June 4 — House Republicans will be able to choose the baseline against which a health care repeal reconciliation bill will be scored— making it easier to replace insurance subsidies should they be struck down in court—thanks to a little-noticed provision of the budget resolution.
Dealing with the costs of replacing the subsidies to some covered under the Affordable Care Act's exchanges is just one of several potential budget scoring issues facing Republicans as they await a ruling by the U.S. Supreme Court in the King v. Burwell case.
No matter the outcome, Republicans will face at least some difficulties meeting the target set in the budget resolution (S. Con. Res. 11) of crafting a bill with a minimum of $1 billion in deficit reduction over 10 years, given the health law's size and complexity.
The CBO baseline is intended to serve as neutral measuring stick for determining a bill's budgetary impact. As such, it reflects current law and is updated at the beginning of each year. But sometimes, the CBO updates the baseline at other times during the year to take into account policy changes resulting from factors other than changes in law, such as a legal or administrative decision.
That is where the King v. Burwell decision comes in. Should the court find for the health care law's opponents and strike down some insurance exchange subsidies, the CBO would likely change the baseline afterwards to reflect a new, lower spending projection in the absence of the subsidies.
But as a side effect, the CBO would score any new legislative proposal to replace those subsidies—whether it be a new tax break or a temporary extension of the subsidies—as increasing the budget deficit, in contrast to the budget resolution reconciliation instruction. That could cause a political headache for Republicans.
And that is what Section 2002 of the budget resolution is intended to fix. The section directs the House Budget Committee chairman to use the March baseline, but notes “If adjustments to the baseline are made subsequent to the adoption of this concurrent resolution, then such Chairman shall determine whether to use any of these adjustments when making such estimates.”
The section goes on to list examples of “inaccurate adjustments,” including “selected adjustments for rulemaking, judicial actions, adjudication, and interpretative rules that have major budgetary effects and are inconsistent with the assumptions underlying the budgetary levels set forth in this concurrent resolution.”
A spokesman for the House Budget Committee declined to comment on the choose-your-own-baseline provision but Republicans have said no decisions have been made yet on reconciliation and budget chairmen always retain the authority to determine baselines.
Richard Kogan, senior fellow with the liberal-leaning Center on Budget and Policy Priorities and a former long-time House Budget Committee aide, said he was not bothered by the provision. He compared the baseline to the rules of a football game and hewing to a new baseline would be similar to changing the rules in mid-game.
“It should be considered acceptable and not a gimmick to keep playing the game under the rules that were agreed to, even if a lawyer successfully points out an unexpected aspect of the way the rules were drafted,” Kogan said.
And there is some precedent for the move. The 2008 farm law (Pub. L. No. 110-234) was enacted in June 2008, more than a year after work on it had begun. At that time North Dakota Democrat Kent Conrad, then the Senate Budget Committee chairman, justified using the old 2007 baseline as fair because that is what lawmakers had started out using.
Bill Hoagland, a former Senate Republican budget staffer and now senior vice president of the Bipartisan Policy Center, used an analogy from another sport—baseball—in expressing concern, though.
“In the budget world, unlike real baselines at the Nationals' baseball stadium, budget baselines can be changed and often are,” Hoagland said. “But the umpire, CBO, usually changes the baseline, not the players. Section 2002 of the recently passed budget resolution, allows the House coach to change the baseline regardless of what the umpire says.”
Using the March baseline could cause problems in the Senate, where requirements for reconciliation bills cannot be waived without a supermajority, Hoagland said. “I do think it raises a serious question for the parliamentarian,” he said. The Senate reconciliation language in the budget did not include similar baseline wording, though the Senate Budget chairman also has the rarely used power to use a score other than the CBO's for enforcing parliamentary points of order.
On the other hand, if the court sides in favor of the White House, the scoring challenges for Republicans would likely be smaller.
Republicans would still have to write a bill with savings greater than the likely cost of simply repealing the law. The last time the Congressional Budget Office scored a repeal bill, in 2012, it projected scrapping the law would cost about $109 billion over 10 years.
That score will almost certainly have changed since then, though by how much and in what direction is uncertain. Adding to the uncertainty is the complexity of even preparing a score. Former CBO Director Douglas Elmendorf said recently that compiling an ACA repeal score is time consuming because of the law's complexity. For example, Elmendorf said provisions on some payments include multiyear steps. If the ACA were repealed, the question would arise whether those payments would revert to pre-ACA levels unless replacement language specified a different outcome.
Hoagland said meeting the $1 billion deficit reduction target would be relatively easy from a scoring standpoint, if the Supreme Court finds in favor of the administration. “They could easily meet that target by eliminating all the subsidies or even a portion of them,” he said.
Also potentially helpful would be the incorporation of the feedback effects from the economy in a repeal estimate, so-called dynamic scoring. The CBO has previously said fewer workers would be in the labor force with the ACA, many of them voluntarily. Fewer hours worked means slower economic growth and smaller federal revenues.
A repeal score would likely benefit from a reversal of those assumptions, though the magnitude of any dynamic effects compared with the overall conventional score is unclear. “I can tell you one of the things that will happen when we also look at the dynamic effect of this: The dynamic effect will actually probably help reduce the deficit or work a little bit against that, at least,” CBO Director Keith Hall said at a June 3 House Budget hearing.
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