With the Senate runoff elections now complete in Georgia, Democrats will control not only the White House, but also—by razor-thin majorities—the U.S. Senate and the U.S. House of Representatives. This post attempts a first pass at what this trifecta of Democratic control might mean for the Affordable Care Act (ACA) and coverage expansion, with an emphasis on the use of the budget reconciliation process and the Congressional Review Act.
This post does not address the range of executive actions that a Biden administration could take on its own, outside of the legislative process. Those options have been discussed in prior posts and this comprehensive resource from the Kaiser Family Foundation.
Implications Of The Georgia Races
President Biden’s ability to accomplish many of his most ambitious goals hinged on control of the Senate. As of this writing, Rev. Raphael Warnock and Jon Ossoff had been declared the winners of Senate runoff races against Sens. Kelly Loeffler (R-GA) and David Perdue (R-GA), respectively. With Warnock and Ossoff in the Senate, the chamber will be equally split by 50-50 between Republicans and Democrats (including the Independents who caucus with the Democrats). Following Inauguration Day, Vice President Kamala Harris—as the president of the Senate—will cast any tie-breaking vote, putting control of the Senate in the hands of Democrats.
According to the Washington Post, an equal split in the Senate has only occurred three times prior. The most recent instance was two decades ago in 2001 but, even then, only for six months. When such a split has occurred in the past, the two parties shared some power, instead of a majority-takes-all approach. In 2001, for instance, the parties split committee memberships evenly. While this type of arrangement is certainly possible, quite a bit has changed in Congress since 2001, and it seems unlikely that Democrats will agree to share power with Republicans in a new, closely divided Senate.
What Democratic Senate Control Means for Biden Appointments
As an initial matter, Democratic control of the Senate blunts the ability of Republicans to block would-be Biden appointees—from Cabinet and other executive branch officials to judicial nominations. Under rule changes made during the Obama and Trump administrations, confirmation of executive officials and judicial nominees requires only a simple majority in the Senate.
President Biden’s nominees for key health posts will be far easier to confirm in a Democratic-controlled Senate than in a Republican-controlled Senate. This includes nominees where Republicans had already raised concerns about confirmation, such as California Attorney General Xavier Becerra as the Secretary of the Department of Health and Human Services and Neera Tanden as the director of the Office of Management and Budget.
The same is true for judicial appointments. President Trump and the Republican-controlled Senate prioritized the appointment of federal judges over the past four years, leading to the confirmation of more than 220 judges to the federal bench. This aggressive approach means that President Biden will have far fewer judicial vacancies to fill in the near term, although that could change over time. A Democratic-controlled Senate ensures that the President’s nominees will receive, at a minimum, a full hearing and a vote.
This is also likely why, on January 6, President-elect Biden named Judge Merrick B. Garland as his intended nominee for Attorney General. Judge Garland, a former chief judge of the Court of Appeals for the District of Columbia Circuit (D.C. Circuit), was nominated to the Supreme Court by President Obama in 2016. The Republican-controlled Senate blocked the nomination without even a hearing, leaving the seat vacant for 14 months until President Trump nominated, and the Senate confirmed, Justice Neil Gorsuch in 2017. Democratic control of the Senate increases the likelihood that Justice Garland will be confirmed as Attorney General and that President Biden can name his replacement on the D.C. Circuit.
All of that said, an equally divided Senate will remain challenging to navigate. Democrats will need to ensure caucus cohesion or work across the aisle to gain support from at least some Republican Senators. This is by no means impossible: a perhaps surprising number of Democratic Senators voted in favor of confirming many of President Trump’s judicial nominees. But, unless a nominee has bipartisan support, there will be no room for error for President Biden and Senate Democrats.
