or others might make to that bill will be subject to rules against floor amendments that reduce the deficit reduction effect of the underlying legislation.  Therefore, hopes that the Senate bill will cut Medicaid, or subsidies to purchase private insurance on exchanges, less than the House bill are likely unrealistic.  Indeed, rumors suggest that the current draft of the McConnell substitute cuts Medicaid even more deeply than the House bill.  This may be an effort to appease Republican critics of Medicaid or a way to raise funds for special provisions intended to win the votes of hold-out senators, such as a fund to treat opioid addicts.  With Medicaid already the primary source of treatment for many vulnerable populations, cutting it further to fund care for those populations seems likely to prove self-defeating but could gain favorable headlines.

     If the Senate does pass a bill allowing states to waive the ACA’s insurance regulations and cutting Medicaid and premium tax credits as or more deeply than the House bill, the result could be a fairly easy conference committee negotiation between the two chambers.  Alternatively, the House could short-circuit that process by simply taking up the Senate version of the bill and passing it, sending it directly to President Trump.

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