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September 16, 2009 01:20 AM UTC

Reconciliation: An Introduction

  • 24 Comments
  • by: roguestaffer

(Wonky, yes. But for those of you political nerds (us included) who really want to understand, this is good stuff. – promoted by Colorado Pols)

Reconciliation: an Introduction

We can all agree that we’re on the homestretch of the health care reform debate, even if the final decision is still off in the distance.

I’ve seen questions about how the reconciliation process would work in the Senate. Along with those questions, I’ve seen a lot of mistaken thinking on how that process would work. Essentially, people seem to think that it’s the knife that will cut the Gordian knot of Senate procedure and debate.

It’s not. Let me explain, based on my experience in the Hill.  

Originally, reconciliation was a process by which Congress reconciled (hence the name) the first budget resolution (the one it passed at the beginning of the fiscal year) with the second budget resolution (the one it passed at the end of the fiscal year).

That’s it; that’s all it was. And that’s all it would have been, had the regular order of the Senate not gotten seriously off-track.

The “regular order” of the Senate is merely the daily routine of the body. In the regular order, debate on an issue before the body is unlimited (that’s why they call it The Greatest Deliberative Body in The World). If 40 or more senators refuse to stop debating an issue, you need 60 senators to invoke cloture and close debate.

[Sidebar: The 40 or more senators refusing to stop debate? That’s a filibuster. That said, filibusters DO NOT work the way you think they do. No one stands up and talks for 40 hours. That only happens in Hollywood. I’ll explain how the whole filibuster process works another time. If you think I’m wrong – I’m not. I wish I was, but I’m not.]

So what does reconciliation do?

Simply this: it limits debate on an issue to 20 hours, followed by an up-or-down vote, thus rendering filibusters moot.

For example, here’s how health care reform would work under the reconciliation process:

Congress would include reconciliation instructions in the original budget. Those instructions would direct specific committees – say, the Senate Finance Committee and the Senate Health, Energy, Labor & Pensions Committee (otherwise known as HELP) – to draft legislation that would reform health care which hit certain spending targets by a certain deadline. Once that legislation was finished, it would get sent to the Senate Budget Committee. That committee would put it all together into an omnibus bill. In turn, that omnibus bill would head to the Senate floor for 20 hours of debate, followed by that up-or-down vote.

As it turns out, Congress did include those instructions in the original budget, and they essentially stipulate that if there hasn’t been health care reform legislation signed by October 15, the Senate can proceed with a reconciliation package.

So why wouldn’t we use that wonderful tool for every piece of legislation?

Because of the Byrd Rule.

First drafted in 1985, the Byrd Rule (named for Robert Byrd) imposes a set of strict restrictions on reconciliation by limiting what you can consider. The basic theory of the Byrd rule is that any legislation considered under the budget reconciliation process should principally affect federal revenues. A tax cut, for instance, can be considered under the reconciliation process. A new federal holiday cannot. But between those two examples sit crucial ambiguities.

The rule states that legislation is unfit for reconciliation if it:

“produce[s] changes in outlays or revenue which are merely incidental to the non-budgetary components of the provision.”

Here’s the dilemma: how do you define “merely incidental”? What, exactly, is a “provision”?

Nowhere in the Senate rules is there an exact definition of what a provision is. It’s well below a title, or a section of a bill; heck, it’s even below a paragraph. But what it is exactly, no one knows. Furthermore, there’s no clarity in the Senate rules as to how you define what “merely incidental” is. No one at all has developed an exact meaning as to what those two words mean.

That matters. That absolutely matters. Here’s why.

The Byrd Rule allows any senator to challenge the acceptability of any provision (remember, that’s undefined) of a reconciliation bill based on whether or not its effect on government revenues is “merely incidental” (remember, that’s also undefined).

So, if you enter the reconciliation process with a health care reform package, it’s absolutely unclear what would be left behind after each and every provision – however that’s defined – is challenged, and after a good number of them are deleted totally.

For starters, the tax portions would still be around. And so would the government subsidies. That said, is regulating private insurance “merely incidental” to the government’s revenues? What about the construction of a public option? Or individual mandates? How about incentives for preventive treatment – are those “merely incidental”?

It’s really difficult to say with certainty, and anyone who does, doesn’t know the process. It turns out that the most important person in the whole mess is…the Senate Parliamentarian! The ultimate decision in all these matters is left up to him, and his rulings are, charitably speaking, unpredictable.

Even though the GOP was able to ram through all manner of things through reconciliation (both sets of tax cuts, trade authority, etc.), they fired two parliamentarians whose Byrd Rule decisions angered them. Are we willing to do the same – and what does that say about the process if we are?

I know a bit more about the process, having been there on the Hill. Based on what I know, here’s what would likely be cut from any health care reform package that goes through reconciliation.

