More on the Byrd Rule Debate: Why Elizabeth MacDonough Should Call Graham-Cassidy Out

All eyes are on Senate Parliamentarian Elizabeth MacDonough, who will decide in the next few days whether a key waiver provision in the Graham-Cassidy bill complies with the Byrd Rule. Nick Bagley and I have argued that the waiver provision flunks the Byrd Rule’s “merely incidental” standard and so should be stricken from the legislation, while Bill Hoagland, who was a senior staffer to longtime Republican Senate Budget Committee Chair Pete Domenici, tells Vox that he thinks the waiver provision passes the Byrd Rule test. For more on the Byrd Rule issue and why it’s central to Graham-Cassidy’s fate, read Greg Sargent’s excellent piece this morning on the Washington Post’s website.

Here’s a bit more about why I think that the Senate parliamentarian should — and likely will — rule that the waiver provision violates the Byrd Rule. The provision in question instructs the Secretary of Health and Human Services to waive the ACA’s essential health benefits and community rating requirements upon request from any state receiving federal block grants under Graham-Cassidy. The waivers would apply only to insurance coverage that receives some subsidy (even a one-cent subsidy) through the federal block grants, but as Timothy Jost has noted, that easily could include every insurance plan offered in a state.

The critical question is whether a waiver provision of this sort — allowing states to turn off the application of federal laws that are related to block grant funding — produces budgetary consequences that are “merely incidental” to the non-budgetary components. If so, then the provision can’t be passed by a simple majority through the budget reconciliation process; instead, the provision must go through the normal legislative route (with the potential for a filibuster).

It’s easy to imagine analogues to the Graham-Cassidy waiver provision outside the health insurance context. E.g.:

— A bill that gives block grants to states to improve policing, and allows states that receive grants to waive the application of federal civil rights statutes with respect to any police department receiving grant funding;

— A bill that gives block grants to states for substance abuse treatment, and allows states that receive the grants to waive the application of the Controlled Substance Act’s ban on marijuana, cocaine, and heroin with respect to any city or county in which a treatment facility funded by the grant is located;

— A bill that gives block grants to states to distribute “Say No to Racism” stickers, and allows states that receive grants to waive the application of all federal employment discrimination laws with respect to any establishment in which a grant-funded sticker is posted . . .

. . . And so on. Graham-Cassidy proceeds on the assumption that a waiver provision passes the Byrd Rule as long as it’s attached to at least 1 cent of federal funding that somehow goes toward the subject matter of the waiver. If that’s the case, then few meaningful limits remain on the use of budget reconciliation to accomplish non-budgetary goals.

Again, I don’t think the Senate parliamentarian will allow this. An important part of her job is to police the reconciliation process to ensure that it’s not used as an end-run around the filibuster for measures that are only tangentially budgetary. Allowing Graham-Cassidy’s waiver provision to pass through reconciliation would amount to an abdication of one her most important responsibilities. I have no inside knowledge, but I can say from the outside that Elizabeth MacDonough so far has seemed to me like a neutral umpire calling balls and strikes. And here, I think a neutral umpire will call Graham-Cassidy out.