Budget Reconciliation Process and Obamacare

By: David Herzig

Friday the Wall Street Journal published Daniel Hemel and my article on why we think it will be very hard for the Senate to just do away with the ACA (aka Obamacare) via reconciliation.  We follow-up our earlier Surlygroup posting (also cross-posted at Yale J. Reg.) which discussed why the Senate norms are hard to break.  Since that article, we have developed some fairly interesting models on why we think the Senate norms are rather sticky – more on that to come.

In the Wall Street Journal article we state, “Most significantly, Majority Leader Mitch McConnell and his caucus may be forced to choose between their antipathy toward the ACA, also known as Obamacare, and their allegiance to longstanding institutional norms. In the end, the scope of ACA repeal will likely depend on whether Senate Republicans decide to score political victories in the short term or to maintain the Senate’s unique culture for the long haul.”

The problem for the republicans is the Byrd rule.  Repeal of the ACA will have budgetary impact beyond the budget window.  A decision will need to be made on the impact.  As we stated, “On some reconciliation-related questions, the presiding officer defers to the Budget Committee chairman, currently Senator Mike Enzi. On other questions, including whether a provision produces “merely incidental” effects on the budget, the presiding officer generally follows the advice of the Senate’s nonpartisan parliamentarian, the official adviser to the Senate on the body’s rules.”

Last year, Elizabeth MacDonough, the Senate Parliamentarian, “signed off on a reconciliation bill last year that reduced the penalties for violating the ACA’s individual and employer mandates to zero.” We point out that even if the Senate Parliamentarian has a contrary opinion, the Budget Chair can ignore her opinion.  

Sam Wice in the Yale J. Reg. has a slightly different variation of our view where he statesthe Senate Budget Committee chairman has little direct authority over determining the budgetary impact of reconciliation measures. As Professors Hemel and Herzig point out, the Senate Budget Committee Chair by practice performs this “authoritative guidance.” Like with the official and unofficial roles of the Senate Parliamentarian and Presiding Officer, even though the Senate Budget Committee sets the rules (whether to use dynamic scoring or not) for determining how a cost estimate is calculated, the Chair by practice defers to the decisions of the Congressional Budget Office (“CBO”) and Joint Committee on Taxation (“JCT”) for the actual cost estimate, including the amount of any offset from a budgetary gimmick. Granted, the Chair is free to disregard the CBO and JCT estimates and Congress may fire the head of CBO or JCT. However, to my knowledge the House and Senate have never disagreed with a CBO or JCT estimate or fired the head of either group (although Congress has refused to reappoint directors).”

It might be worth Wice telling this to Ted Cruz who last year “suggested that the parliamentarian should be ignored or ousted if she stands in the way of ACA repeal.”

One final point of clarification.  Normally, I do not read the comment sections to the my articles.  However, in the Wall Street Journal article there is a consistently wrong statement.  Most readers apparently think that the ACA/Obamacare was passed via reconciliation.

Let me use this Washington Post article to summarize the actual process.  According to the article, “The Senate did not use the reconciliaton process to pass the ACA. The act, comprising 906 pages, is the basic comprehensive substance of Obamacare. It was passed on a bill that was filibustered, and a supermajority vote of 60 was required to end that filibuster (by invoking cloture under Senate Rule 22). It was signed by the president on March 23, 2010, and became Public Law 111-148. 

A second bill, which was a reconciliation bill, was passed after that date to make a series of discrete budgetary changes in the ACA. That act, the Health Care and Education Reconciliation Act of 2010, was signed by the president on March 30, 2010, and became Public Law 111-152. It comprises 54 pages, 42 of which dealt with health care. Like the reconciliation bill in 2010, the reconciliation bill that the president vetoed this month made discrete budgetary changes in existing law. That vetoed bill did not “repeal” Obamacare. It amended several of the law’s budgetary components while leaving the basic structure of the law in place.” 

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