Medicaid Expansion, Subsidies, Taxes, Doughnut Hole Fix, etc: Reconciliation Protection, Part 2

There are many parts of health care reform that potentially violate the Byrd rule and potentially could be stripped out of health care reform if it passes using reconciliation. Yet it is important to remember just how much of health care reform could be easily passed using reconciliation. Many of the important provisions do directly relate to government revenue. Harry Reid recently said that reconciliation could accomplish 65 percent of what his party thinks is necessary.

Expanding Medicaid or the CHIP program to cover everyone below a set percent of the Federal Poverty Level can be passed using reconciliation. Simply expanding Medicaid to everyone below 150% of the FPL could reduce the number of uninsured by at most 26 million. The CBO says expanding Medicaid to Americans below 133% of the FDL would reduce the number of uninsured by 11 million, with a potential for several million more if strong efforts were made to enroll everyone eligible. While it may not be the best policy or the most cost effective way to expand coverage, simply expanding Medicaid to cover everyone below 300% of the FDL would offer coverage to almost all uninsured Americans. It could also be done using reconciliation.

Providing uninsured individuals money to help purchase insurance (either as subsidies, vouchers, or tax credits) should also pass using reconciliation. It is one of the major costs in health care reform.

Tax credits and/or subsidies to small businesses who offer their employees health insurance should be protected from the Byrd rule. They would be a significant source of federal spending.

Different fixes or improvements to the Medicare Part D “doughnut hole” issue have been proposed. Closing the doughnut hole would cost several billion and would also likely be protected.

All the different changes to Medicare which are projected to save money should survive reconciliation. Fixing the overpayment for Medicare Advantage would save over $100 billion. Efforts to move away from the fee-for-service payment structure are projected to also save hundreds of billions. For the most part the important cost saving changes to Medicare should be able to pass using reconciliation.

Several different tax ideas are being considered to help pay for health care reform: reducing the tax deductions for the wealthy, a surtax, taxing “Cadillac” health insurance plans, soda tax, liquor tax, etc... Any tax that increase revenue should be protected.

These are are not the only aspects of health care reform that I believe will be easily passed using reconciliation, they are just the major pieces I'm 95 percent confident will not violate the Byrd rule. The major problems with getting these reforms passed using reconciliation is cost. The bill will need to be revenue neutral after only 5 years.

This should demonstrate that even though there are problems with using reconciliation, it can be used to dramatically improve the lives of millions. Savings from Medicare reform alone -- even without any new taxes -- could pay for fixing the Part D doughnut hole as well as dramatic expansion of Medicaid that could reduce the number of uninsured Americans by almost half.