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Repealing the ACA: Not as Easy as it Sounds

by Bill Finerfrock on February 10, 2017 at 4:05 PM

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Since being sworn into office on January 3, 2017, the 115th Congress has wasted little time in beginning the process of repealing the Affordable Care Act, or ACA. Despite a long-fermenting desire among Republicans for a swift repeal of President Obama’s signature healthcare law, the legislative process by which the repeal will happen is not so simple.

Republican leadership in Congress will use the budget reconciliation process to achieve many of its desired changes to the ACA. This process will allow the repeal measure to bypass procedural obstructions that can be used for traditional pieces of legislation. However, the reconciliation process also limits which parts of the ACA can be changed.

Using Budget Reconciliation to Repeal the ACA

The first step in the budget reconciliation process is for both Chambers of Congress to pass an identical budget resolution. A budget resolution is an internal document that does not require a presidential signature to be effective. Congressional budget resolutions set top-line spending amounts for about 20 spending categories. However, when an identical budget is passed by both the House and Senate, Congress is allowed to use the budget reconciliation process to identify and achieve savings in the federal budget.

Both the House of Representatives and the Senate passed an identical budget resolution in mid-January. This resolution serves as the foundation for Congress to consider a reconciliation bill that will serve as the mechanism for repealing and/or replacing key provisions of the ACA. 

The votes for the budget resultions were largely along party lines; however, nine Republicans in the House and one Republican in the Senate voted against the resolution. All voting Democrats voted against the resolution.

The budget resolution includes committee instructions, of which require selected congressional committees to identify and report legislation that achieves a specific amount of savings. In this case, the resolution directs each of the congressional committees with jurisdiction over the ACA to identify no less than $1 billion in savings over 10 years – an easily achievable amount by federal budgetary standards.

These committees will be able to select provisions of the ACA to repeal as a way to achieve this savings target. The committees can also include new policies to replace what they repeal as long as, in the aggregate, the policy changes in the reconciliation bill achieve the specified savings target.

The congressional committees involved in this process are the Finance and HELP committees in the Senate, as well as the Ways and Means, and Energy and Commerce committees in the House. These four committees are expected to report recommendations to their respective chamber’s budget committees in the coming weeks. The budget committees will then consolidate each committee’s recommendations into the official reconciliation bill.

The committees have broad latitude in what they recommend with respect to  programs within the committee’s jurisdiction – as long as, in the aggregate, the changes result in reducing the deficit by $1 billion over 10 years. 

The Senate Finance Committee could, for example, authorize programmatic changes that cut Medicaid spending by $50 billion over 10 years, which is well in excess of the $1 billion charge. Furthermore, it could simultaneously authorize programmatic changes to Medicare that would increase spending by $49 billion over 10 years. The key here is that the committee has met their obligation because the net is $1 billion in savings over 10 years. 

The Budget Committee, in conjunction with the Congressional Budget Office, must certify that the committees have met their obligation under the budget resolution. Once all of the appropriate certifications are in place, the Budget Committee can then take the budget reconciliation bill to the House and Senate for debate and voting. 

The advantage of this process is realized when the reconciliation bill receives a vote by the full Senate because it is not subject to a filibuster. A filibuster, which can indefinitely extend a debate, can only be overridden with 60 votes. The GOP Majority is 52–48 short of the votes needed to overcome a filibuster. However, by rule, a budget reconciliation bill cannot be filibustered. Thus, this allows Senate Republicans to advance the bill with a simple majority, which they have.

The filibuster is also not in play because rules for consideration of a reconciliation bill are set by statute; the bill itself cannot be filibustered and there is no opportunity to filibuster a procedural motion. The rules stipulate that 20 hours of debate time must be equally divided: 10 hours for each the majority and the minority. Senators can file an unlimited number of amendments within the 20 hours, and it is expected that dozens of amendments will be filed by both parties. After the 20 hours of debate conclude, a simple majority vote in both Chambers sends the reconciliation bill to the president’s desk.

It is expected that Republicans will pass a reconciliation bill in both Chambers, as they successfully passed a reconciliation bill that repealed much of the ACA during President Obama’s administration. It was, in this instance, immediately vetoed. Republicans subsequently lacked the votes to override the presidential veto. However, the White House is now occupied by a president who is willing to sign such a bill.

Understanding the Byrd Rule Limitations

Finally, it is worth reiterating that there are strict limits on what can be included in a budget reconciliation bill mandated by the budget resolution. 

The Senate operates under what is called the Byrd Rule, a Senate rule that stipulates in order for a provision to be considered on a reconciliation bill, it must be germane to the purpose of the bill; in this case, the raising or spending of money. 

Any provision in a reconciliation bill is subject to a Byrd Rule challenge that goes to the Senate president and, by advice, the parliamentarian.  If the parliamentarian rules that the provision in question violates the Byrd Rule, such a finding can be challenged by any Senator. 60 votes are ultimately required to overturn the ruling. 

The Byrd Rule defines a provision to be extraneous, and therefore ineligible for reconciliation, in six cases:

  1. If it does not produce a change in outlays or revenues;
  2. If it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
  3. If it is outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
  4. If it produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision;
  5. If it would increase the deficit for a fiscal year beyond those covered by the reconciliation measure, and
  6. If it recommends changes in Social Security.

Because of the Byrd Rule, certain things were adopted as part of the ACA that cannot be included in a budget reconciliation bill; even if they were, Democrats would certainly raise a Byrd Rule challenge. 

For example, a reconciliation bill cannot eliminate the federal health insurance exchange, but it can eliminate the federal tax subsidies provided to assist consumers in affording coverage purchased on the exchanges.

It is generally believed that repealing the prohibition on pre-existing provision clauses in insurance contracts would not be germane to a budget reconciliation bill. Similarly, the ACA provision that authorizes companies to allow dependents up to age 26 to remain on their parent’s insurance policy would not be germane to a budget reconciliation bill. 

In contrast, the individual mandate (a tax), the employer mandate (a tax), the tax subsidies, Medicaid expansion, Medicare changes and federal money to operate the exchanges would all be germane to the purpose of a reconciliation bill. 

The action and attention now turn to the Senate Finance Committee, the Senate HELP Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee where they will begin putting together, with assumed input and guidance from the Trump administration, a resolution.

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This post was written by Bill Finerfrock

Bill Finerfrock is a consultant at Intermedix and is president of Capitol Associates (CAI). Finerfrock specializes in health care financing, health systems reform, health workforce and rural health. Finerfrock has worked in and with the U.S. Congress and Federal agencies on health policy matters for nearly 40 years