On Graham-Cassidy and the Byrd Rule, All Depends How Thinly You Slice It
And precedent suggests that the Senate parliamentarian will slice thinly
There is no course in law school entitled “the Law of Reconciliation”; there are no casebooks on the subject; and those of us seeking to predict the Senate parliamentarian’s imminent ruling on Graham-Cassidy have precious little data from which to work. The parliamentarian does not publish opinions that explain her reasoning, and most of what we know comes in drips and drabs from Senate Budget Committee staffers following the so-called “Byrd Baths” at which Byrd Rule compliance questions are hashed out.
That said, the Law of Reconciliation is in some ways similar to the subjects that are studied and taught at every law school. Questions often come down to whether the adjudicator “lumps” or “slices.” The legal standard in 2 U.S.C. § 644(b)(1)(D) — which states that a provision shall be stricken from a reconciliation bill “if it produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the provision” — requires the adjudicator (here, the Senate parliamentarian) to decide just how narrowly or broadly to define the relevant “provision.” (For more on questions of lumping and slicing in other areas of law, see the work of my colleague Lee Fennell here, here, and — in video format — here, and look out for her forthcoming book. For more on Graham-Cassidy and the Byrd Rule, see my prior posts, these excellent writeups from the Washington Post’s Greg Sargent and Vox’s Dylan Scott, and this epic Twitter thread from the University of Michigan’s Nick Bagley.)
If we lump together all of Graham-Cassidy, then the bill does indeed produce changes in outlays and revenues that are more than merely incidental to the non-budgetary components: in 2027 alone, the bill would reduce federal health care spending by $299 billion, according to the Center on Budget and Policy Priorities. If we analyze the new 42 U.S.C. § 1397ee(i)(1)(B) as a standalone slice, then we reach the opposite conclusion. That new subparagraph, which Graham-Cassidy would add to the Social Security Act, allows states that receive federal block grants to waive several of the ACA’s most important provisions — including the requirement that insurers provide “essential health benefits” and the ban against discrimination on the basis of preexisting conditions. The new subparagraph on its own has no federal budgetary impact — states receive the same block grants regardless of whether they waive any ACA requirement — while the non-budgetary effect is to transform the regulation of the individual and small group health insurance markets in states that exercise their new waiver powers.
This observation raises both normative and predictive questions. As a normative matter, how thinly should the Senate parliamentarian slice? As a predictive matter, what will she likely do? I have much more to say on the normative question but will focus for now on prediction.
What we have here is a provision attached to a new block grant that allows states to shut off a previously binding federal law. Shutting off the previously binding law does not affect the federal budget, but the new block grant program certainly does. Do the parliamentarian’s previous rulings offer anything in the way of a precedent with respect to this question?
I think so. The initial Senate draft of the Better Care Reconciliation Act this past June gave states the option to receive federal Medicaid funds in block-grant form beginning in fiscal year 2020. Section 134 of the bill would have added a new provision to the Social Security Act that would have applied to states that opt into the block grant and that don’t exhaust all of their funds for the fiscal year. The provision would have allowed states to use so-called “rollover funds” for non-health care purposes. (Current law prohibits states from using federal Medicaid funds for purposes other than health care.)
Senate Democrats argued that the provision regarding the availability of rollover funds violated the Byrd Rule because the effect on the federal budget was “merely incidental” to the non-budgetary component. (It wouldn’t have affected the amount of money that states received — only the use to which they could put those funds.) If the parliamentarian analyzed the rollover-fund provision as a standalone slice, it’s hard to see how she would disagree with the Democrats’ argument. If she lumped it together with the rest of the block grant program, then she almost certainly would have allowed the provision to remain in the bill. (After all, the block grant program would indeed have had significant federal budgetary consequences.)
According to a backgrounder produced by the staff of Senator Bernie Sanders, the top Democrat on the Budget Committee, the parliamentarian ruled in July that the rollover-fund provision violated the Byrd Rule. Again, we don’t know for sure how she reached that conclusion, but it seems fair to infer that she sliced rather than lumped. Apparently, in the parliamentarian’s view, a provision attached to a new block grant program that allows states to avoid the application of a previously binding federal law should be analyzed for Byrd Rule purposes as a standalone slice, and not lumped with the rest of the block grant program.
And that pretty much describes the lumping-versus-slicing question that the parliamentarian again faces with respect to Graham-Cassidy. That is, if the parliamentarian is consistent in how she aggregates or disaggregates elements of a bill for Byrd Rule purposes, then she will analyze the ACA waiver provision attached to the new block grants on its own. If she does that, then she will conclude that the federal budgetary effects are “merely incidental” (indeed, nonexistent), and that the provision must be stricken from the legislation. That, in turn, would likely blow up the bill. In other words, if the Senate parliamentarian continues to slice as she has, then the proponents of Graham-Cassidy could soon end up with pie in their faces.
