Can The President's Health Care Proposal Survive Reconciliation?

Assuming abortion doesn't kill health care reform, the other sine qua non of the process is the sidecar bill. House Democrats won't pass Senate health care legislation unless they're assured that a separate package is moved through the reconciliation process, making a number of amendments.

On that score, the White House put some skin in the game several weeks ago when they unveiled a package of proposed changes to the Senate bill, which administration officials say are designed to survive reconciliation--an esoteric process, which only allows measures with significant budgetary impact to advance.

Are they right? For the most part, yes.

According to Paul Van de Water, a health care and budget expert at the Center for Budget and Policy Priorities, and an 18 year veteran of the Congressional Budget Office, the majority of President Obama's proposal is good to go.

"I think that most of the provisions, by far, in the President's 11-page outline probably do have a budgetary impact and are probably therefore OK," Van de Water told me yesterday, though he cautioned, "None of us is really in a position to say what the parliamentarian is ultimately going to determine."

Under reconciliation, according to Van de Water, measures that have a budgetary impact are generally given a pass, unless the Senate parliamentarian determines their budgetary impact is "incidental"--i.e. that the budgetary ramifications are subordinate to the policy. That means the Senate should be able to adopt the most important elements of the Obama plan: increased subsidies, scaling back the excise tax, and closing the Medicare Part D donut hole.

Other issues might be a harder sell. For instance, Obama proposes databasing complaints against Medicare and Medicaid providers--a measure that could save money, but, which, is hardly just a budgeting item.

"That's an uncertain one," Van de Water says, even though "the clear purpose of that is to save money for Medicare and for the government."

Assuming the bulk of the proposal can pass muster, then, it has to meet two more standards: It must reduce the deficit by a billion dollars over five years, and be deficit neutral or better after that. Van de Water thinks it's probably in the ballpark.

Though certain items--subsidies, closing the donut hole, etc.--will be costly, Van de Water points out several areas where the proposal generates revenue.

"The further expansion of the Medicare tax to include unearned income, the change to the Medicare advantage payments to save more than what was in the Senate bill...provisions speeding up provision of generic drugs," all will help pull the proposal into line with the demands of the budget. But there may need to be some tweaks.

"They've done some calculation to lead them to think that the package as a whole is deficit neutral, or saves a billion dollars over five years," Van de Water says. "They're clearly in the ballpark, but nobody, not even in the administration, can project a CBO cost estimate."