What A New Congress Means For Legislative Options
As a candidate, Biden pledged to strengthen and build upon the ACA. His platform includes providing more generous subsidies to more people and adding a public option to help fill the Medicaid coverage gap. Many of these priorities are shared by Democratic lawmakers: Democrats in the House previously passed several pieces of legislation—both before and after the pandemic—intended to strengthen and build upon the ACA. Those bills, however, were never taken up by the Republican-controlled Senate.
But Democratic control of the House, Senate, and White House means new possibilities on several fronts. (Although the Senate could eliminate the filibuster, this post assumes that the filibuster will remain in place. Elimination of the filibuster raises a host of complex political and legal issues and seems unlikely with only a slim Senate majority for the Democrats.)
First, Democrats seem poised to pursue further pandemic relief beyond the omnibus package approved in late December. In addition to stated priorities such as a new round of $2,000 stimulus checks and financial relief for states and localities, Democrats may look to prior versions of the Heroes Act in crafting a new package. The Heroes Act included some ACA changes (like a special enrollment period and funding for ACA outreach and education) but was far broader. That legislation would have provided expanded coverage of COVID-19 treatment, vaccines, and testing (including for the uninsured); a new risk corridors program; COBRA subsidies; and more generous federal funding for Medicaid.
Some of these priorities have likely shifted since the legislation was drafted. But a new COVID-19 relief package could be an opportunity to advance ACA enhancements and other coverage expansions so long as the bill can garner sufficient bipartisan support to garner a filibuster-proof majority in the Senate. The fact that many of these priorities were not included in prior pandemic relief bills suggests that Democrats may face an uphill battle in securing these provisions, but control of both chambers of Congress and the White House could help bolster these efforts.
Second, Congress could pursue ACA enhancements under regular order. With a Democratic-controlled Senate, Democrats could reconsider legislation such as the Patient Protection and Affordable Care Enhancement Act, which was passed by the House in 2020 but never considered in the Senate. That bill would have extended ACA subsidies to additional income brackets, made premium tax credits more generous, eliminated the “family glitch,” funded outreach and navigators, funded state-based reinsurance or subsidy programs, funded state efforts to set up their own marketplaces, rescinded Trump-era guidance on Section 1332, and incentivized Medicaid expansion as well as continuous eligibility for Medicaid and CHIP. Most of these priorities have long been included in prior ACA legislation or considered as stand-alone bills in the House and Senate.
These bills would require a filibuster-proof majority of 60 votes in the Senate. Though not inconceivable, this too seems like an uphill battle given enduring partisan politics surrounding the ACA and the narrow Democratic majorities in the House and the Senate. Other pressing health care priorities (such as efforts to lower prescription drug costs) might fare better than ACA changes by garnering bipartisan support.
Budget Reconciliation Process
Third, narrow Democratic control of the Senate means that Democrats are likely to use the budget reconciliation process to achieve ACA-related legislative changes. Even before the Georgia election results, House Speaker Nancy Pelosi (D-CA) had suggested that the House would use budget reconciliation procedures for ACA legislation and pandemic relief. Because the budget reconciliation process is limited, Democrats may not be able to achieve all their ACA and coverage expansion goals, but this process could be used to advance significant ACA enhancements.
The two-step process is complex and begins with a budget resolution that is passed by both chambers. This resolution instructs congressional committees to develop legislation that meets the budgetary goals set forth in the resolution. The budget resolution itself can be complicated: Democratic leaders would first have to agree to and then pass a budget resolution with spending parameters for the reconciliation legislation.
Budget reconciliation legislation is then considered using a fast-track process and can be passed by a simple majority without being filibustered in the Senate. These features make budget reconciliation bills attractive for Congress, but the process also has limitations. Budget reconciliation cannot be used for any and all federal legislation. Instead, such bills can only contain provisions that affect revenue and spending with no “extraneous” provisions. This restriction is known as the Byrd rule and prevents the use of reconciliation for “extraneous” provisions that:
- Have no budgetary effect (i.e., the provision does not change federal spending or revenue);
- Worsen the deficit when a committee has not achieved its reconciliation target;
- Are outside the jurisdiction of the relevant congressional committee;
- Have a budgetary effect that is merely incidental to the non-budgetary policy change;
- Increase deficits for any fiscal year beyond the usual 10-year budget window; and
- Recommend changes in Social Security.
