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Elyssa Schmier's picture

In the next couple of months the U.S. Congress is going to participate in a series of intense debates, negotiations, and deals all having to do with the federal budget. You might be hearing of something called “reconciliation” a lot. This is a fancy budget term that you probably think has nothing to do with your life, but I am here to tell you it does. Think of me as your personal budget wonk! I am here to help answer all your questions about the budget process and how it may affect your healthcare (Medicaid in particular).

Below you will find a series of questions and answers all about the budget process, reconciliation, and the various threats to Medicaid. Please feel free to ask any additional questions in the comments section and I will do my best to answer them.

What exactly is budget reconciliation?

A reconciliation bill is a single piece of legislation that usually includes multiple provisions which all affect the federal budget. This bill cannot be filibustered by the Senate, so it only requires a majority vote to pass (as opposed to 60 votes).

How does the reconciliation process work?

“Reconciliation instructions” are passed in the budget resolution by the House of Representatives and the Senate and they tell the relevant committees how much they should change revenue or spending to make them consistent with the overall targets in the budget resolution. So for example, the recently passed budget resolution sets total spending at $3 trillion dollars and projects revenues of $2.7 trillion (with a deficit of approximately $300 billion in FY2016). The budget resolution then tells specific legislative committees that they need to cut spending in mandatory programs (such as Medicaid, Medicare, the Affordable Care Act, SNAP etc.) in order to ensure that the deficit is no larger than the $300 billion assumed in the budget. Through the reconciliation instructions, the committees instructed to make savings decide exactly how to achieve their target (i.e. which programs to cut). All of the committee’s decisions need to be reached by a certain date. The Budget Committee then packages all the various reconciliation bills from the committees into one giant bill that goes to the floor with debate limited to no more than 20 hours (it can’t be filibustered!).

If there are differences between what the House and Senate passes for their reconciliation bills they will need to work out the differences in a conference report. The conference report is then voted on on the floor of the House and the Senate. If it reaches final approval, it will be sent to the President for his signature or veto.

Is there anything a reconciliation bill can’t legislate on?

There are some constraints on what a reconciliation bill can do. They must abide by something called the Byrd Rule in the Senate (named after the late Senator Robert Byrd from West Virginia). This means that any changes made to existing policy in a reconciliation bill must have direct fiscal implications. Basically, the Byrd Rule says a reconciliation bill, or amendment to it, cannot have “extraneous” provisions that have nothing to do with changes in spending or revenue. At their core, reconciliation bills are supposed to reduce the deficit so the Byrd rule can be used to throw out policy changes that are unrelated to spending, or that have a net effect of increasing spending beyond the committee’s targets. Reconciliation bills do not affect appropriations, nor can they make changes to many other things like Social Security or employment law for example. So if the Senate Health, Education, Labor, and Pensions Committee were considering a reconciliation bill, they could cut funding or block grant Medicaid but they couldn’t make Medicaid illegal to all people with blue eyes or make English the official language of the United States. Basically, reconciliation instructions have to do with that exact issue at hand and its spending and taxes.

In addition, no entitlement increases or tax cuts that cost money beyond the five years covered in the reconciliation bill is allowed unless they are fully offset by other provisions in the bill.

Why should I even care about this?

I know this whole process seems really complicated and a little confusing, but reconciliation instructions have the potential to massively change the programs our families use and, at times, rely on. Some members of Congress might be hoping that this process is so complicated that the American people will not weigh in or realize what is actually at risk.

So what is at risk? How will budget reconciliation effect Medicaid?

The budget reconciliation instructions direct the pertinent Congressional committees to repeal the Affordable Care Act (ACA), as well as eliminate Medicaid expansion. In addition, reconciliation instructions likely will try to restructure and make further funding cuts (possibly to the tune of billions of dollars) to Medicaid. We don’t know the exact details yet of how this will be carried out because the relevant committees (House Ways and Means Committee and Senate Finance Committee) haven’t started working on the reconciliation instructions, but we have a few ideas of how this could be carried out.

  • Per Capita Caps- This would shift Medicaid costs to the states and almost certainly lead to cuts affecting beneficiaries and providers. It would also likely halt the Medicaid expansion and could cause some states that have adopted the expansion—or plan to do so—to abandon it. In a per capita cap, the federal government would only pay its percentage share of a state’s Medicaid costs only up to a fixed amount per beneficiary (as opposed to what happens now, which is the percentage varies by state and need). If actual state Medicaid costs per beneficiary exceeds the capped amount, the state would be responsible for covering the rest of the costs. Since states are in different financial situations (and some are already experiencing budget shortages) it is expected that a per capita cap would drive many states to institute hefty cuts over time, which would lead to a large number of Medicaid recipients to be underinsured or in some cases uninsured. In addition, providers could see lower reimbursement rates. Basically, states would either have to contribute more of their own funding to offset the loss of federal funding, or, as is more likely, institute cuts to their Medicaid programs. This would hurt our families!
  • Block Grant- Under a block grant states would receive a lump sum from the federal government to fund their Medicaid programs. This would also shift costs to states by eliminating the guarantee of additional federal funds if state costs increase because of economic downturns or natural disasters (like hurricanes, tornadoes etc.). Overtime, this would stretch an already taxed state budget, forcing states to reduce eligibility and benefits (and could lead to cuts in health sector jobs). This increases the financial burden to families who depend on Medicaid for healthcare.

What can I do?

We have been able to beat back proposals that cut massive amounts of spending to programs like Medicaid before, but it takes a lot of work and a lot of voices. One thing you can do is take action! MomsRising will be delivering this letter to key members of Congress in a few weeks and we need your support.

After you take action, spread the word to your friends and family on Facebook and share this blog. We need LOTS of signatures in order to influence members of Congress.

We also need your stories! Do you have a personal experience with Medicaid? If so, share it here.

It turns out I find this stuff really interesting. Where can I find more information on this?

The Center on Budget and Policy Priorities has a lot of great resources:

-Policy Basics: Introduction to the Federal Budget Process.

-Medicaid Per Capita Cap Would Shift Costs to States and Undermine Key Part of Health Reform.

-Congressional Budget Would Add Tens of Millions to Ranks of Uninsured.

And a few additional resources:

-NPR “Budget Reconciliation Explained Through Chutes and Ladders”

-National Committee to Preserve Social Security and Medicare “Block Grants and Per Capita Caps Would Destroy Medicaid”

Please feel free to ask any questions you might have in the comments section and I will do my best to answer them.

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