Senate Budget Committee Chairman Mike Enzi (R-WY) introduced a budget resolution for fiscal year (FY) 2017 today narrowly focused on repealing the Affordable Care Act (ACA), with no changes to other parts of the budget. Notably, it exempts future health care legislation replacing the ACA from certain budget rules meant to impose fiscal discipline.
Even though we are already well into the fiscal year, Congress is able to consider a budget resolution for FY 2017, because it failed to pass a budget resolution last year. Congress will still need to pass a full FY 2018 budget resolution later this year.
The levels in Enzi's FY 2017 resolution reflect the current law baseline for all spending and revenue. Although Republican opposition to discretionary spending at the levels set by the 2015 Bipartisan Budget Act (BBA) prevented the House from adopting a budget resolution last year, Enzi's budget sets discretionary spending for FY 2017 at the $1.070 trillion cap level authorized by the BBA. Because Enzi's budget assumes current law, it shows deficits growing over the next 10 years.
Enzi's resolution includes reconciliation instructions requiring the committees with jurisdiction over spending and revenues in the ACA – Ways and Means and Energy and Commerce in the House and Finance and Health, Education, Labor and Pensions (HELP) in the Senate – to report legislation achieving at least $1 billion in deficit reduction over ten years. It is expected that these committees will meet the reconciliation instructions by reporting legislation repealing provisions of the ACA with budgetary effects, thus allowing ACA repeal legislation to be considered under the special reconciliation procedures that prevents a filibuster and therefore makes it possible for legislation to be passed in the Senate without needing 60 votes.
The resolution also includes two “reserve funds” allowing the Chairman of the Budget Committee to adjust spending and revenue levels for health care legislation, one of which will presumably be used for ACA repeal legislation and the other designed to be used for one or more bills replacing the ACA with alternative provisions for health care coverage. The reserve funds could be used for other health-related legislation.
The first reserve fund allows spending and revenue levels to be adjusted to reflect the budgetary effects of repeal legislation. The second reserve fund would allow spending and revenue levels to be adjusted to allow replacement legislation to use all but $2 billion of the net savings from ACA repeal legislation for new spending or tax breaks for health care coverage, effectively allowing the savings from repeal legislation that is likely to be enacted early this year to offset costs of replacement legislation considered later this year or beyond. This also means that the budget reserves just $2 billion of the savings from ACA repeal for deficit reduction, a major shift from previous Republican budgets that assumed more than $2 trillion in deficit reduction from repealing the ACA.
Importantly, replacement legislation that costs no more than the savings from ACA repeal minus $2 billion would be exempt from the Senate PAYGO rule. The reserve fund for replacement legislation also provides that replacement legislation would be exempt from the Senate short-term deficit point of order that prohibits the deficit from being increased by more than $10 billion in any given year, and from the Senate long-term deficit point of order that prohibits legislation from increasing the deficit by more than $5 billion in any of the four decades beyond the ten-year budget window. The inclusion of these exemptions suggests an expectation that the costs of replacement legislation may exceed the savings from repeal by more than $10 billion in some of the years within the ten-year budget window, and that the combination of repeal and replace legislation may increase the long-term deficit beyond the ten-year budget window.
The budget resolution is just the first step in the process for repealing and replacing the ACA. The ultimate budgetary implications will depend on the policy details contained in the reconciliation bill repealing ACA and legislation with replacement policies. We hope that as Congress moves forward with legislation filling in the policy details, it does so in the most fiscally responsible manner possible.