The Byrd Rule and Its Effect on Health Reform: A Short Guide

Recent press reports have suggested that amendments to the American Health Care Act (AHCA)—legislation to replace "Obamacare"—might run afoul of a piece of Senate procedure known as the Byrd Rule. The Byrd Rule is a set of limitations on the reconciliation process, which can allow the Senate to pass legislation with a simple majority rather than a filibuster-proof 60-vote majority. We explained reconciliation in detail in our recent Reconciliation 101; below we explain the Byrd Rule in more detail.

What is the Byrd Rule?

Although reconciliation bills are granted many privileges that are not available to most other legislation (see Reconciliation 101), they remain bound by several conditions. Some of these restrictions championed by former Senator Robert Byrd (D-WV) and established in Section 313 of the Budget Act are jointly referred to as the “Byrd Rule.” The Byrd Rule disallows “extraneous matter” from being included in a reconciliation bill, extraneous matter being defined in three major categories of restrictions.

First, reconciliation legislation must only involve budget-related changes and cannot include policies that have no fiscal impact, that have “merely incidental” fiscal impacts, or that increase the deficit if the committee did not follow its reconciliation instructions (including proposals outside of a committee's proper jurisdiction—more on this below). Second, reconciliation bills cannot change Social Security spending or dedicated revenue, which are considered “off-budget.” And finally, provisions in a reconciliation bill cannot increase the deficit in any fiscal year after the window of the reconciliation bill (usually ten years in the future) unless the costs outside the budget window are offset by other savings in the bill.

The Byrd Rule provides a "surgical" point of order that strikes any provisions in violation without blocking the entire bill. However, the Byrd Rule can also be waived by 60 votes. Even though this point of order only exists in the Senate, it de facto governs the House too since it can be applied to any conference report.

What does this mean for the AHCA?

The recently proposed amendment by Rep. Tom MacArthur (R-NJ) to the AHCA permits the federal government to issue waivers to states over some of the regulations from the Affordable Care Act, including the essential health benefit requirement and the ban on charging higher premiums for those with pre-existing conditions or certain other risk factors.

It is not fully clear that these changes can pass the "budget related" test as regulation changes tend not to score as savings and costs.  It could be argued that any budgetary effects of the waiver are "merely incidental." Ultimately, the Senate Parliamentarian will rule on this question, taking into account the size of the budgetary impact, whether the rule change in the waiver can be considered "a term" of the AHCA tax credit, and other arguments.

Assuming the Parliamentarian rules the waiver in order, other issues remain.

Recent reports that Members of Congress and their staffs would be exempt from the AHCA waivers made headlines and drew criticism—but it turns out it may be related to Byrd rule and germaneness compliance. Arguably, health care for Senators, Representatives, and Congressional staff falls under the jurisdiction of Homeland Security and Government Affairs Committee (HSGAC) in the Senate. HSGAC received no reconciliation instructions in the FY 2017 Budget Resolution, so without a congressional exemption to the state waivers there is an argument the waiver could have violated the Byrd Rule's "committee of jurisdiction" issue without this carve-out.

Removing this carve-out—which many have called for—could be very problematic for the bill. In the past, Senate Parliamentarians have not been open to expanding the germaneness of the reconciliation bill to include other committees; and because germaneness itself is very serious in the Senate for reconciliation, a bill coming from the House to the Senate may lose it's 50-vote privilege altogether. If this were the Parliamentarian's ruling, the whole bill would lose privilege and the bill could be filibustered. This is a separate problem to Byrd Rule issues.

Lastly, there is still the issue of cost. No one knows yet how much the new AHCA amendments will cost, because the Congressional Budget Office has not yet produced a score. If the amendments lead the legislation as a whole to add to, rather than reduce deficits, the legislation would no longer be allowed under the budget resolution's reconciliation instructions. And we will be looking out for any further changes that may lead the debt to be larger over the long run because then the legislation would be in violation of the Byrd Rule as it relates to long-term costs, and such provisions that add to long term deficits could be struck.

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There are many challenges to healthcare changes under reconciliation. Reconciliation can be a powerful tool to reduce the deficit or enact budget-related legislation; but it also comes with limitations, like the Byrd Rule, to target its use.

For more information on Reconciliation, please see our Reconciliation 101. For more information on the AHCA, see our work here.