Health Reform by Reconciliation: Maligned, Misunderstood, but Misused Is Up for Debate

Unable to pass health care reform using “regular order,” Congressional Democrats now are turning to much-misunderstood process known as “budget reconciliation” to enact the measure. They'll still have to do legislative back flips to get the job done, but the process gives Democrats two major advantages: In the Senate, debate is limited to 20 hours--in other words, no filibusters allowed--and it can pass the Senate with 51 votes, rather than the 60 that much legislation has been required to overcome the filibuster threat. For that reason, congressional Republicans are crying foul, saying the process undermines the rights of the minority. Democrats counter, saying that reconciliation is a legitimate tool, which has been used regularly by both parties to pass high-priority legislation.  Republicans have a few legislative tools with which to protest the process and already are discussing that possibility.

The Democrats are certainly correct that both parties have used reconciliation. Of the 22 times it has been employed, 14 were initiated by a Republican-controlled Congress, and eight by a Democratic Congress. Three have been vetoed, all by President Clinton. Congress, with the cooperation of presidents, has enacted several major policy initiatives using the expedited reconciliation rules. For instance, in 1985, Congress passed the Consolidated Omnibus Reconciliation Act (COBRA), which, among other things, established a program allowing employees to continue their health insurance even after leaving employment. Reconciliation does have its limits. In particular, it cannot include any provisions which are not germane to the budget, it cannot increase the deficit outside of the budget window, and in this case it must reduce the five-year deficit by $1 billion. How these rules might impact efforts for health reform remains to be seen. But Congress appears poised to use the tool to attempt to pass the largest reconciliation bill in history.

Here's how it would work: Both the House and Senate passed health reform bills last year. Normally, that would mean that House and Senate conferees would meet, hammer out a compromise, which would go to the floor of each chamber. Democrats would need 60 votes to pass the compromise in the Senate, since Republicans would filibuster the measure. But with the election of Sen. Scott Brown (R-Mass.), Democrats no longer have 60 members. That means Democrats need to pass the bill with fewer than 60 votes.  How do you do that? Using reconciliation. The House is likely to pass the Senate's health bill. Then, House Democrats, who are unhappy with some provisions of that measure, will pass a bill to change the Senate measure. That will be the reconciliation bill. The Senate will then consider the House-passed reconciliation bill, which only will need 51 votes to pass.

Budget reconciliation is an optional procedure designed to make it easier for Congress to change current law in order to bring revenue, spending and debt-limit levels in line with the annual budget resolution. It was established in the Budget Act of 1974, and first used successfully in 1980, when it made several changes in entitlement programs and raised revenues in an effort to save $8.276 billion between 1981 and 1985.

Reconciliation is essentially a two-stage process. First, Congress includes reconciliation instructions in its concurrent budget resolution. These instructions direct committees to develop legislation implementing the instructions. This already has been done as part of the Fiscal 2010 budget resolution – and these instructions will remain in place until the next resolution or the end of the Congress. Once these instructions are written, authorizing committees must write legislation complying with them and meeting other budget rules. 

Normally, the House passes a special rule limiting amendments and debate on the bill. However, strict rules apply in the Senate, with limits on debate. In addition, all amendments must be germane and not include extraneous material. However, there is no limit on amendments that can be offered. That often has resulted in dozens of amendments introduced and then dispensed with during what has become known as a “Vote-a-Rama.” While all debate time will have been used, normally amendment sponsors and opponents are given a couple of minutes to debate the proposed change.  Republicans already are discussing the possibility of using this tactic.

Because of the many attempts over the years to add extraneous matters into reconciliation bills, in the 1980s, the Senate adopted the Byrd Rule, which requires that all matters included in reconciliation are germane and that they cannot increase the deficit outside the budget window. Material is considered extraneous if it does not produce a change in outlays or revenue, recommends changes in Social Security or increases the deficit outside the “budget window.” The Byrd Rule has been used to block large chunks of legislation. For instance, in 1993, the Senate stripped more than 80 pages of statutory language dealing with Medicare that had been hammered out by the House Ways and Means Committee. During the debate over the Republicans’ large reconciliation bill in 1995, the Senate struck huge portions of the House bill, including 46 welfare reform provisions, including a cap on assistance to families. Provisions dropped have come to be known as “Byrd Droppings.” Republicans are intent on scouring the health bill to find such droppings.