• John McDonough on repeal and Capretta

    John McDonough, author of  Inside National Health Reform and an expert on the ACA and the legislative process, agrees with me that repeal of health reform is possible if the Republicans take over the government. Actually, he thinks that repeal of some elements of the law are almost certain in that case. By email, he also corrects a widely held mistaken impression of Reconciliation.

    He wrote me,

    I pretty much agree with your take.  Here’s my best estimate at this time:

    If the Rs hold the House, and then take the Senate and the White House, Reconciliation-generated repeal of all major elements of Titles I (private insurance) and II (Medicaid) are fairly certain; they may keep some of the early, already-implemented reforms (the blessed under-26 year olds, eg), though they will certainly eliminate Medical Loss Ratio limits and other reforms hated by the insurance industry. I would be fairly certain they would hold onto the Medicare cuts in Title III because they have already done that in their votes for the Ryan budget plan, and they will pick and choose on the delivery system reforms in Title III.  They probably would try to repeal most of Titles IV (prevention) and V (workforce) — though may have a harder time because most have no direct budget consequences. They are likely to keep most of Title VI, such as fraud and abuse, and the elder justice act, even the physician payment sunshine act (because all are Sen. Chuck Grassley initiatives) — and will probably can the Patient Centered Outcomes Research Institute. Title VII, biosimilars, will surely stay. Title VIII, CLASS, will be gone. And Title IX, revenues, nuked out of existence.

    Note that McDonough is not suggesting a wholesale repeal, but a repeal of specific parts of the law. Maybe some will be replaced by something. Maybe not. In any case, I take this as good evidence that it is not unreasonable to think something like repeal of the law, or parts thereof, would be in play if Republicans sweep in 2012.

    I also asked McDonough about James Capretta’s implied assertion (which Avik Roy makes explicit) that Reconciliation measures need to be budget reducing. Turns out, they don’t.

    Capretta’s theory of how Reconciliation could be used to repeal the ACA is mostly plausible and legitimate.  There is one key confusion held by many on both sides — Reconciliation provisions do not have to be budget cutting, they only have to change the budget in a significant way, up or down.  That has been the rule since the GOP changed it in 2001 to pave the way for use of Reconciliation to approve the Bush tax cuts, which were definitely not deficit reducing.  So the Rs in 2013, in control of the House, Senate, and White House could use Reconciliation to repeal the ACA even if that measure increases the deficit — which it would.  Alternately, they can preserve  the ACA’s Medicare reductions and thus probably advance an ACA repeal which would reduce the deficit. [Emphasis added.]

    This, by the way, also means Reconciliation could be used by either side to change budget-related provisions pertaining to health care even if they increase the budget. Hence, what can be done via Reconciliation in the name of budget cutting (or not!) can be restored by Reconciliation. The process is reversible. Given that, why would anyone think it would be used only once? I don’t. In fact, repeal via Reconciliation would be the second use of the maneuver with respect to the 2010 health reform law. Lather, rinse, repeat.

    • I think that McDonough is not entirely correct in terms of the rules “change” that occurred in 2001 regarding Reconciliation (I suspect the people involved would call it an “interpretation” of the rule and not a “change” to the rule). The basic rule being interpreted was that under a rule generally referred to as the “Byrd Rule” (named after the late Sen. Rober Byrd), Reconciliation cannot be used (without a 60-vote approval) to increase the deficit beyond the period covered by the Reconciliation period (generally 5 to 10 years, whatever period, up to 10 years, is specified in the Reconciation instructions). The Republicans did not try to (and could not have gotten the super majority vote needed to) change the Byrd Rule. Rather, they got an interpretation of the rule that the sunset provision causing the Bush tax cuts to expire after 10 years (originally expiring on 1/1/2011) satisfied the Byrd Rule. The parlimentarian at the time would not agree to this interpretation, so he was fired and a new parliamentarian who agreed with this interpretation was hired. The Republicans still had to satisfy the rule generally, which is why the Bush tax cuts expired after 10 years–i.e., if they lasted longer they would increase the deficit in a year after the 10-year period covered by the Reconciliation bill (a follow-up 2003 Reconciliation bill push the sunset out 2 extra years, which is why the Bush tax cuts are set to expire on 1/1/2013). So any Reconcilation bill that increases the long-term deficit (and does not get 60 votes) must include a sunset provision no later than 10 years so that it does not have any deficit impact beyond the 10-year window. Of course any such action by Reconciliation can be reversed by a future Reconciliation bill (if the Democrats were to regain full power), and more to the point, if the Republican are not in full power at the end of the 10 year period, the repeal would be undone automatically unless extension of the repeal had Democratic support at that point. Now I would not put it past the Republicans to use some form of “nuclear option” (or what they would call “Constitutional option”) to change the rules outright and allow full repeal on a majority vote. But the Byrd Rule, as of now, is still in effect, and Reconciliation cannot be used to increase the deficit beyond the 10-year window (without a 60-vote approval of the deficit increase). So while MdDonough is sort-of correct (10-year repeal may be as good as permanent repeal for all practical purposes), he is not entirely correct on this point.

