Earlier today, Senate Budget Committee Ranking Member Jeff Merkley (D-OR) issued a press release that provides new details about the Senate Parliamentarian’s review of health care provisions included in the Senate Finance Committee’s portion of the One Big Beautiful Bill. While the Congressional Budget Office (CBO) has not yet issued even a preliminary score of the Senate Finance Committee’s legislative proposals, based on CBO’s score of similar provisions included in the House-passed One Big Beautiful Bill Act (H.R. 1), the Parliamentarian’s rulings will impact nearly $175 billion in additional federal revenue intended to offset spending on tax reductions and other priorities included in other portions of the soon-to-be-combined Senate budget reconciliation bill.
Finance Committee “Byrd Bath”
Three provisions make up the vast majority of the potential amount of offsets subject to Byrd Rule violations (known colloquially on Capitol Hill as “Byrd Droppings”). These provisions propose to:
- establish a moratorium on new or expanded provider taxes for all states, and reduce the provider tax hold harmless threshold for Medicaid expansion states from 6% to 3.5% over five years (an over $89 billion offset);
- reduce eligibility for premium tax credits to a much smaller group of immigrants residing lawfully in the United States (a $74 billion offset); and
- disallow premium tax credits for persons whose immigration status would deem them ineligible for Medicaid (e.g., immigrants lawfully present in the United States for less than five years) (a $49.5 billion offset).
The Parliamentarian’s rulings also mean that other health care provisions included in the Finance Committee’s title likely abide by the Byrd Rule, including, but not limited to: Medicaid work reporting requirements; limits on State Directed Payments and provider tax waivers; increased frequency of Medicaid eligibility determinations; and changes to ACA income verifications and tax credit recapture.
The Senate Parliamentarian also is reviewing whether (i) repealing certain health care regulations promulgated under the previous administration (e.g., rules related to eligibility and enrollment in Medicare Savings Programs, Medicaid and CHIP eligibility and enrollment, and nursing home staffing requirements) abides by the Byrd Rule; and (ii) a section intended to restrict Medicaid funding to certain providers such as Planned Parenthood are similarly allowed, but the Parliamentarian has not yet issued her advice one way or the other. If the Parliamentarian rules that those provisions also violate the Byrd Rule, they would collectively represent around $190 billion in additional offsets not allowed by the reconciliation rules.
HELP Committee “Byrd Bath”
In a separate decision, the Parliamentarian also ruled that a provision intended to end “silver-loading” in ACA marketplace plans by funding cost-sharing reductions also violated the Byrd Rule, eliminating an additional $30 billion in offsets.
Taken together, the Senate Parliamentarian’s rulings total nearly $175 billion in potential offsets that would need to be passed under a 60-vote threshold. If the Parliamentarian later determines that the recission of the Biden-era health care rules also requires 60 votes, Senate Republicans could need to restructure current provisions or develop new ones that increase federal revenue by $365 billion.
How Will These Byrd Droppings Impact the Senate’s Timing?
These rulings complicate the delicate balance congressional Republicans are attempting to strike between increased federal spending related to extending and expanding federal tax cuts and other additional spending on defense and immigration enforcement, and offsetting that spending through significant changes to social safety net programs including changes to Medicaid, ACA coverage, SNAP benefits, and other programs.
Senate Majority Leader John Thune (R-SD) indicated a desire to begin the process of bringing the legislation to the Senate Floor later this week, which would set up a vote-a-rama and a final vote on the legislation over the weekend. But Byrd Rule complications could lead to a delay in consideration of the reconciliation bill in the Senate as staffers attempt to rewrite violative provisions in a way that maintains the spending effects while complying with the statute. Those complications could also move Senate Republicans to consider other offsets that reduce federal spending on health care. For example, a proposal to reduce the federal matching percentage for Medicaid expansion enrollees – now set at 90% – to the state’s percentage applicable to all other Medicaid enrollees could be revived.
Senate Republicans are also reportedly considering the addition of a fund intended to help rural hospitals mitigate the impact of the Medicaid provisions included in the bill.
All of this means that we will likely see new health care legislative text over the next day or two, which could then be voted-on and passed by the Senate by a simple majority as early as this weekend.
