It appears more likely that there will be two reconciliation measures next year. The first will be implemented through an FY 2017 budget resolution so that it can be used early in the year. The second would be implemented through a budget resolution for 2018.
The first reconciliation will likely be used to repeal the ACA by late January 2017. There was some growing public disagreement between Senate Republicans about timing of a replacement but there appears to be a developing consensus around a January repeal that would be implemented in two or three years when they develop an alternative. There may not be total consensus on that point with Senator Lamar Alexander (R-TN) saying that any repeal should also include a replacement.
The challenge is there is not clear path to a replacement that would assure the current 20 million Americans now covered by the ACA will continue coverage. The Congressman Price package revolves around allowing insurance companies to sell insurance across state lines, combined with different set of tax credits, allowing people to place their own income into a medical saving account, and creating high risk insurance pools for some uninsured. It is unclear that these proposals will result in greater coverage. The ACA had a high-risk pool shortly before full roll-out but there was very limited use.
Despite the complexities of replacing the ACA, the goal is for the next Congress to pass a bill that repeals “Obamacare” that President Trump can sign early.
Once Congress uses that first reconciliation the second one will be used much later in the year for more significant changes to at least some entitlements. Part of this reconciliation could involve turning Medicaid into a block grant or a proposal such as a “capitated payments.” Capitated payments would base Medicaid reimbursement to states on a formula that allocates funds on population and potentially population type (e.g. elderly, children, individuals with disabilities). Such a capitated payment idea is seen by many health care advocates as a slightly different version of a block grant.
This second reconciliation could also be a vehicle for converting SNAP/food stamps into a block grant and to make significant changes to the Supplement Security Income (SSI) program. Elimination of SSBG is also on the table since the House has passed budget resolutions that would do just that. Such a reconciliation could also make significant changes to the Title IV-E entitlement for foster care and adoption assistance. While no one has suggested a block grant as was proposed in 1995 and 1981, a large reconciliation where the drive is to find significant savings, all programs would come under scrutiny and no one program is too small for consideration.
There is also the thought that is could all get tied together with tax reform but Senate Finance Committee Chair, Senator Orrin Hatch (R-UT) has indicated that he would prefer bipartisan support for such a package.
A block grants or even a capitated payment could be a selling point to many governor with 17 governors term-limited in 2018 (14 Republicans and 3 Democrats) and not returning after 2018. In either a capitated payment structure or flat out block grant the federal government saves money by swapping more state flexibility and less accountability for states while states agree to get less money in the future as the block grant gets older.
SSBG started that way in 1981 when it was converted from and entitlement to a fixed block grant. Spending was capped at $2.5 billion instead of the more than $3 billion a year it was projected to cost by the end of the 1980s. In return states no longer had to document individual eligibility or file reports. In recent proposals, Speaker Paul Ryan, while proposing block grants for some programs including Medicaid and SNAP, has called for the elimination of SSBG because it lacks outcome measures and does not provide enough documentation of spending.
