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What the Senate Republican budget actually means for health care

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Senate Republicans released their new budget resolution last week. It was supposed to set up a tax overhaul, but we have instead fixated on — what else — health care.

Is Congress taking another run at Obamacare repeal? Are they going to pay for corporate tax cuts with cuts to Medicaid and Medicare? Probably not and, well, we just don't know yet.

If Senate and House Republicans agree to a budget and pass it, they would unlock the “budget reconciliation” privileges that allow a bill to advance in the Senate with only 51 votes instead of the usual 60, which prevents a Democratic filibuster. That's why the budget resolution is so important.

For now, we have little reason to doubt that the plan is to use budget reconciliation for tax reform. A Senate Republican aide confirmed as much when I asked.

But the fine print of the Senate budget does technically leave some wiggle room for Republicans to take a bite out of the Affordable Care Act or Medicare and Medicaid — on either a grand or small scale.

That is, if that’s what Republicans decide they want to do. But they have good reason not to. A fight over health care would jeopardize tax reform, the party's new hope for a major legislative win.

Progressives are nevertheless on guard. Republicans have shown a dogged determination to repeal Obamacare and overhaul Medicaid, even as they remain short on votes.

“[From] what we’ve seen throughout this process on health, the legislative strategy changes frequently based on where the legislative resistance is,” Jacob Leibenluft, a senior adviser at the left-leaning Center on Budget and Policy Priorities, told me. “I think it’s meaningful to see how the ACA and a broader set of entitlements are potentially at risk in the instructions.”

To start the budget reconciliation process, the House and Senate need to pass a budget resolution that provides “instructions’” for the reconciliation bill that Congress will ultimately produce. The Senate released its version on Friday.

The resolution includes three provisions that caught the eye of Obamacare and Medicaid defenders:

  • It instructs the Senate Finance Committee to draft most of the reconciliation bill
  • It provides flexibility for the Senate Budget chair to revise the instructions in order to repeal and replace the Affordable Care Act
  • Democrats say they have identified a $1 trillion cut to Medicaid and a nearly $500 billion cut to Medicare in the budget

The first two fit together: They seem to open the door for Republicans using reconciliation for Obamacare repeal again. The third has become a rallying cry for Democrats who claim the GOP is preparing for pay for tax cuts with cuts to Medicare and Medicaid.

Let's take those two issues one at a time.

First, the budget does technically open the door for Republicans to revisit Obamacare repeal, if they want to. This is partly a coincidence and partly intentional ambiguity on the part of Republicans.

The Senate budget resolution directs the Finance Committee to come up with the bulk of the reconciliation bill. That committee is responsible for the tax code, so it makes sense that it would receive those instructions for a tax plan. But the finance panel also oversees huge swaths of health care, including much of the ACA, Medicare, and Medicaid.

So in one sense, it's just a coincidence that one committee covers both health care spending and taxes. Nothing necessarily nefarious there.

But the Finance Committee's jurisdiction is so broad that technically, Republicans could use the existing instructions to take up major parts of their most recent Obamacare repeal plan. They could call an audible, if tax reform becomes too hard or they find 50 votes for Obamacare repeal.

“They can do most but not all of Graham-Cassidy with the Finance instruction. They won't, but they could,” Ed Lorenzen at the Committee for a Responsible Federal Budget told me.

"Most but not all" because the budget resolution currently does not instruct the Senate health committee to help craft the reconciliation bill, as last year's budget resolution for Obamacare repeal did.

But the Senate is notably offering some wiggle room for the budget resolution to be changed later, with the explicit purpose of repealing and replacing Obamacare.

This is pretty standard practice — the resolution includes a long list of provisions for which the budget chair could adjust it. It could be nothing more than Republicans trying to appease their base and their frustrated members with a fig leaf that suggests Obamacare repeal is still on the table.

Bottom line: The Senate budget could be used for Obamacare repeal without much effort. But it would require Republicans to either 1) give up on tax reform or 2) decide to do tax reform and health care together.

The first seems like a stretch after the White House and congressional leadership have fully committed to a tax overhaul. There is also good reason to doubt that they would take the second option — the politics would get really messy really quickly.

Tax reform will be hard enough on its own, and Republicans are still working with an incredibly thin margin for error: 50 of the 52 Senate Republicans need to back the reconciliation bill. That needle already proved impossible to thread with health care on its own.

"The same members who were problems for leadership on Obamacare are likely to be problems on tax reform," James Wallner at the right-leaning R Street Institute told me. "All have ideas about tax reform. If they don’t accommodate those and add Obamacare into the mix, that’s doubling the incentive for those members to vote against the overall package."

"I think it gets to be very difficult to do two very large, controversial things on one bill," he concluded.

Second, the budget doesn't necessarily set up entitlement cuts to pay for tax cuts. But that could be what Republicans end up doing.

Democrats are saying that the Senate budget cuts Medicare and Medicaid by $1.5 trillion over 10 years, which is how they claim Republicans plan to pay for their tax cuts for businesses and the wealthy.

