Congressional Budget May Pave the Way for Health Reform

The April passage of Congress's Fiscal Year (FY) 2010 budget resolution may prove decisive to Democrats' efforts to legislate comprehensive health reform this year. Buried within the discussion of outlays, projections and deficits are arcane procedural rules that may ultimately determine whether a reform bill can survive a floor debate in the Senate or whether it will be stalemated by a filibuster. "Budget reconciliation" has become a provocative term in Washington, perennially viewed by the majority party as a critical legislative tool for carrying out key budgetary priorities and simultaneously by the minority as an egregious power grab. The prospect of Democrats using it to pass health reform has Republicans seething, and many conservative Democrats concerned.

Bills considered under reconciliation in the Senate are protected from a filibuster, which requires 60 votes to overcome. When both houses of Congress and the Presidency are controlled by a single party, the Senate filibuster becomes the primary vehicle through which the minority party retains its legislative influence. Reconciliation takes that tool away, as reconciliation bills need only 50 votes to pass (with the Vice-President serving as the tiebreaker).

The budget resolution passed by Congress authorizes, but does not require, the use of reconciliation for health reform legislation prior to October 15. If the committees of jurisdiction have not passed a bill by that time, they may not do so through reconciliation. October 15 has therefore become a "drop dead" date—if bipartisan negotiations do not produce a bill capable of surviving the normal legislative process (including any filibusters) by that time, it appears almost certain that the Democratic leadership will move forward to adopt health reform legislation under reconciliation. The Democratic leadership has emphasized its desire to approach health reform in a bipartisan fashion, without reconciliation, but hopes that the threat of reconciliation will keep Republicans at the negotiating table. For now, Democrats and Republicans have been working together closely to draft legislation, at least in the Senate. But keep an eye on that October date as the legislative process unfurls.

The substance of the budget resolution, despite scant detail, provides an important blueprint for congressional reform efforts. In particular, the resolution establishes "deficit neutral" reserve funds in the House and Senate that authorize comprehensive health reform legislation as long as the reforms are fully paid for. The resolution does not identify funding sources. The reserve funds generally require the committees to develop legislation that is consistent with the President’s eight health reform principles, including reducing costs, providing universal coverage and improving quality.

In contrast to the congressional budget, which does not specify a price tag for health reform, the President’s budget calls for a $634 billion down payment on health reform. This reserve fund will be used to finance health reform, and identifies savings to pay for it. Approximately half of the reserve fund would be financed by reducing federal Medicare and Medicaid spending over the next ten years, while the other half would be funded by new tax revenues generated by limiting tax deductions for high-income wage earners. Legislators in both parties have voiced strong opposition to the President’s proposed tax changes, while signaling their support for the Medicare and Medicaid payment reform proposals, many of which are likely to find their way into upcoming reform legislation. The President’s budget is not self-implementing; that is, its provisions will become law only if Congress opts to enact his proposals into legislation.