Capitolworks: Just the Facts…The Development of a Senate Health Care Bill

With the passage of the American Health Care Act a distant memory, all eyes and ears are now focused on the Senate as this chamber embarks on the journey of its repeal and replace. News outlets, Members of Congress and political pundits are all filling the airways with speculation, promises, and predictions as to what the Senate bill may or may not look like in the end. The intent of this “Capitolworks: Just the Facts” is to shed light on the unique Senate rules that will dictate what legislators in this chamber can do with their bill versus what we may be led to believe is possible.

If you are listening, watching and reading anything regarding the House and Senate health care bills, you have heard the term “reconciliation.” And, like most of us, you may be struggling to understand what that word means in a legislative context and why it seems so important. Discussing the complexities of reconciliation—and there are many—are beyond the scope of this post. However, we do hope to explain this Congressional budgetary process in such a way that you may better understand its significance as well as how and why it has anything to do with current repeal and replace efforts.

In its simplest sense, reconciliation is a tool used to pass federal Congressional spending, tax and revenue bills, like the budget, by only a simple majority. It’s not a process that legislators use every year to pass a budget, but because it requires only a simple majority (versus what’s called a super majority), it can help avoid some of the political pitfalls that keep legislation from passing particularly during very partisan times. But what does a Congressional budgetary process have anything to do with health care reform? Good question!

Again, the simple answer is because the health care bill that has passed in the House and the proposals being touted in the Senate all impact federal taxes, spending, and revenue. And as we know, reconciliation as a legislative process allows bills that impact tax, spending and revenue to pass with a simple majority. Ok but now that leaves us wondering, if this is primarily a budget procedural tool, why would non-budget bills be allowed to be passed using this process and at the same time as a budget? Well, the funny thing about these legislative processes is that many of them allow other bills to “ride along” with a larger bill, in this case, the budget, if they are “germane” or said differently, something in common with the larger bill. In the case of the health care bills, they are germane in that they would impact taxes, revenue, and spending. In fact, the ACA, along with many other significant pieces of legislation, have moved using the same legislative tool.

There are a few other details to keep in mind before we move over to the Senate and the rules that will govern the development of their bill. First, whether or not Congress uses reconciliation to pass a budget in any given year is based on something called the “Budget Resolution.” This is a process that the budget committees go through to establish a blueprint for budget goals concerning spending and revenue. Included in the Resolution may or may not be instructions from the budget committee to use reconciliation. This year, we had a budget resolution passed on January 17th with instructions for the committees to utilize reconciliation.

Secondly, some may wonder why the House passed their health care bill first. Why didn’t the Senate just move forward with their own? The answer is that there is a clause in the U.S. Constitution called the Origination Clause that requires all bills affecting federal spending and revenue to initiate in the House. Why? Because back when the constitution was written, the drafters wanted to ensure that the federal “purse strings” were held by the Congressional chamber most representative of the people. In our governmental structure, that chamber is the House of Representatives.

Alright, on to the Senate! Finally, the Senate can create their version of a health care bill. This chamber will have the benefit of the reconciliation process, and thus only a simple majority is needed to pass their bill. Additionally, the Senate can make any substantive changes that they would like to the House bill or create their bill entirely ignoring the House passed version. In fact, such significant changes are what we are hearing from many Senators as the process unfolds. But wait, there’s a catch! The Senate has a unique and lesser known set of reconciliation rules that were established by the late Senator Byrd from West Virginia. For our purposes, the most significant of those rules is the one that requires any Senate bill, constructed using reconciliation, to produce the exact amount of government savings as the House bill (or better). Said slightly different, the Senate bill may not cost the federal government one penny more than the House bill. So now let’s think about that using some examples.

If a Senator is proposing to cover an additional health benefit, let’s say substance abuse and addiction that the House bill does not require, can this Senator’s proposal be included in the Senate’s bill? Yes, it can so long as there is a “pay for” for that proposal or essentially a cut made to another service, population or provider. Again, this is because Senate reconciliation rules require cost/savings neutrality between the Senate and House bill.

So, this is a rather long, but hopefully helpful way of providing you with the facts about what is happening at this moment. The Senate has made it clear that there is much about the American Health Care Act that they do not like, would like to change, and are promising their constituents that they will fix. We need to bear in mind the rules that govern the Senate process as we contemplate the various promises and proposals put forth.

By: Brooke Lehmann, Partner, Capitolworks LLC