Here's everything you need to know about reconciliation.
Why Republicans care so much about reconciliation
The some-or-all approach required by reconciliation basically comes down to this reasoning: If a policy directly affects the nation's economic bottom line, you can use reconciliation to pass said policy with a simple majority. If a policy doesn't directly affect the nation's budget, you have to follow the regular rules for passing legislation.
And these days,” regular rules” is synonymous with a 60-vote filibuster in the Senate by the minority party (especially on a bill as controversial as health care). In 2017, that means 52 Senate Republicans would need at least eight Democrats to join them — which, under this bill, is about as remote a possibility as President Trump giving up Twitter.
The alternative is to pass some Obamacare changes that affect the nation's budget now using the simple majority vote afforded by reconciliation, and worry about the rest later. That's actually how Democrats passed major parts of the ACA in 2010, and it's how Republicans passed some of the Bush-era tax cuts a decade earlier.
What that means for Obamacare
Listen closely and you'll notice that supporters of this bill — such as House Speaker Paul D. Ryan (R-Wis.) — are championing it even while cautioning that many big changes to health care are yet to come. That's code for reconciliation.
The ability to buy insurance across state lines, an attempt to lower drug prices and malpractice liability protections for health-care providers, “can't be done through this current bill,” Trump press secretary Sean Spicer acknowledged this week.
Ryan outlined three phases in which health-care reform would be achieved: first, via the special budget procedure known as reconciliation, of which the current measures are a part; then, through regulations at the Department of Health and Human Services; and finally, the passage of other bills that will need bigger backing and could include the ability to buy insurance across state lines.
The history of reconciliation
Reconciliation got its start in the 1970s and 1980s, when Congress was reforming how it makes and passes its budget. In those days, Congress would pass a resolution to set targets for revenue and spending — a.k.a. a budget — and a second resolution later in the year that set firm limits on what the government could spend/take in.
Once that second resolution was passed, Congress had to reconcile its choices about spending and revenue. And that's where we get the term, says Molly Reynolds, a congressional expert with the Brookings Institution. The Senate is not permitted to filibuster the budget resolutions, explains the nonpartisan Center on Budget and Policy Priorities. A tool was born.
But! This is Congress we're talking about, and crafty lawmakers quickly wielded this budgetary tool to sneak in totally unrelated budget items and avoid a Senate filibuster. In the ’80s, Sen. Robert C. Byrd (D-W.Va.) advocated for a rule to prevent anything that doesn't directly change the level of spending or revenue — or where the changes are “merely incidental” to the policy — from being passed under reconciliation.
It's known as the Byrd Rule, and any senator can raise a “point of order” under it to challenge a policy's pertinence to the budget. Parliamentarians, the behind-the-scenes nonpartisan rule-keepers of Congress, decide what policies actually affect the budget under the Byrd Rule.
The Byrd Rule is largely what keeps policymakers from just passing an entire Obamacare repeal/replace bill under reconciliation and calling it a day.
A cautionary tale of Obamacare and reconciliation
But sometimes, even the most careful lawmakers get it wrong. That actually happened recently with Republicans' attempt to undo Obamacare, explains Reynolds.
In early 2016, Republicans passed a test run of a bill via reconciliation that got all the way to Obama's desk. (He vetoed it, duh.)
In that process, a parliamentarian held Republicans up by ruling that one of the central pieces of their bill, eliminating the individual mandate that people have health insurance or else pay a tax, wasn't directly related to the budget and couldn't be passed under reconciliation.
Republicans were forced to get creative to undo a central part of Obamacare without a filibuster from Democrats.
“Republicans came back and said: ‘We can't include a straight repeal of the mandate, but can we just dial the penalty for violating the mandate down to zero?’ ” Reynolds explains. “And the parliamentarian said that was okay.”
In the end, the 2016 test repeal-replace legislation passed with the individual mandate intact but with a $0 penalty if you don't have health care.
That's more or less how Republicans have crafted their replacement bill in 2017: The individual mandate isn't struck out of the bill, but it wouldn't be enforced. (In its place is a fee for anyone who tries to buy health care at the last minute or who drops their insurance for an extended period of time.)
So, before Republicans even introduced their Obamacare replacement bill this week, reconciliation was shaping what they put in it — and what they left out. Republicans who support the bill seem to acknowledge that there's quite a bit that they had to leave out because of reconciliation. And that suggests that this titanic battle over step one of their health-care plan is just, well, step one.