But the problem is the Senate budget doesn't really do anything to change federal spending.

When and if Congress passes the budget, these cuts won't actually go into effect. The budget resolution is largely an aspirational document, much like the president's budget request. It might be fair to attack Republicans for wanting to cut Medicaid and Medicare, but the story isn't as clean as tax cuts for entitlement cuts.

At least that's the situation right now. But there is a catch: Republicans certainly could end up cutting Medicare, or Medicaid, or even Obamacare spending to pay for their tax cuts. We just don't actually know yet if they'd need to or would want to.

Here's how it could happen. Under the budget, the Finance Committee is allowed to draft a tax reform bill that increases the federal deficit by $1.5 trillion. But let's say that once Republicans draft their tax plan to satisfy their conference and then project for all the economic growth they claim their plan will produce, the best they can do is come up with a bill that increases the deficit by $2 trillion.

In that case, Republicans would need to find $500 billion in spending cuts to meet the $1.5 trillion target. Because Medicare, Medicaid, and the ACA are within the Finance Committee's jurisdiction — and they spend a lot of money — the health care programs would be obvious targets.

We don't know nearly enough yet about the Republican tax plan or its projected effects to know whether that'd be necessary. And this strategy would open up the GOP to the accusation that they are cutting health care to cut taxes for corporations and the wealthy, one many Republicans were uncomfortable with during the Obamacare repeal debate.

Still, it's a plausible scenario — just not as black-and-white as some of the criticisms from Democrats might have you believe.

And that is perhaps the toughest part of navigating this budget resolution/tax reform/health care maze. Both parties have an incentive to spin the facts a bit.

Republicans, to appease their base and donors, don't want to close the door on Obamacare repeal. They are also legitimately committed to overhauling the Medicaid and Medicare programs. Those goals are not out of line at all with the party's priorities.

Democrats, on the other hand, know attacking a bill as health care cuts for tax cuts is an effective strategy. It helped kill Obamacare repeal repeatedly over the past year.

The truth is a little muddier. It is certainly possible that we end up with a Republican bill that slashes Medicare and Medicaid spending or repeals parts of Obamacare to finance corporate tax cuts. But we just don't know enough yet say for sure.

Chart of the Day

SSRN

This week's hottest health care study. Fee for service, man. Researchers in Switzerland executed what I think is a pretty brilliant and fascinating study, one that's had health policy Twitter abuzz this week: They sent a patient with healthy teeth to appointments to test whether the dentist would nevertheless recommend fillings.

What they found: 50 of the 180 dentists did just that. According to the chart on the left, at least one dentist recommended six fillings! For a full breakdown of their methodology and findings, read the paper here.

Kliff’s Notes

With research help from Caitlin Davis

Today's top news

  • “Cassidy Eyes Changes to Health Care Bill While Trying to Win Support”: “Louisiana Sen. Bill Cassidy said there will be changes to a proposal he wrote to overhaul the 2010 health law as he and fellow Republican Sen. Lindsey Graham of South Carolina try to win more support for the measure while other lawmakers focus on tax legislation.” —Mary Ellen McIntire, Roll Call
  • “Obamacare Stabilization Talks Languish In Congress As Rate Hikes Hit States”: “This week, health insurance plans across the country submitted their final rates for 2018, many requesting massive double-digit rate hikes and explicitly citing uncertainty around Congress and the president’s plans for the individual market.” —Alice Ollstein, Talking Points Memo
  • “Children’s health bill advances in the Senate”: “The Senate Finance Committee this morning approved, without dissent, a bill to reauthorize the Children's Health Insurance Program. Federal funding for CHIP expired at the end of September; Congress is hoping to pass an extension before states start running out of money and are forced to reduce coverage.” —Sam Baker, Axios

Analysis and longer reads

  • “Obama Vets Plan Health Insurance Sign-Up Campaign Because Trump Won’t”: “Two former officials who worked on the sign-up campaigns for the Affordable Care Act’s health insurance exchanges when Barack Obama was president launched an initiative Wednesday called Get America Covered. In essence, it seeks to stand in for a federal government that, under President Donald Trump, is dramatically scaling back efforts to get the word out that enrollment season is about to begin.” —Jeffrey Young, Huffington Post
  • “The Health Reform That Hasn’t Been Tried”: “A more direct path to broadening access would be to reduce the cost of care. This means creating market conditions long proven to bring down prices while improving quality — empowering consumers to seek value, increasing the supply of care, and stimulating competition.” —Scott Atlas, Wall Street Journal
  • “Nevada’s mental health care system was already in dire straits. The carnage in Las Vegas will strain it more”: “Nevada’s mental health system was already overstretched before the carnage on Sunday night at a country music festival here. Now, thousands of victims, survivors, and their loved ones — as well as first responders and local workers who witnessed the horror — are expected to need mental health services in the coming weeks and months.” —Rebecca Robbins, STAT

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