Politics & Policy

A Congressional Rule May Determine the Health-Care Bill’s Fate

Protesters demonstrate against plans to end Obamacare (Reuters: Kevin Lamarque)
Republicans are testing the limits of the ‘reconciliation’ process.

The filibuster — which in effect forces a Senate majority to pass legislation with 60 votes instead of 51 — is eroding, a victim of its own success. In the 1970s, changes to Senate rules made it both politically and procedurally easier to filibuster — the “two-track” system allowed the Senate to continue routine process despite an ongoing filibuster, and the rise of the “virtual filibuster” allowed Senate minorities to block business without physically taking the podium and speaking for hours. And so, over the last decade, as bipartisan consensus has practically disappeared and the filibuster has become normalized, legislators in both parties have begun to consider alternatives to the seemingly intractable process of building supermajorities. The filibuster has been fully “nuked” for presidential nominations, and senators are becoming increasingly aggressive about working around it when it comes to legislation, too.

“Reconciliation,” a product of the Congressional Budget and Impoundment Control Act of 1974, originally had a very narrow purpose: Congress wanted to streamline the budget process, so the Budget Act provided that “reconciliation bills” — bills implementing a new annual budget — would be immune to a filibuster. By 1990, the Budget Act had been amended to make clear that matters “extraneous” to the budget could not be included in reconciliation bills, a provision generally known as the Byrd Rule.

Politics is not so innocent anymore: What was originally intended as a purely budgetary provision has evolved into a sneaky way of passing major pieces of substantive legislation. In 1982, the Tax Equity and Fiscal Responsibility Act, which instituted a number of reforms to reduce the budget deficit, was passed through reconciliation. By 1996, the scope of reconciliation had expanded to encompass Bill Clinton’s welfare reform. Now, one only has to look at the legislative history of Obamacare to see how important reconciliation has become to congressional lawmaking. When Scott Brown was elected to the Senate in 2010, destroying the Democrats’ 60-vote majority, proponents of Obamacare were in a bind: The health-care bill had already passed the Senate, but centrist Democrats in the House wouldn’t vote for it, and Republicans could now filibuster an amended bill in the Senate. The Democrats came across an ingenious solution: To avoid a filibuster, they could pass the Senate bill through the House as-is, but then pass a separate bill through reconciliation that made alterations only to tax and spending provisions.

It seems that Obamacare repeal, too, will be passed under reconciliation if it is passed at all. Republicans have been aware since Trump’s election that they will have trouble getting a single Democratic vote to repeal Obama’s signature legislation, let alone the eight votes they would need to overcome a filibuster. So the plan has been to craft a bill that doesn’t run afoul of the Byrd Rule and thus can pass with a simple majority through reconciliation. The Senate parliamentarian will decide how the rule applies to the bill, though Vice President Mike Pence could technically overrule her.

Under the Byrd Rule, reconciliation legislation cannot include provisions that do not affect “outlays or revenue,” provisions that do so in a way “merely incidental to the non-budgetary components of the provision,” or provisions that increase the deficit over the long term. These are fairly stringent requirements — the most important elements of Obamacare were not passed under reconciliation — and they have dramatically constrained Congress’s efforts both to repeal significant portions of Obamacare and to come up with an adequate replacement for the program.

Take, for instance, the repeal-and-replace proposal from the American Enterprise Institute, incorporating suggestions from such highly regarded conservatives as Yuval Levin, Ramesh Ponnuru, and Avik Roy. The broad structure of the proposal goes something as follows: Set age-based, refundable tax credits for those not on employer plans; replace the pre-existing-conditions mandate with funding for high-risk pools and protections for those who have maintained continuous coverage; repeal the Essential Health Benefits requirements that prevent insurers from selling cheap “catastrophic” insurance plans; instruct states to establish default insurance plans for those who don’t sign up for a plan on their own, eliminating the need for an individual mandate. Of these proposals, only the refundable tax credit and the high-risk-pool funding would safely and surely survive the Byrd Rule. Repealing the pre-existing-conditions mandate or the Essential Health Benefits requirement would probably be construed as affecting revenue only in an “incidental” way, as would the establishment of default insurance plans and continuous-coverage protections.

In its original version of the American Health Care Act, the House chose to interpret the Byrd Rule conservatively — if idiosyncratically. As Yuval Levin noted in March, the House was unwilling to touch the consolidation of health care in the federal government, forcing it to operate “within the boundaries of Obamacare’s imposition of specific guaranteed-issue and community-rating rules on the insurance system.” But the House was willing to institute a continuous-coverage provision that would seem susceptible to a challenge under the Byrd Rule. In essence, the House bill was the worst of both worlds: It was designed within an exceedingly narrow set of constraints, yet some of its most important provisions may still have been unworkable under the Byrd Rule.

Republicans may be best served by presuming for now that they will have wide latitude under the rules of reconciliation.

But the Senate bill and some of the later amendments to the House bill suggest a much broader understanding of what can be done under reconciliation. The MacArthur-Meadows amendment to the House bill, which allowed states to waive many of the requirements that Obamacare imposed on insurance plans, and which was crucial to the ultimate passage of the bill, implies a willingness to tackle the federalization of health care under Obamacare, and the Senate bill has a similar provision. More ambitious still is a section in the Senate bill that would allow small businesses to purchase coverage through less regulated “associated health plans,” which comes close to the sort of deregulation of the insurance marketplace that it was widely assumed the Byrd Rule would prohibit. Some of the proposed amendments to the Senate bill would go even farther: Ted Cruz’s suggestion that insurers be allowed to sell unregulated insurance plans if they also sell at least one plan that qualifies under Obamacare would truly test the limits of reconciliation.

In the end, we probably won’t know exactly what is permissible under the Byrd Rule until the Senate parliamentarian, Elizabeth MacDonough, formally weighs in — and it does seem likely she will have the final word. If Vice President Pence overruled her, he would transform the Senate, setting a precedent for the total abolition of the filibuster. After all, if the vice president determines what falls under reconciliation, then any legislation he supports can be passed with a simple majority vote.

But this is no argument for a narrow approach to the limits of reconciliation. If MacDonough vetoes certain elements of the Senate bill, they can be removed or adjusted as needed, so there’s no cost to pushing the limits with an aggressive opening bid. And there are, anyway, some indications that MacDonough will be open to an aggressive take on what’s allowable under the Byrd Rule: Mike Lee has suggested that she would be amenable to some deregulation of the Obamacare exchanges, which would enormously expand the scope of a viable Senate repeal bill. On the other hand, it is worth noting that MacDonough has signaled opposition to Hyde amendment–style language, which would prevent the refundable tax credits in the Senate bill from being used for insurance plans covering abortion.

In the end, then, Republicans may be best served by presuming for now that they will have wide latitude under the rules of reconciliation. They could then use feedback from MacDonough to reform any elements of the bill that go too far. An excessively ambitious bill that needs to be pared back is better than legislation that can obtain MacDonough’s approval but not the votes it needs to pass.


The GOP’s Ongoing Health-Care Confusion

Getting to ‘Yes’ on Obamacare Repeal

Republicans’ Grim Health-Care Fairy Tale

— Max Bloom is a student of mathematics and English literature at the University of Chicago and an editorial intern at National Review.

Max BloomMax Bloom is an editorial intern at National Review and a student of mathematics and English literature at the University of Chicago.


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