April 20, 2014

Will Reconciliation for Health Care Reform Even Matter?

Now that the Congressional Budget Resolution has passed, there has been a lot of talk about how the reconciliation instructions included in the resolution will make it easier for a health care reform effort to pass.  Particularly since the mechanics of reconciliation provide for a simple majority vote for approval -- instead of the 60 votes that might be needed to overcome a filibusterer in the Senate.

Ironically, considering political motivations, it might be easier to round up 60 votes for a fiscally irresponsible health care reform bill, than to attain the 51 votes for a fiscally responsible bill -- which would be needed to utilize the reconciliation fast track procedure. 

Let me explain. When the modern budget process was established, the idea behind including a lower procedural bar under reconciliation was to facilitate legislation that contained difficult choices resulting in deficit reduction. Only in recent years have legislators deviated from this intention, most notably by the usage of reconciliation to pass large, deficit-increasing tax cuts.

The guidelines put in place by the budget resolution for reconciliation -- in a sense -- navigate this budget procedure closer to its original purpose. Specifically, for Congress to consider any health care reform bill, it must contain offsets scored by the Congressional Budget Office to ensure it is deficit neutral. While deficit neutrality is not deficit reduction, and ultimately substantial deficit reduction would be the best use of reconciliation, a deficit neutral health care reform -- that also contains major efforts to control long-term costs -- would indeed be a fiscally responsible thing for Congress to pass given that long-term health care cost growth is the greatest threat to the nation's fiscal health.

Yet, even a cursory review of the political winds leads one to believe that there might be even more opposition among legislators for the offsets -- either revenue raisers or spending cuts -- needed to counterbalance increased spending for "investments" in health care or expansion of health insurance coverage, than opposition to specific reforms of the gigantic health care industry.

For those concerned about fiscal responsibility, this is an incredibly frightening prospect. One could imagine a situation where 60 votes were cobbled together for a very expensive expansion of health insurance and minor system reform (cost estimates right now put such an effort in the $1 trillion range), packed with goodies to get different Senators and industry players to agree to the package. Harder to imagine is 51 votes for members to do the right thing and pass a fully offset bill, that inflicts pain by seriously reforming the health care industry while raising taxes and cutting other spending to pay for insurance expansion.

One can only hope those driving reform in the Senate stick to their plan to create a fiscally responsible piece of legislation. It is also worth repeating that fiscally responsible reform is not simply reform that is deficit neutral over 10 years. Current fiscal policy is on an unsustainable path, and just paying for an expansion of government intervention in health care does nothing to reduce the future burden of health care inflation. Health care reform must work to decrease health care spending over the long-term. The Obama administration has been proclaiming that as their goal. Hopefully everyone will stick to their guns and use the procedural tools to their advantage and their intended purpose.

--Josh Gordon