by Politico reported today that Democrats on the House Ways and Means Committee plan to include a temporary expansion of the Affordable Care Act (ACA), what we usually call “Obamacare,” in its portion of the forthcoming reconciliation bill that Congress will consider likely before the end of the month. The hope that Democrats have, of course, is to make this expansion of the permanent down the road.
For those who aren’t familiar with budget reconciliation, this is a fast-track process created by the Congressional Budget and Impoundment Act of 1974 (often referred to as the “Budget Act”) that begins with the passage of a budget resolution that includes instructions for specific committees to produce legislation under some target dollar figure over the ten-year budget window. The reconciliation instructions will also include a date by which the committee(s) must have their work completed. The House Budget Committee takes the legislation from each committee and combines it all into one single bill for consideration on the floor. The entire budget process, including reconciliation, can be found in 2 U.S.C. §§631-645a.
Unlike virtually everything else considered by either chamber, a budget resolution doesn’t have to be signed into law, functioning as an agreement between the two chambers on the base discretionary budget. For purposes of budget reconciliation, the actual dollar figures specified in the budget resolution for security and nonsecurity spending don’t really matter.
Under the rules of budget reconciliation, Congress can make changes to direct spending (also known as “mandatory spending”), revenues, and the debt limit. There are limits, however, to budget reconciliation in the Senate. Named after Sen. Robert Byrd (D-WV), the “Byrd rule,” found in 2 U.S.C. §644, prohibits the inclusion of extraneous matters, the parameters for which are established in subsection (b). Legislation produced under budget reconciliation is subject to a “Byrd bath” to eliminate extraneous provisions.
Budget reconciliation also can’t be used to increase the budget deficit after ten years. This is why only the corporate tax portions of the the Tax Cuts and Jobs Act of 2017 were made permanent while the individual tax portions expire at the end of tax year 2025.
Although this process is one that’s worth its own post, the Congressional Research Service has great publications on budget reconciliation. Check out The Budget Reconciliation Process: Stages of Consideration and The Budget Reconciliation Process: The Senate’s “Byrd Rule” to learn more.
Last week, the Congress passed S.Con.Res. 5 to begin the reconciliation process for FY 2021 with the deadline of February 16 for each committee to report its work to the budget committee of the House, in the case of House committees, or the Senate, in the case of Senate committees.
| House Committee | Dollar Figure | Senate Committee | Dollar Figure |
|---|---|---|---|
| Agriculture | $16,112,000,000 | Agriculture, Nutrition, and Forestry | $22,717,000,000 |
| Education and Labor | $357,926,000,000 | Banking, Housing, and Urban Affairs | $89,250,000,000 |
| Energy and Commerce | $188,498,000,000 | Commerce, Science, and Transportation | $35,903,000,000 |
| Financial Services | $75,000,000,000 | Environment and Public Works | $3,206,500,000 |
| Foreign Affairs | $10,000,000,000 | Finance | $1,296,487,000,000 |
| Natural Resources | $1,005,000,000 | Foreign Relations | $10,000,000,000 |
| Oversight and Reform | $350,690,000,000 | Health, Education, Labor, and Pensions | $304,956,000,000 |
| Science, Space, and Technology | $750,000,000 | Homeland Security and Governmental Affairs | $50,687,000,000 |
| Small Business | $50,000,000,000 | Indian Affairs | $8,604,000,000 |
| Transportation and Infrastructure | $95,620,000,000 | Small Business and Entrepreneurship | $50,000,000,000 |
| Veterans’ Affairs | $17,000,000,000 | Veterans Affairs | $17,000,000,000 |
| Ways and Means | $940,718,000,000 | ||
| Total | $2,103,319,000,000 | Total | $1,888,810,500,000 |
In subtitle G of its budget reconciliation legislation, the House Ways and Means Committee expands the ACA’s premium tax credit for tax years 2021 and 2022. Under the ACA, households earning up to 133 percent of the federal poverty level (FPL) will pay no more than 2 percent of the premium based on the “benchmark” health plan, which is the second-lowest-cost silver plan on a state health insurance exchange. Households earning between 300 percent and 400 percent of FPL won’t pay more than 9.5 percent.
The Ways and Means language, in Sec. 9661, subsidizes all premiums for households earning up to 150 percent of FPL and extends the premium tax credit to households earning more than 400 percent of FPL, capping premiums at 8.5 percent of household income.
| Current Law Household Income | Current Law Initial Premium Percentage | Current Law Final Premium Percentage | Proposed Household Income | Proposed Initial Premium Percentage | Proposed Final Premium Percentage |
|---|---|---|---|---|---|
| Up to 133% | 2.0% | 2.0% | Up to 150% | 0.0% | 0.0% |
| 133% up to 150% | 3.0% | 4.0% | 150% up to 200% | 0.0% | 2.0% |
| 150% up to 200% | 4.0% | 6.3% | 200% up to 250% | 2.0% | 4.0% |
| 200% up to 250% | 6.3% | 8.05% | 250% up to 300% | 4.0% | 6.0% |
| 250% up to 300% | 8.05% | 9.5% | 300% up to 400% | 6.0% | 8.5% |
| 300% up to 400% | 9.5% | 9.5% | 400% and higher | 8.5% | 8.5% |
Although this is being framed as a temporary expansion of the ACA premium tax credit, this particular part of subtitle G is remarkably similar to the Patient Protection and Affordable Care Enhancement Act, H.R. 1425, from the 116th Congress. Sec. 101 of H.R. 1425 did exactly the same thing as Sec. 9661 of subsection G of the Ways and Means reconciliation legislation. H.R. 1425 passed the House in June 2020, but the bill wasn’t considered in the Senate.
Some conservatives who work in the healthcare policy space have quietly wondered if H.R. 1425 could be the basis for a Democratic healthcare bill in the event that a public-option proves unworkable due to opposition in either the House or Senate Democratic caucuses.
Separately, Congress subsidized 65 percent of COBRA continuation coverage for nine months in Sec. 3001 of the American Recovery and Reinvestment Act of 2009. However, subtitle F of the Ways and Means reconciliation legislation would subsidize 85 percent of COBRA continuation coverage through September 2021 for individuals who’ve lost their job. Unlike subtitle G, subtitle F isn’t one that risks being permanently extended.
These aren’t the only parts of the reconciliation recommendations prepared by committees that are concerning. Hopefully, we’ll cover more of those in the coming days. Helping people who are struggling from the economic disruptions caused by partial economic shutdowns imposed by governors across the country is reasonable, but, at some point, Americans will get stuck with the bill for the cost of the response to COVID-19. What’s more, some elements of the COVID-19-era policies that Congress has approved may wind up becoming permanent, costly fixtures in the federal budget. But that was always Democrats’ goal.
