Reconciliation Explained
The best option for making changes to the ACA?
By Alpha Lillstrom Cheng, JD, MA
May 5, 2017
The word of the year for health care policy is reconciliation. This special legislative procedure has been used for decades to pass controversial legislation with a simple majority vote in each chamber of the US Congress. Using standard legislative procedure, a divisive issue such as health care reform or repeal legislation would likely be bogged down and effectively sidelined. This is because, under regular order, the Senate allows for unlimited debate, known as the filibuster, which can be used to block legislative action. While Republicans currently have the majority in both houses of Congress, their 52-48 majority in the Senate is insufficient to assemble the 60 votes commonly needed to cut off debate and pass legislation. Therefore, the Republican party and the White House are now seeking to use reconciliation—a complicated yet useful tool—to pursue the passage of health care legislation that would otherwise not succeed in the Senate.
A Cumbersome Process for a Daunting Task
The legislative branch is responsible for determining how much the US government spends on behalf of the American people. The federal budget includes both mandatory and discretionary funding. The funding process begins with a budget resolution that lays out a framework for Congress to follow when setting spending limits and developing the corresponding policy.
Should Congress desire to adjust tax policy or mandatory spending amounts for programs like Medicare and Medicaid, the budget resolution for that fiscal year must include “reconciliation instructions.”1 The instructions designate the dollar amount as well as the committees responsible for producing the legislative proposals. The Budget Committee compiles the policy recommendations submitted by the committees of jurisdiction into a single reconciliation measure that may be considered by the full House. The Budget Committee’s responsibility is to simply manage the process, not to develop the policies that will have the budgetary impact called for in the reconciliation instructions.
How Reconciliation Is Used to Pass Legislation
The House and Senate each have their own rules to guide its legislative process. Most legislation is passed under regular order. However, using reconciliation improves the chances for passage of significant yet contentious legislation like the Patient Protection and Affordable Care Act. This alternative and expedited law-making process loosens some procedural requirements while simultaneously imposing considerable limitations.
Under regular order in the Senate, proposed legislation can be stalled or blocked by a filibuster of unlimited debate and the offering of numerous amendments. In order to halt debate, three-fifths of the Senate (generally 60 members) must vote to invoke cloture. Once cloture is invoked, the final vote on that legislation must take place within 30 hours, and only relevant or “germane” amendments may be considered.2
The procedural rules are different for a reconciliation bill. In addition to the requirement that the policies impact federal spending, debate is limited to 20 hours on the original bill and to 10 hours on the subsequent House and Senate compromise bill.3 Utilizing the time and relevance restrictions, the Senate is able to debate and pass a reconciliation bill relatively quickly with the support of a simple majority.4
Further restrictions referred to as the Byrd Rule have an enormous impact on what policy changes can be considered using reconciliation.5 Each provision in a reconciliation measure must alter spending or revenues. Additionally, the Byrd Rule states that those changes cannot be “merely incidental” to the provision’s nonbudgetary effects.6 Furthermore, the rule declares as “extraneous” any provision that is outside the jurisdiction of the committee recommending it or if it raises deficits beyond the years covered by the reconciliation instructions. These restrictions are imposed because without the Byrd Rule, the committees “would be free to add a wide range of unrelated provisions to their legislative recommendations, including provisions that might have difficulty passing under normal procedures.”7
In the House of Representatives, the standard procedure is that the House Rules Committee determines a new set of rules for each piece of legislation that is to be debated and considered. For major bills as well as reconciliation, the House will use a special rule process to stipulate the maximum time for debate and restrict the types of amendments that can be offered.8 While the Byrd Rule only restricts the Senate’s actions under reconciliation, it effectively constrains the House as well “by limiting what the House can ultimately insist upon when compromising with the Senate.”9
Using Reconciliation to Change Health Care Policy
In recent years, lawmakers have used reconciliation to reform health care policy. As has been mentioned, in 2010 it was used to help pass the Affordable Care Act (ACA) or “Obamacare,” which was signed into law. It was used again in 2016 when the House and Senate passed a bill to repeal key elements of the ACA. However, that attempt failed when the legislation was vetoed by President Obama.
On the second day of this new Congress, the Senate began the process of repealing the ACA with a party-line procedural vote. Just over a week later, the Senate passed the Fiscal Year 2017 budget resolution on January 12, 2017. The following day, the House passed the same legislation without amendment.10
The Fiscal Year 2017 budget reconciliation instructions named four committees with jurisdiction over health care policy: the Senate committees on Finance and on Health, Education, Labor, and Pensions (HELP), the House Committee on Energy and Commerce as well as the House Ways and Means Committee. Each committee was requested to “submit changes in laws within its jurisdiction to reduce the deficit by not less than $1,000,000,000” for the standard budget window of 10 years (fiscal years 2017 through 2026).11 As of this writing, the named committees of jurisdiction are formulating their legislative proposals in accordance with the reconciliation instructions.