My guess is that the most important part of the reform package – the Health Insurance Exchanges, where the public option resides – would be thrown out. The insurance market reforms would likely be thrown out as well, as would be prevention and wellness incentives. I’d also wager that delivery system reform, and a whole lot more that currently is part of either the Senate Finance or Senate HELP packages would get tossed out as well.

Thing is, at day’s end, no one can predict what would be lost – it may be that the resulting legislation would be a bill that simply doesn’t work – much like a computer without an operating system.

Before you start rending your clothes and gnashing your teeth, let me look at something that could survive the reconciliation process: Howard Dean’s 2004 health care plan.

Dean proposed combining the Children’s Health Insurance Program (S-CHIP) and Medicaid into one program called the Families and Children Health Insurance Program, and making everyone up to 185% of the federal poverty line eligible for it. Dean also would’ve allowed people between the ages of 55 and 65 to buy into Medicare, and creating a tax credit for people in the middle.

That proposal alone would be a lot less than what we’re looking at in any of the health care reform proposals. They would cover and help far fewer people than the House bill would.

Nevertheless, they would help millions of people. The genius is that they’re directly related to federal programs and directly reliant on federal expenditures. Fund them through Medicare and Medicaid changes, add a small surtax on the wealthy, and it’s tough to see anything that the Senate parliamentarian would object to in that.

I know that that isn’t a great outcome. It’s, however, the best that you can expect from the reconciliation process.

Bottom line, that’s the best way to think about the reconciliation process: as a way to aggressively expand public programs, rather than the place to reform America’s health care system. Depending on how you look at it, it’s not the outcome you may have been hoping for. It’s an outcome, however, that still helps millions of Americans – and isn’t that the point of the whole thing?

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24 thoughts on “Reconciliation: An Introduction”

  3. which is one reason why it’s been suggested that reconciliation would force a bill with more government involvement than some Democrats want:

    Sen. Judd Gregg (R-NH)–ranking member on the Budget Committee–says the only way for the public option to survive the process is for it to be “very aggressive in setting rates, price controls and rationing,” a fact which may cost Democrats a number of conservative votes within their own party. However, if it’s too weak, and doesn’t meet the procedural demands of the reconciliation process, Gregg says the Republicans are preparing myriad objections to it and other aspects of the Democrats’ reform plan.

    Not that Gregg is the most helpful person to take advice from, but you get the point.

    There are also automatic sunset provisions for things that increase the deficit (for example, the Bush tax cuts which are set to expire), so that has to be worried about too.

    Republicans also passed the welfare reform act of 1996 using reconciliation, so I figure if that doesn’t violate the Byrd rule, nothing really does. Of course, it’s the Senate parliamentarian who decides that, not me. Some interesting articles on the role of the current parliamentarian, Alan Frumin, here and here.

    1. the role of the parliamentarian is why I caution people about thinking that reconciliation is the holy grail.

      That said, while I’d LOVE it if we were to get Medicare for All through reconciliation, given the current makeup of the Democratic caucus, and particularly the chairs, you’re much more likely to see a package like the one I outlined above.

      Here’s what I mean: we all know that the current chair of Finance is Max Baucus, whose proposal has been roundly panned by both sides in the debate. What most people forget is that the chair of the Budget Committee – remember, that’s the committee responsible for stapling together the Finance and HELP proposals – is none other than Kent Conrad, who started the whole process of sinking the public option by floating health care co-ops as an alternative.

      That ground truth is why I’m skeptical that you’ll see Medicare for All come out of reconciliation. That’s way too ambitious of a package to come out of the process, given the people involved.

      That said, the package I outlined above isn’t nothing – it would help millions of Americans, and you could gradually start the process towards a public system by gradually expanding eligibility – starting at 185% of the poverty level, then raising that to 300%, then to 400%.

      Heck, given that you’ve got something of a consensus on 300% of the poverty level, you could even start there!

      On the flip side, remember that Dean’s plan allowed people to buy into Medicare starting at age 55, and gave people in the middle a tax credit. So you could slowly lower the age limit, as well – start out at 55, then lower that to 45, etc.

      Again, would it be everything we’d want? No. Would it punish insurers? No. Then again, that’s not why I’m interested in this issue – I’m in it to help people, by whatever means necessary.  

  4. what a bummer.

    I kind of had the impression that Reconciliation was kind of like The Force: if the good guys just used it (properly and only for good purposes, of course) then success would be guaranteed.

    Instead, roguestaffer tells us that it will continue to take hard work to reach real health care/insurance reform.

    Thanks. A lot.

    No, seriously, thanks. Increasing information and reducing naivety is always good. I think.

    😉

    1. Over and over again…

      Robert Dove was hired by Republicans in 1981 and served until 1987, when Democrats took over the Senate. They hired Alan Frumin, who served until Republicans retook control of the Senate in 1995. Republicans rehired Dove.

