Can Democrats Pass a Health Care Reconciliation Bill?
If you were reading the New York Times’ story this morning closely, you might be skeptical. The piece notes that Democrats want to use the reconciliation process to increase health insurance subsidies, and then quotes Budget Committee Chairman Conrad that the bill “would have to reduce the deficit over the next five years, taken together, and must not increase the deficit in any year thereafter.” CBO has already analyzed the subsidies in the Senate bill, and found that they would be growing at “about 8 percent per year” at the end of the budgetary window.
However, the White House’s proposal called for this new spending to be paid for largely through an expansion of Medicare taxes to include dividends and capital gains, as well as other taxes on “black liquor” and higher “fees” (i.e. taxes) on various companies. CBO has previously analyzed proposals to tax the wealthy through the House bill’s “surcharge” and found that they would grow about 5 percent a year. Although not certain, it’s highly likely that any wage-based tax would grow at roughly the same 5 percent level, based on general economic and wage growth as opposed to growth within the health care sector.
This “fuzzy math” raises numerous questions:
- How can a reconciliation bill with spending (i.e. health insurance subsidies) growing at 8 percent per year and offsetting tax increases growing at 5 percent per year not increase the deficit in any future year, as required under the Senate’s “Byrd rule?”
- If the subsidies become subject to the “Byrd rule” for increasing deficits in future years, would proposals to expand the “union deal” on the Senate’s Cadillac tax or increase Medicaid physician reimbursements – the latter of which the President endorsed yesterday – also be stricken from a reconciliation bill for the same reason?
- If even Democrats agree that reconciliation can’t be used to tackle abortion or immigration-related language, and if one or more budgetary components can’t be included in a reconciliation package because they would increase the deficit, what’s the point of a reconciliation bill anyway?
Keeping apart the very separate question of whether the majority should even attempt to embark on this route, a reconciliation strategy may appear to some as a fool’s errand on policy as well as politics – because it remains unclear at best how Democrats can enact any of their preferred changes to the Senate-passed legislation through this controversial procedure.