Reconciliation can be used to make changes to parts of the ACA that impact tax and spending, such as altering the federal investment in Medicaid, repealing the fine imposed on those who do not purchase health insurance, as well as adjusting the taxes levied against high-value, employer-provided health insurance. It is important to note that because the use of reconciliation is limited to legislative changes that would have an effect on the federal budget, some well-known elements of the ACA cannot be altered using this mechanism. For example, current law that ensures that children up to age 26 may remain on their parents’ insurance policy as well as the requirement that all consumers are able to obtain insurance even if they have a preexisting condition would have to be changed under regular order.
Only One Shot
The Senate is effectively limited to one budget reconciliation bill per fiscal year. This is because only issues of tax, spending, and debt limit can be addressed through this mechanism and each of those categories is allowed to be the subject of only one bill per budget reconciliation instruction.12 This restriction “is most significant if the first reconciliation bill that the Senate takes up affects both spending and revenues. Even if that bill is overwhelmingly devoted to only one of those subjects, no subsequent reconciliation bill considered that same fiscal year can affect either revenue or spending because the first bill has already addressed them.”13 This year, lawmakers chose to use reconciliation to modify health care policy—which impacts both taxation and spending.
Despite being fully aware of the functional limitations of a single reconciliation instruction per fiscal year, the content of the bills adopted by the House and Senate will often be different. When this happens, the differences between the two versions must be resolved, usually by a conference committee consisting of members from both the House and the Senate. The bill will then be returned to both legislative bodies for an up-or-down vote on the final, compromise version. If this final version of the legislation receives a majority vote in both chambers, the bill will go to the President. The President can either sign the legislation into law or veto it. If the President vetoes a reconciliation measure and Congress is unable to override the veto, that reconciliation instruction expires. Should Congress be unable to complete health care reform using this current reconciliation instruction, it will not be able to renew these efforts until fiscal year 2018.
Conclusion
Due to their narrow majority in the Senate, Republicans see the use of reconciliation as their best option to make changes to the ACA. It will be a bumpy road—as we have seen with the failure of the first attempt to repeal and replace—as the procedural rules are strict, the underlying policies are contentious, and public opinion is not only divided but vocal. Furthermore, consensus on the extent to which the ACA should be altered or simply repealed remains elusive within the Republican delegation. As the year progresses, many options will be considered before the final package is developed, debated, and voted on by the full House, then the Senate. Should the attempt to repeal or revise the ACA not be successful, Republican leadership will be forced to go back to the drawing board.
References
1. www.senate.gov/reference/glossary_term/reconciliation_instruction.htm
2. www.senate.gov/CRSpubs/be873e40-a966-4feb-9d72-cf23a93cbe46.pdf
3. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
4. While the special procedures limit the time for debate, they do not limit the number of amendments that can be offered during the Senate’s initial consideration of the bill. As a result, once the 20-hour limit has expired, remaining amendments are considered with little or no debate—a process known as a “vote-a-rama.” www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
5. The Byrd Rule is named after its chief sponsor, the late Senator Robert Byrd (D-West Virginia). http://archives.democrats.rules.house.gov/archives/byrd_rule.htm
6. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation. The Byrd Rule allows for inclusion of provisions that have no budgetary effect as long as they are determined to be necessary “terms and conditions” of other provisions within the bill that have a budgetary effect.
7. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
8. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
9. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
10. www.congress.gov/bill/115th-congress/senate-concurrent-resolution/3
11. www.budget.senate.gov/imo/media/doc/HEN17065.pdf, pp. 45, 46.
12. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
13. www.cbpp.org/research/federal-budget/introduction-to-budget-reconciliation
Alpha Lillstrom Cheng, JD, MA, is a registered federal lobbyist working with Connolly Strategies & Initiatives, which has been retained by PPS. An attorney by training, she provides guidance to companies, nonprofit organizations, and political campaigns. For six years, she served as Senior Policy Advisor and Counsel for Health, Judiciary, and Education issues for Senator Jon Tester (Montana), advising and contributing to the development of the Affordable Care Act, as well as working on issues of election law, privacy, government transparency, and accountability. Alpha has also directed Voter Protection efforts for Senators Bob Casey, Al Franken, Russ Feingold, and Mark Begich. She was Senator Franken’s Policy Director during his first campaign and was hand-picked to be the Recount Director for his eventual 312-vote win in 2009.