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Repeal & Replace Watch

A Guide To Budget Reconciliation: The Byzantine Rules For Disassembling The Health Law

After capturing the White House, Republicans put repealing the health law at the top of their to-do list. But since they can’t get around a Democratic filibuster in the Senate, they are forced to use an arcane legislative tool called budget reconciliation to disassemble parts of the law. KHN’s Julie Rovner and Francis Ying explain the process.

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Video Transcript:

Led by President Donald Trump, Republicans have promised to repeal the Affordable Care Act. They have control of both houses of Congress and the White House, but they still have one big obstacle in that effort.

In the Senate, opponents could stage a filibuster — the right of the minority to try to talk a bill to death and keep senators from voting. It takes 60 votes to stop a filibuster. Republicans have a majority but only 52 seats. And Democrats say they won’t help take apart the health law they voted to pass seven years ago.

Instead, Republicans are vowing to use a budget procedure called “reconciliation.” It comes from a 1974 law called the Congressional Budget and Impoundment Control Act. Lots of major health laws have been passed using reconciliation, including those guaranteeing the right to emergency room care, creating the Children’s Health Insurance Plan, and allowing private plans as an alternative to traditional Medicare coverage.

Here’s how reconciliation would work. First, Congress has to pass a budget resolution.

That budget document has to be agreed on by the House and Senate, but it doesn’t go to the president for his signature.

The budget resolution does two main things. First, it sets spending targets for federal programs Congress funds every year. Those are known as appropriations.

But there are also programs funded by the federal government that don’t need annual approvals from Congress. These include tax cuts or increases and so-called entitlement programs like Medicare and Medicaid.

So the budget resolution also instructs the congressional committees in charge of those programs to propose changes in the law that would “reconcile” how much those programs cost with the targets set by the budget. This is what Republicans would use to order changes to the Affordable Care Act.

When the committees report back their proposed changes, they are assembled into a budget reconciliation bill.

In the Senate, budget reconciliation has its own special rules that make it easier to pass. Debate is strictly limited, and the bill only needs a simple majority to pass.

But there are limits, too. Budget reconciliation bills can only change things that directly impact the federal budget — either adding to or reducing federal spending.

For the Affordable Care Act, that means Congress could use budget reconciliation to eliminate spending, like the help people get to pay their premiums or funding to states to expand the Medicaid program for the poor. It can also repeal the taxes that help pay for those benefits, including the tax penalties for individuals who fail to have insurance.

But Congress can’t use reconciliation to change parts of the health law like provisions requiring insurance companies to provide certain benefits or sell coverage to people with preexisting conditions. Those don’t directly affect federal spending.

That has led insurance companies to complain that they will go broke if they still have to sell to sick people, but healthy people won’t have any incentive to get covered. In that case, they say, only sick people will buy insurance, and premiums will skyrocket.

And the new Republican Congress seems set on using the technique to take apart the health law. Whether that’s a good idea may depend on whether you favor or oppose the Affordable Care Act.

Related Topics

Multimedia The Health Law