The health care bill House Republicans unveiled earlier this week has a serious defect — it cannot pass the Senate in its current form even if every single Republican backs it. Sen. Chris Murphy (D-CT) explains why.
Remember, the linchpin of #Trumpcare – the penalty on people who lose coverage – needs 60 votes. Bill falls apart without that provision.
— Chris Murphy (@ChrisMurphyCT) March 9, 2017
Murphy’s right. The “penalty on people who lose coverage” that he refers to is a provision that imposes a 30 percent surcharge on people who allow their insurance coverage to lapse for more than a brief period. Under this provision, a person with lapsed coverage who buys a $300 a month insurance policy would have to pay $390 a month for the first year.
But this provision requires 60 votes to pass the Senate, not 51 like most of the other provisions in the bill.
That’s because of the rules surrounding a legislative process known as “reconciliation,” which allows the Senate to enact some measures by simple majority vote without the potential threat of filibuster.
Through reconciliation, the Senate may enact changes to the nation’s fiscal policy by a simple majority vote — shifts in how the United States spends money and most changes to the tax code, for example. But reconciliation cannot be used for regulatory changes, including most laws that govern how private parties conduct their business. These changes must meet the traditional 60-vote threshold in the Senate to overcome a filibuster.
The so-called “Byrd Rule,” which is codified in federal law, lays out these restrictions. The Byrd Rule provides that reconciliation cannot be used to enact a provision of law that “does not produce a change in outlays or revenues” or “if it produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the provision.”
Most of the House Republican bill deals with cuts to Medicaid, cuts to tax credits that help many low-to-middle income Americans afford health insurance, tax cuts for wealthy Americans, and subsidies for families earning as much as $150,000. These provisions deal primarily with outlays and revenues, and thus are likely to comply with the Byrd Rule.
But a provision governing how much private health insurers may charge private health consumers does not. It is neither a taxing or spending provision. And, while it may have some marginal impact on the government’s balance sheet, that impact would only be incidental to its non-budgetary function, which is to regulate the insurance market.
Sen. Murphy is also correct to describe this provision as the “linchpin” of the House Republican plan. The 30 percent surcharge is intended to replace the Affordable Care Act’s individual mandate, which charges higher income taxes to most people who do not have insurance.
While the individual mandate is unpopular, it is also essential. Because the law prevents insurers from discriminating against people with preexisting health conditions, there must also be a mechanism to encourage people to buy insurance before they become sick or injured. Otherwise, people will wait until they have high medical bills to become insured, draining all the money out of an insurance system that they haven’t paid into.
House Republicans are betting on the (quite dubious) proposition that a 30 percent surcharge on people who allow their insurance to lapse will be sufficient incentive for healthy people to buy insurance that the individual mandate can be safely repealed.
Due to the Byrd Rule, however, the Senate cannot pass this surcharge without 60 votes.
That doesn’t meant that Congress couldn’t replace the surcharge with some other replacement for the individual mandate. The bill could pay people to obtain insurance, for example. Or it could impose a tax on people who do not maintain continuous coverage. As an economic matter, however, both of these solutions are nearly identical to the individual mandate.