      Then Trent Lott got pissed at Robert Dove for ruling against him and fired him in 2001, at which time Frumin took over again. Frumin has been in the position since then (despite the Senate changing parties three times since then).

  7. There’s been a lot of talk about splitting the bill in two, to avoid much of the parliamentary debate.

    The Public Option would probably survive any challenges (assuming you can get it past Kent Conrad in the Budget Committee) – it needs startup funds to get it off the ground (to be repaid, sure, but it goes directly against the immediate budget…).  Same with the subsidies, the Medicare Part D expansion.

    The regulations, Exchanges, etc. might not survive a challenge, but for those are the provisions most likely to get moderate Republican support.  I’m sure the planners are already looking at shoving the reconciliation provisions through first, then saying to the moderates – here’s how you get what already passed to work better and cost less.

    Sadly, single-payer “Medicare for all” is most likely to pass Byrd Rule muster, but least likely to make it to the point where anyone is arguing for it.

    I’m beginning to get the feeling that Max Baucus, whose chairmanship of the Finance Committee has been such an annoyance to Progressives in the past month or two, may not be able to suppress some pretty massive changes from overrunning his “bill” when it comes time to mark it in the next couple of weeks.  I hope this is true, and that the Budget Committee can similarly tell Sen. Conrad where to shove his co-ops.

  10. Assuming this is correct- and I believe it is.

    Some trivia to add.

    Current Senate Parlimentarian: Alan Frumin

    see http://en.wikipedia.org/wiki/P…

    cloture, from freedictionary.com

    cloВ·ture  (klchr)  n.

    A parliamentary procedure by which debate is ended and an immediate vote is taken on the matter under discussion. Also called closure.

    And a little political analysis.

    As long as it doesn’t hyperballoon the deficit,  a bad bill is better than no bill at all.

    And by bad I mean anything that doesn’t do what you think it should.

    Here’s why: the status quo is at best sub optimum. At worst it’s stupid and destabilizing to our economy and ultimately our national security. (It’s going to be hard to spend 3% of GDP on defense when we spend 30% on healthcare.)

    A bad bill would force most every Representative  to run for or against it next cycle and make something up about how to fix it. And 33 Senators.  The results of those elections will tell everyone which way the AMerican voters are leaning. For reform, against it, for expanding Medicare, for killing it, etc. And, naturally, this would make it a hot topic in 2012.

    This would be a good thing.

    1. There are no significant cost controls in the bill OTHER than the Public Option.

      You’re not going to pass a bill that mandates community ratings, an end to rescission and and end to pre-existing condition denials unless you also pass some kind of insurance mandate (employer and/or individual).  And you won’t pass one of those without subsidies for the poor.  And without a Public Option, you won’t be bringing down the costs charged by insurers such that you’ll have lower subsidy requirements.

      It’s one big nasty ball.  Passing a “bad” bill is not really an option, fiscally.

      1. If we’re going to spend $850 billion odd dollars, and it won’t do one damn thing to make things better, then why don’t we just put it all towards curing AIDS or cancer or something? I’m sure there are scientists and doctors who could do a lot of good with $85 billion a year.

        1. I’m with you – though I think it would be foolish for the Dems not to at least try to pass it as a lump-sum bill via reconciliation.  Worst case, it gets pared down and Dems split the bill, passing the reconciliation stuff first, then the other stuff.  The other stuff is actually the easier bill to pass.  The parts that can go through reconciliation are the tough parts.  I think we can get at least two Republicans on the non-tax, non-public option, non-subsidy provisions.

          And, if not, well, it’s not like a real filibuster is illegal; just because Reid hasn’t made anyone actually do a filibuster for more than a day doesn’t mean it isn’t time to break out the catheter and the phone book…

          1. I’m afraid I’m going to have to do a diary on the filibuster.

            Breaking out the phonebook wouldn’t be up to Reid, nor would it be up to anyone else – it wouldn’t be part of the filibuster at all.

            There’s a reason that you don’t see filibusters – it’s because the process hurts the non-filibustering party, not the party that’s filibustering.

              1. (assuming it’s an old-fashioned filibuster, that is…)

                It’s not painless for anyone.  IIRC, the party that wishes to invoke cloture has to be in attendance or close by – quorum has to be maintained or else the filibustering party can call for a quorum count in an attempt to close the Senate for business.  But someone from the filibustering party must lead the filibuster, and they can’t move from the podium while they are speaking during that time.

                Also IIRC, there has been only one “real” filibuster in the last 10 years, and it was more of a faux filibuster that Sen. Reid hosted for one 24-hour marathon before retreating to the Rule 22 “filibuster” rules.  I don’t even think it was a traditional filibuster: the ground rules allowed the Republicans to swap out speakers.

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