Whether a given provision in the budget reconciliation bill complies with the Byrd rule is determined by the Senate parliamentarian. She decides whether a given provision is “extraneous” or not and thus can, or cannot, be included in budget reconciliation legislation. Although the Senate can waive the Byrd rule, 60 votes are needed to do so. (There are also some exceptions to the definition of “extraneous” provisions, with more detail here.)
The Byrd rule played a prominent role in efforts to repeal the ACA in 2017 when Sen. Ted Cruz (R-TX) wanted an amendment that would allow insurers to offer non-ACA plans so long as they offer ACA plans. Democrats and experts argued that this change to insurance rules was barred under the Byrd rule because any budgetary effect would be merely incidental. Senate Republicans argued that the Senate, vis-à-vis the Vice President, can overrule the parliamentarian’s Byrd rule determination and allow the amendment to be included. Democrats may be tempted to overrule the parliamentarian to enable broader policy changes, but it remains to be seen whether there will be an appetite for actually doing so.
Overall, the budget reconciliation process has benefits and tradeoffs. Democrats will have to set spending targets, pass a budget resolution, develop legislation that satisfies these targets, ensure that the Byrd rule is satisfied, and maintain full caucus support for the legislation with a tie-breaking vote from the Vice President. Indeed, this complex process contributed to the failure of Republicans to repeal parts of the ACA using the same process in 2017.
Budget Reconciliation And Coverage Expansion
Given its limitations, budget reconciliation likely could not be used to adopt all the ACA enhancements that congressional Democrats or President Biden might want. Establishment of a new public option, for instance, would be challenging under budget reconciliation. But budget reconciliation could presumably be used for several ACA enhancement priorities, especially those tied to ACA subsidies and eligibility. For instance, Congress could likely use this process to eliminate the ACA’s subsidy cliff for those whose income is above 400 percent of the federal poverty level, increase the generosity of subsidies, fix the so-called family glitch, increase excess premium tax credit repayment protections, and increase the federal matching percentage for state Medicaid programs to incentivize states that have not yet expanded their program under the ACA.
ACA enhancement via budget reconciliation would be consistent with the history of health legislation. Long before the ACA, various programs and protections—ranging from COBRA continuation coverage, the Children’s Health Insurance Program, and the Emergency Medical Treatment and Active Labor Act, as well as several changes to the Medicare program—were all enacted using budget reconciliation procedures. And ACA historians know that budget reconciliation was used as a fallback option in passing the legislation—the ACA was ultimately amended by the Health Care and Education Reconciliation Act of 2010.
California v. Texas
Budget reconciliation has also played a prominent role in ACA repeal efforts. In 2015, Republicans tried to use a budget reconciliation bill to repeal parts of the ACA, although the legislation was vetoed by President Obama. Republicans also used the budget reconciliation process to pass the Tax Cuts and Jobs Act, the December 2017 tax reform bill that set the ACA’s individual mandate penalty to $0. That amendment led to California v. Texas, a lawsuit over the fate of the entire ACA that is pending before the Supreme Court and will be decided later this year.
Ahead of a decision in Texas, Congress could enact legislation to “save, sever, or sink” the mandate. Congress could “save” the mandate by increasing the penalty up from $0, “sever” the mandate by adding a provision to make it clear that the mandate (if found to be unconstitutional) should be severed from the rest of the ACA, or “sink” the mandate by striking it from the ACA. Relevant to the discussion above, the first option (“save”) could likely be accomplished through the budget reconciliation process while the latter two options (“sever” and “sink”) likely require a filibuster-proof majority in the Senate.