      I think McDonough makes a more fundamental error in his analysis concerning the specifics of what can be repealed through Reconciliation (again, assuming no new changes to the rules). Another aspect of the Byrd Rule requires that Reconcilation cannot be used (without 60 votes) to change something that does not affect budget outlays–or if the effect on budget outlays is merely incidental to the non-budgetary components of the provision. Something like the regulation on Medical Loss Ratio (which McDonough indicated he thought would be repealed using Reconciliation if Republicans gained power) is a regulatory provision impacting insurance companies that does not have an impact on governmental budget items (or any such impact would merely be incidental to the non-budgetary component which is to regulate the insurance industry, not to spend government money or generate tax revenue). Thus, I do not believe a change to this provision on Medical Loss Ratio regulation would survive a Byrd Rule challenge. Most of the PPACA was passed by overcoming a filibuster and getting 60 votes, not through Reconciliation. After the Democrats lost a Senate seat to now-Sen. Brown, changes could only be done through Reconciliation (because any filibuster would be sustained), but those changes through Reconciliation were limited to budget items. The Democrats could not change any non-budget aspects of the PPACA through Reconciliation (and some minor aspects of the Reconciliation corrections to the PPACA were ruled out of order under the Byrd Rule for this reason). These non-budgetary items are not permitted in a Reconciliation bill (without 60 votes) under the Byrd Rule even with a 10-year sunset–they are simply out of order. So under the current rules (assuming the Republicans don’t “go nuclear”), many aspects of the PPACA simply could not be changed using Reconciliation (such as the elimination of restrictions on preexisting conditions, for example). Here, I believe McDonough simply got some parts of his analysis wrong in terms of what can be changed using Reconciliation.

      • I think it’s clear from his full comment that McDonough recognizes that only budgetary items are in play for Reconciliation. It may be that the MLR provisions do not count, but that would be up to the Parliamentarian. (Do they effect the budget through insurance subsidies and the employer-sponsored insurance tax exclusion?)

        The 10-year budget game is well known, but good to be reminded of. Thanks.

        • The commentator makes some helpful clarifications, and emphasizes the uncertainty of making predictions in this arena. My list of where Republicans might try to eliminate provisions — and structure changes in a way to help ensure their passage — was more an attempt to predict their likely wish or to-do list and less an attempt to predict the Parliamentarian’s rulings — a hazardous task. Republicans fully understand the limits of Reconciliation and, thus, can attempt to frame their repeal efforts in ways that might include a federal budgetary component in order to get through the gate. They may not succeed, but they will have a lot of folks in DC trying hard to help them.

      • zzz:

        Actually, I think you make a fundamental error in assuming that the Republican party will operate in good faith. There is no solid evidence for that. If the only way they could repeal the bill is through reconciliation and a favorable interpretation that it is budget related, exactly what evidence exists that they would not do this? If you are willing to fire people until you find one with the “correct” interpretation for a tax cut, why not for this bill? And it’s not likely the courts are going to intervene in a legislative rules fight.
        The Republican party fights to win. It’s foolish not to take them at their word. After all, when exactly did those tax cuts passed via reconciliation actually expire?