An obscure rule in the US Senate could cause the House GOP leadership’s plan to repeal and replace the Affordable Care Act to collapse.
The Byrd rule could stymie the American Health Care Act, the bill that was introduced this week by the GOP in the House, as soon as it hits the floor of the Senate, according to lawmakers and analysts familiar with the rule.
Passed in 1985, the rule makes it so any bill going through the budget reconciliation process – like the AHCA – can be blocked on the grounds that it contains an “extraneous matter” or something “merely incidental” to the federal budget.
The budget-reconciliation maneuver through which the GOP hopes to move the AHCA allows a bill that adjusts the federal budget to pass through the Senate with a simple 50-vote majority to avoid a filibuster. Any other legislation needs 60 votes to avoid a filibuster.
The issue is that a central piece of the AHCA may not pass muster under the Byrd rule.
The AHCA contains a provision that would allow insurance companies to charge a patient 30% more than their baseline premium if they had not maintained coverage during the previous year.
Put another way, if a person went 63 consecutive days without health insurance, a company could charge them more for the next year. If a person’s premium would have been $200 a month but they did not maintain coverage the year before, the company could charge them $260 a month.
Since the money from the penalty would go to the insurance companies, the rule does not affect tax receipts for the federal government like the ACA’s current individual mandate, in which the penalty is paid to the IRS.
The provision of the law is designed to keep people from dropping their coverage and signing up only when they’re sick. But since it would not affect the budget and rather insurance companies’ bottom lines, there is a case to be made that the provision is an “extraneous matter.”
Democrats can lodge a complaint about the bill to the Senate parliamentarian, who is something of an arbiter of Senate rules. The parliamentarian would then make a recommendation to the presiding officer of the Senate. Technically, the presiding officer is the vice president, since they are the president of the Senate. But typically, this position is occupied by another senator, except in special cases.
Since the presiding officer would be a Republican, it’s possible they could rule in favor of the AHCA’s provision. But many experts question whether that would happen.
The possibility that the Byrd rule may hold up the legislation has not been lost on analysts and lawmakers.
Perhaps the most colorful description came from Republican Rep. Trent Franks, who told Bloomberg’s Sahil Kapur that he was concerned about possible Byrd rule hiccups.
“The House has an untenable task of trying to craft a bill that will fit through the matrix of the Byrd rule,” Franks said. “It’s essentially like trying to force a giraffe through a keyhole. If you get the job done, he looks a little differently on the other side.”
National Review’s Yuval Levin wrote that the Byrd rule would be a difficult threshold for the AHCA as it currently stands to cross.
“And the proposal also introduces some elements, like a 30 percent surcharge on premiums for people who haven’t been continuously insured, which seem (to me) very unlikely to survive a Byrd rule challenge,” Levin wrote.
Make or break
The 30% penalty is a key part of the legislation, making the potential ramifications even more significant.
Without it, there would theoretically be no incentive for people to stay in the market unless they were sick. The risk pools would, in that case, be more heavily weighted with older, sicker people who need to maintain coverage for a regular health condition.
This scenario would cause massive losses for insurance companies in the individual market beyond the current ACA losses and likely cause them to jack up premiums at an even faster rate.
In essence, the Byrd rule could be standing between, in the best-case scenario, a successful overhaul of the American healthcare system by Republicans and, in the worst case, the insurance “death spiral” the GOP has always feared.