A Little More Precision on the Rules for Health Care Reform Legislation

It has been said that a little knowledge is a dangerous thing, and I think we have a good current example of this in the current discussion on the likelihood that health care reform will be passed by the Senate sometime this year. While most people have now gotten used to the fact that it takes 60 votes to end a filibuster, those of us who are “in the know” politically are aware that health care reform will only take 50 votes to pass because it was included in the budget reconciliation process. (See, for example, yesterday’s discussion on Politico’s Arena, where I and others made this very point). Likewise, this seems to be the dominant message in the media as well; see for example the Economist, which wrote:

That pledge of bipartisanship may not survive. And it may not matter much, for Mr Obama has made it clear that he will sign health reform as part of the budget reconciliation process if necessary—a controversial manoeuvre that would need only 50 votes in the Senate, not the normal 60.

But is this really the case? In a in excellently titled post on his blog (Will Republicans Flip Health Care the Byrd?), Nolan McCarty writes that the ability of the Senate to pass health care reform using the budget reconciliation process (which is governed by the Byrd rule, hence Nolan’s title) is not nearly as straightforward as it seems. While I’d recommend reading the whole post, here is the main point Nolan makes:

The second relevant provision of the Byrd Rule is that the bill cannot contain provisions that increase the deficit in a year not covered by the reconciliation instructions unless their effects lead to an overall reduction in the deficit. Consequently, because the budget resolution is based on a five-year window, a health care reform bill passed via reconciliation must be budget neutral or decrease the deficit beyond 2014 (its short term costs are covered by the $635 billion set aside contained in the budget resolution)….
…So I think it is the second Byrd Rule objection that may be the more dangerous one. The effects of the health care bill on the deficit will be scored by the Congressional Budget Office. It will be much more difficult politically to confront the CBO over an adverse scoring decision than it would be to fire the parliamentarian. So budget neutrality is an absolute necessity for the reconciliation gambit to work.
I believe it will prove very difficult to produce a meaningful health care reform bill that is budget neutral over the long run (or at least one that will be scored by the CBO that way). First, any budgeting for a health care plan is going to rely heavily on cost savings through hard to quantify reforms like electronic medical records. If the CBO comes back with a low number for these savings, other cuts or revenue increases will be required. Second, many of the revenue enhancements expected to be in any reform bill such as employer “play or pay” or the taxing of some employer-provided benefits may not sit well with many moderate Democrats. As these provisions get scaled back to keep the moderates on board, expenditure cuts will be necessary to ensure Byrd Rule compliance.

Bottom line: we don’t know if the reconciliation process will ultimately be in play for health care reform, which means for now we don’t know how many votes it will take to pass this legislation.

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