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The Risks of Using Reconciliation for Health Care Legislation

By Rebecca Adams, CQ Staff

April 3, 2009 -- The biggest question facing both the budget resolution and this year's health care debate is whether lawmakers will use a fast-track parliamentary maneuver known as reconciliation to pass the health care bill.

Reconciliation gives Democrats the advantage of passing health care legislation with only a majority of votes in the Senate rather than the 60 required to shut off a filibuster.

Most critics who oppose using reconciliation have complained that using the technique would stir up partisan tensions and doom any chances of getting a broadly accepted compromise through Congress. But often overlooked is a much more fundamental problem: if Democrats use reconciliation, they are taking the risk that major pillars of the health care bill could be struck down under Senate budget rules.

Some of the most significant parts of potential health care legislation could be killed under a Senate rule that requires provisions in reconciliation bills to be related to tax or spending decisions, not major unrelated policy changes with little budgetary impact. The vulnerable provisions include some of Democrats' highest priorities, such as requiring insurers to offer health care to everyone, regardless of preexisting conditions and without charging patients different rates based on their health. Another provision that could face a challenge would require all individuals to buy insurance. Facing slightly less risk is a proposal to require all employers to offer or pay for coverage for their workers.

The resulting bill would end up looking like "Swiss cheese," said Senate Finance Committee Chairman Max Baucus, D-Mont.

"I don't know what the point of doing health reform would be if you took out all of the insurance provisions," said Baucus' counterpart, Finance Committee top Republican Charles E. Grassley of Iowa.

Democrats are aware of the risks. That is one reason why the Democratic chairmen of the main committees who will write the bills—including those at Senate Finance Committee; the Senate Health, Education, Labor and Pensions Committee; the House Ways and Means Committee; and the House Energy and Commerce Committee—say that using reconciliation is not their most preferred route for passing health care legislation.

"My preference is to develop a bipartisan majority so you don't need reconciliation," said Henry A. Waxman, D-Calif., chairman of the Energy and Commerce Committee.

Plan of Attack
The House budget resolution includes language that would allow Congress to use reconciliation to pass health care legislation. The Senate version does not. Negotiators will soon decide whether to include the fast-track option in a conference report version of the budget resolution.

If lawmakers decide to keep reconciliation as an option, the committees that oversee health care legislation have until late September to report out a bill and bring it to the floor for debate.

The Senate rule that critics of health care legislation could use to gut the measure is known as the Byrd rule, named for its sponsor Sen. Robert C. Byrd, D-W.Va. If a senator challenges a provision under the Byrd rule and the parliamentarian rules in favor of the challenge, the provision is taken out of the measure. Supporters of the provision who want to restore it then must muster 60 votes in order for the contested provision to survive.

The rule applies both to bills and conference reports that are considered by the Senate. The last time that senators used the Byrd rule against a language in a conference report came in 2005, when three Medicare-related provisions in the Deficit Reduction Act were struck down.

Extraneous provisions have been included before in bills that were passed using reconciliation, but those were often noncontroversial provisions that weren't challenged because they were in bipartisan bills such as the 1996 welfare reform law.

For his part, Byrd wrote in an April 2 letter that he opposes the use of reconciliation for health care legislation.

The health care bill is "replete" with provisions that Republican critics could challenge, said Senate Budget Committee top Republican Judd Gregg of New Hampshire, characterizing the list as "almost everything except the act of raising money . . . It'd be very hard to get [much of health care legislation] past the Byrd rule."

The main test that the Senate parliamentarian would have to decide, said Gregg, is whether a public policy proposal is extraneous to the main goal of cutting the deficit. Public policies can be included in budget reconciliation bills, but the main purpose should be to affect tax or spending decisions, not meet a policy goal such as getting people insured.

Over the 24 years that the Byrd rule has been used, challengers are successful in striking contested provisions about 80 percent of the time, according to the Congressional Research Service.

The Byrd rule allows an extraneous provision to be struck if the parliamentarian decides that the language meets any one of six scenarios:

  • it does not change outlays or revenues;
  • it produces a change in spending or revenues that is only a fig leaf and incidental to the policy changes it would make;
  • it produces a spending increase or revenue decrease that does not meet the instructions given to the committee in the budget resolution;
  • it was produced by a committee that does not have jurisdiction over that provision;
  • it would increase the deficit for a fiscal year beyond the time period covered by the reconciliation measure;
  • or it recommends changes in the Social Security program. (This does not include Medicare, which was created through the Social Security act.)

Many Democrats say that even if the conference report of the budget resolution includes the option of using reconciliation techniques, they want the tool to be used only if they first fail to get a bipartisan consensus.

"Ideally, you don't want to use reconciliation," said Sen. Sherrod Brown, D-Ohio, a member of the Senate Health, Education, Labor and Pensions Committee and a fierce proponent of health care overhaul legislation. "I hope we don't use it. But it helps to get Republicans to the table and be reasonable about this."

Rep. Jim McDermott, D-Wash., a House Ways and Means Committee member who supports universal health coverage, said that Democrats only want to "preserve the option as a last resort."

The problem is that merely keeping the option on the table raises suspicions among Republicans that Democrats are not truly interested in incorporating the views of Republicans.

"Republicans feel that Democrats could be stringing them along until they don't need them anymore," said a Senate GOP aide.

Avoiding the Byrd Bath
Democratic staff say their primary focus is on getting a bipartisan agreement. But if Republicans refuse to agree on health care legislation, aides are considering ways to use reconciliation and get around the threat of the Byrd rule.

Democrats were able to protect themselves from one use of the Byrd rule by tucking language in the Senate budget resolution that says that any health care legislation would have to be paid for over an 11-year timeframe. Democrats had adopted "pay as you go" budget rules in the last congressional session that would otherwise require the health legislation to be offset over both a six year- and an 11-year window.

One potential trick could be to tuck a vulnerable provision into a larger section of the bill that would not be extraneous, said G. William Hoagland, a Republican who spent nearly three decades on Capitol Hill as the top budget aide to Senate GOP leaders, and who now heads the public policy office of Cigna Corp. Then the Congressional Budget Office might estimate the costs of the entire section rather than the individual provision that would be at risk.

"That might work in some cases," he said. But for parts of the bill governing the complex laws governing the insurance industry, "that would be a nightmare."

Writing the bill in unnatural ways designed to protect vulnerable provisions from the Byrd rule could give headaches to regulators who would later have to figure out the bill's intent, and lawsuits could be filed to challenge the provisions.

Hoagland and congressional aides say that one of the most at-risk parts of the health care bill could be language requiring insurers to offer health care to everyone, regardless of preexisting conditions and without charging patients different rates based on their health. That language seems inherently extraneous, several Republican aides said, as does language requiring individuals to buy insurance.

A requirement for employers to pay for their workers' coverage could be in jeopardy for another reason, Hoagland said. That provision probably would have tax consequences and might not be considered extraneous. However, it could affect Social Security, which would give critics a different argument for dropping that provision.

Provisions that are struck down could potentially be added to other must-pass legislation later, but that is not easy to achieve.

All of the parliamentary challenges underscore the reasons why lawmakers prefer to get a broad consensus on health care legislation. A bipartisan compromise is easier to sell politically to the public and it's far easier to actually move through the Senate.

"If you're going to make major policy changes in this country you want a strong bipartisan majority," Hoagland said.

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