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Should Reconciliation Be Used To Pass Health Reform?

21 Aug 2009
Posted by Pete Davis

If reconciliation is the only way to get health reform through the Senate this year, requiring a majority vote instead of the normal 60 votes, I would answer with a lukewarm "Yes," but there are some big drawbacks.

Number one, reconciliation is viewed by nearly all Senate Republicans and by some Democrats as nuclear attack on the rights of the minority to full and complete debate and to offer amendments.  Health reform could pass in mangled form, but the Senate's ability to pass anything else would diminish as disaffected senators would call a halt to business as usual to express their displeasure at having health reform rammed down their throats.

Number two, only health reforms that cut spending or raise taxes would pass muster under the "Byrd Rule" prohibitions against "extraneous" measures.  That would leave out a lot of elements of any sensible health reform bill, including most insurance reforms, like outlawing pre-existing condition exclusions and requiring renewal; requiring employers to provide health insurance; preventive care; most new incentives for improved quality of care; President Obama's proposed Independent Medicare Advisory Council (IMAC); most health workforce improvements; and most of the administrative foundations of health reform.  In theory, the Senate would pass these other essentials of health reform in a second bill subject to the normal 60 vote requirement.  However, I doubt that bill would pass if the reconciliation bill did or was about to.

Number three, it will make it more difficult to use reconciliation later on for deficit reduction, which we will sorely need once the economy is safely in recovery.  Next Tuesday, OMB and CBO are expected to estimate a $1.579 trillion FY09 deficit and deficits in excess of $1.0 trillion in FY10 and FY11 as well.  Those are deficits approaching 12% of GDP, a record not approached since World War II.

When the Budget Act was enacted in 1974, reconciliation was envisioned as the final accounting at the end of the fiscal year containing spending cuts and tax increases to bring the budget deficit back to the level approved in the original budget resolution.  The idea was to circumvent the normal impediments, like the Senate's filibusters and never ending amendments, to achieve deficit reduction.  The first reconciliation bill at the end of 1980 fit that conception, as tiny as it was, $11.6 b., but the next reconciliation bill, President Reagan's 1981 spending cuts of $137 b. over three years, was a major effort, but it was more than offset by Reagan's Roth-Kemp tax cut of $269 b. over the same period.   In addition, spending took off anyway, particularly for defense, leaving record high peacetime deficits that persisted until 1998.  Reconciliation bills devoted mostly to deficit reduction were enacted almost every year from 1982 through 1997.

Like President Obama, I would much prefer a bi-partisan bill, but Republican delays and right wing disruptions of town hall meetings make it clear, that this isn't so much about health reform, it's about raw political power and whether our government remains broken and unresponsive to the obvious need for health reform.

Yesterday, Mr. Obama took this message directly to the right wing by inviting Michael Smercomish to interview him on radio at the White House.  Mr. Obama stated in part:

"Well, look, I guarantee you, Joe, we are going to get health care reform done.  And I know that there are a lot of people out there who have been hand-wringing, and folks in the press are following every little twist and turn of the legislative process.  You know, passing a big bill like this is always messy.  FDR was called a socialist when he passed Social Security.  JFK and Lyndon Johnson, they were both accused of a government takeover of health care when they passed Medicare.  This is the process that we go through -- because, understandably, the American people have a long tradition of being suspicious of government, until the government actually does something that helps them, and then they don't want anybody messing with whatever gets set up.

And I'm confident we're going to get it done, and as far as negotiations with Republicans, my attitude has always been let's see if we can get this done with some consensus.  I would love to have more Republicans engaged and involved in this process.  I think early on a decision was made by the Republican leadership that said, look, let's not give them a victory and maybe we can have a replay of 1993-94 when Clinton came in; he failed on health care and then we won in the midterm elections and we got the majority.  And I think there's some folks who are taking a page out of that playbook.

But this shouldn't be a political issue.  This is a issue for the American people.  There are a bunch of Republicans out there who have been working very constructively.  One of them, Olympia Snowe in Maine, she's been dedicated on this.  Chuck Grassley, Mike Enzi, others -- they've been meeting in the Senate Finance Committee.  I want to give them a chance to work through these processes.

And we're happy to make sensible compromises.  What we're not willing to do is give up on the core principle that Americans who don't have health insurance should get it; that Americans who do have health insurance should get a better deal from insurance companies and have consumer protections.  We've got to reduce health care inflation so that everybody can keep the health care that they have.  That's going to be my priorities, and I think we can get it done."

1981 tax cut NOT a reconciliation bill

Please publish a correction - the 1981 tax cut bill was NOT a reconciliation bill. Never was, never will be, not even revisionist history will make it so.

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