In part 1 of this budget reconciliation refresher, I wrote about the basic rules for passing legislation in the House versus the Senate and how the budget reconciliation process allows certain legislation to move forward with approval from a simple majority of Senators rather than the usual three-fifths or 60-vote threshold. Now I’d like to take a closer look at how reconciliation has been used in the past, especially with respect to health care legislation and Medicaid policy, to get an idea of what may be coming our way as the 117th Congress gets to work in 2021.
Congress has considered 26 budget reconciliation bills since 1980, and 21 have become law (for a full history, see this CRS report). Past budget reconciliation bills have included major spending and tax cuts. Specific budget reconciliation bills that stand out on health policy include a series of deficit reduction and omnibus bills in the 1980s and 1990s (e.g., DEFRA, COBRA, and OBRA 86, 87, 89, and 90), the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, or “welfare reform”) and the Health Care and Education Reconciliation Act of 2010 (HCERA, or the “sidecar” that accompanied the Patient Protection and Affordable Care Act, PPACA, later known together as “the ACA”). Finally, the Better Care Reconciliation Act of 2017 (BCRA) ultimately failed to pass but is still an instructive example of the types of Medicaid policies that have been considered in the past under reconciliation.
Reconciliation Bills Have Made Major Changes to Medicaid Policy Over the Years
It’s important to note that reconciliation bills can be used to amend “mandatory” or entitlement spending such as Medicare, Medicaid, and SNAP but cannot be used to amend Social Security. As long as Medicaid policy changes impact federal spending or revenues, they are potentially fair game for budget reconciliation bills, and reconciliation has been used frequently to change Medicaid eligibility and funding.
Enacting Incremental Coverage Expansions for Children and Pregnant Women
The deficit reduction and omnibus reconciliation bills in the 1980s and 1990s included incremental expansions of Medicaid eligibility for children and pregnant women that ultimately led to requirements that states cover pregnant women and children under age 6 in families with incomes at or below 133% of the federal poverty level (FPL) and children ages 6 through 18 with family incomes up to 100% of FPL. The bills spanned 7 years and the policies therein were incremental – starting with state options to expand coverage before phasing in requirements (See the Medicaid Resource Book, Appendix 1). Most of these bills were subject to the Byrd Rule or went through the “Byrd bath” as it is often described.
Erecting Barriers to Coverage for Lawfully Residing Immigrants
In 1996, PRWORA repealed the Aid to Families with Dependent Children (AFDC) program and replaced it with a block grant known as Temporary Assistance for Needy Families (TANF). PRWORA also established mandatory parent or “section 1931” coverage, requiring states to cover parents meeting the AFDC criteria as of 1996 and allowing states to cover parents at higher income levels. This is what led to mandatory eligibility for parents at very low levels of income (the national median eligibility level under section 1931 is 45% FPL, but in some states it is much lower, such as 18% FPL in Alabama) with very limited coverage at higher income levels until the Medicaid expansion in the ACA. But perhaps most famously at least with respect to Medicaid, PRWORA created new barriers to coverage for immigrants, namely prohibiting Medicaid coverage of lawfully residing immigrants during their first five years and making it optional after the 5-year bar. It wasn’t until the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) that states were given the option to waive the 5-year bar for lawfully residing children and pregnant women (35 states have adopted the option for children and 25 states have adopted it for pregnant women in Medicaid); there is still no such option for other adults.
Amending the Senate Health Reform Bill to Give More Money to States and Providers
Heading into the 2008 Presidential election, Democratic leaders in the House and Senate were interested in pursuing sweeping health reform legislation and by the end of 2009, both chambers passed comprehensive bills. The two chambers began working out their differences to draft a conference agreement that both chambers would have to vote on and pass, but in January 2010, Senate Democrats lost their 60-vote majority. Without 60 Democratic votes, the Senate filibuster rules meant that a vote on the conference agreement would fail. Thus, the victory of Republican Senator Scott Brown ultimately led to the House passing the Senate’s health reform bill as is, and then quickly amending it through a second, reconciliation bill. Compared to prior reconciliation bills and processes, this 1-2 punch is rather unusual. But, process anomalies aside, HCERA is yet another example of a reconciliation bill that made major changes to Medicaid. It included 6 provisions in the Medicaid subtitle: (1) federal funding for states, (2) payments to primary care physicians, (3) disproportionate share hospital payments, (4) funding for the territories, (5) delay in community first choice option, and (6) drug rebates for new formulations of existing drugs. The Congressional Budget Office (CBO) estimated the budgetary impact of these proposals in combination with similar proposals from PPACA and the separate, incremental budgetary effect (totaling upwards of $23 billion over 10 years). If you’d like to tour down memory lane, read this helpful summary of what made it in and what was left out by Peter Overby at NPR.
Attempting to Block Grant Medicaid and Repeal the Medicaid Expansion
In 2017, during the protracted repeal and replace debate that ultimately failed, the Senate reconciliation bill included several Medicaid policies that went through the Byrd bath, many of which were helpfully cataloged by Tim Jost in Health Affairs. Provisions restructuring Medicaid financing into a per capita cap, with growth rates well below costs in the out years, cleared the Byrd Rule hurdles easily (CBO estimated the Medicaid cuts, which also included repeal of the Medicaid expansion, would total savings of $772 billion over ten years). But application of the Byrd Rule to other provisions under consideration at the time was less cut and dry. For example, a provision barring federal Medicaid payments to Planned Parenthood for one year, while saving about $100 million over ten years, failed the Byrd bath because the budgetary impact was merely incidental to the broader policy change. Other provisions that arguably also had a small budgetary impact relative to the major policy change passed the test, such as Medicaid work requirements.
The most common bases used to officially raise a point of order under the Byrd Rule are that the provision or amendment does not change outlays/revenues and that the provision or amendment is outside an instructed committee’s jurisdiction. However, much of the deliberation about what to include in a reconciliation bill happens before the bill hits the floor, and provisions likely to fail are eliminated before the bill text is finalized. The behind-the-scenes nature of the process and the deterrent effect the Byrd Rule has on including policies in the first place expose the Byrd Rule to criticism, including that it distorts the balance of power between the House and the Senate (as House-passed provisions easily fall out in the Senate) and gives too much power to unelected officials (Byrd Rule debates are argued by staff and decided by the Parliamentarian).
Though looking back does not tell us what the 117th Congress has in store for reconciliation and Medicaid policy in the future, it is clear that reconciliation has been used regularly to make (or try to make) significant changes to the program – coverage expansions, eligibility restrictions, federal funding level changes – so we’ll be watching carefully to see what comes up this time around. Hopefully, we’ll see policies that will help get us back on track to covering more children and families.