What A New Congress Means For The Trump Regulatory Agenda
A Democratic-controlled Senate also has implications for parts of the Trump agenda. This is because Congress has authority under the Congressional Review Act (CRA) to summarily reverse recent Trump-era regulations and guidance by a simple majority vote in both chambers.
The CRA was adopted in 1996 and allows Congress, under certain circumstances, to overturn federal regulations using a joint resolution of disapproval and fast-track procedures. This joint resolution must be approved by a simple majority of lawmakers in both chambers of Congress within a certain time period. This period is triggered once a guidance document or rule is presented to Congress. The president can sign or veto the resolution; that veto can be overridden by Congress. If a rule is disapproved, federal agencies cannot issue a rule on the same topic or in “substantially the same form” unless there has been a change in federal law.
Prior to 2017, the CRA had been used only once, to revoke a Clinton-era federal rule. Beginning in 2017, however, Congress invoked the CRA repeatedly to overturn Obama-era regulations and has taken an expanded view of the ability to use the CRA. Republicans in Congress used the CRA to strike down a number of environmental rules, a rule that prevented people with mental disabilities from purchasing a firearm, and guidance that prohibited racial discrimination in auto lending. A list of successful CRA resolutions is available here. More recently, Democrats attempted to use CRA procedures to overturn a Trump administration rule on short-term limited duration insurance and guidance on Section 1332 waivers; both resolutions were approved by the House but failed to clear the Senate.
Relevant to the Trump administration’s legacy, the CRA allows an incoming Congress to review the last 60 legislative days of rules issued during the previous Congress. This “lookback” period is complex to calculate (you can get all the wonky details here), but experts estimate that this date will be August 21, 2020. This means that all Trump-era rules or guidance issued since August 21 could be undone by the new Congress under the CRA. (Note that this timeline is only an estimate; the House and Senate parliamentarians are the arbiters of the CRA process, including time periods.) The new Congress will have its own 60 legislative day period to pass a joint resolution of disapproval for any rule or guidance; this clock begins on the fifteenth legislative day of the new Congress.
The CRA is a powerful but blunt tool. Disapproval invalidates the entire rule, meaning Congress cannot choose to keep or modify parts of a rule. Rules and guidance are either allowed to stand or disapproved in their entirety. Use of the CRA also poses some risks because agencies cannot issue a future rule that is “substantially the same.” This standard is not defined in statute and has not been tested in court, meaning the limits on future agency action are not quite clear. While a permanent ban on a certain rule could be attractive in some instances, this will not be the case for other rules where a Biden administration wants the flexibility to reverse or change course from the Trump administration’s interpretation. Thus, rules where the administration wants to adopt a different interpretation, or omnibus rules that address multiple issues, are likely not strong candidates for invalidation under the CRA.
So which Trump-era rules might be invalidated under the CRA? If the lookback period begins on August 21, targets for Congress might include the “good guidance” rule, a rule to allow grandfathered group plans to impose higher cost-sharing requirements, an insurer transparency rule, a drug pricing rebate rule, the most-favored nation drug pricing rule, and a drug importation rule. (Other recent final rules address the ACA’s risk adjustment data validation program and COVID-19-related coverage policies.)
This target list could expand if the Trump administration finalizes additional rules before the end of its term. Examples of recently proposed, but not yet finalized, rules include a regulatory “sunset” rule, the 2022 notice of benefit and payment parameters, and a rule that would allow employee reimbursement for fees for direct primary care and health care sharing ministries. Because the CRA only allows Congress to disapprove a rule in its entirety, omnibus rules—such as the 2020 payment rule—are more likely to be amended through traditional notice-and-comment rulemaking rather than congressional invalidation.
As noted above, the CRA time period is only triggered once an agency presents its guidance or rule to Congress. If the Trump administration failed to submit any materials to Congress in a timely manner, the CRA could potentially be used to invalidate rules and guidance put in place even before the August 21 lookback period. This will need to be assessed on a case-by-case basis.