The restrictions of reconciliation will set the parameters of the Senate's health care debate — and are already proving difficult for lawmakers to navigate and limiting what ideas they can consider.
The Senate, for example, needs to come up with a bill that will save the federal government as much money, or more, as the House version.
That's going to be a problem for the health care bill — senators want to bolster the financial assistance for lower-income people buying private insurance and soften the House bill's Medicaid cuts, which will cost more money. If they increase spending, they must offset it somewhere else, perhaps by delaying the repeal of Obamacare's taxes.
They also have to make sure that the bill actually saves money. There was a brief panic last week that the House bill didn't achieve that goal, which also would have put the whole enterprise at risk because the bill wouldn't comply with the Senate's rules.
The mother of all conditions is known as the Byrd Rule. The rule came about in the 1980s, after Sen. Robert Byrd of West Virginia, a Democrat, grew frustrated with reconciliation. His colleagues were using it to advance all sorts of policies, not just those related to spending and revenue. So he introduced his standard for what can be included in a reconciliation bill, which has since been enshrined in federal law.
A bill being considered under reconciliation has to check every box of the six-part Byrd Rule. If it fails any one of those tests, it must be stripped out.
- The provision must change federal spending or revenue.
- If the bill does not meet the budget resolution's instructions to reduce the federal deficit, any provision that results in either increased spending or decreased revenue is removed until it does meet those targets.
- The provision must only affect policies that fall under the jurisdiction of the specific committees that were instructed in the budget resolution.
- The provision's effect on spending or revenues must be more than incidental to its policy impact.
- The provision cannot increase the federal deficit at some point in the future, beyond the typical 10-year "budget window" that is used to evaluate legislation.
- The provision cannot change Social Security.
Most of the time, if part of a bill fails that six-part test, that provision is removed and the rest of the legislation is allowed to advance.
But some violations can be considered "fatal" — meaning that the entire bill would need 60 votes to pass. Those could include any provisions that violate No. 3, on the issue of jurisdiction, I'm told. Congress is said to have controversially exempted itself from part of the health care bill because the bill would otherwise have been risk of such a fatal Byrd Rule violation. Member benefits, like their health insurance, fall under a different committee's jurisdiction, one that wasn't included in the budget resolution. Without the exemption, the bill could have lost its 50-vote privileges in the Senate.
The American Health Care Act has been shaped by those restrictions since the beginning. The original version of the House bill, which failed before House Speaker Paul Ryan could bring it to the floor in late March, didn't touch most of Obamacare's regulations. Senate aides told me this was because of the Byrd Rule.
It was only after House conservatives revolted, helping to sink the bill the first time, that the compromise of allowing states to waive those rules emerged.
But that step is also where the bill might run into trouble in the Senate. The first step there will be what's known as a "Byrd bath." Republican and Democratic staff will go through the House bill with Senate parliamentarian Elizabeth MacDonough and make their arguments about which provisions violate the Byrd Rule and which ones don't.
"Because some of these questions will be matters of gray, the question is interpretation of the Byrd Rule given past precedent," Sarah Binder, who studies Senate procedure at George Washington University, told me. "Both parties will try to convince her of their position for or against a Byrd Rule violation."