Budget Reconciliation and Georgia: Senate Developments
It can be hard to keep up with developments in Washington, and outcomes of the ongoing budget reconciliation process remain difficult to forecast. The “One Big Beautiful Bill Act” that emerges from the Senate will already require substantial changes compared to the one that passed through the House in May, and cuts to Medicaid remain on the table. A major reason the bill is seeing changes is the budget reconciliation process, a procedure introduced in 1980 that provides for an expedited review of bills that implement policies related to congressional budget resolutions. Changes in the Senate help to illuminate how the final bill could affect Georgia dentists.
What is Budget Reconciliation?
Reconciliation is a 2-phase process that was introduced through Section 310 of the Congressional Budget Act of 1974. The first phase starts with the House and the Senate adopting budget resolutions containing instructions for committees. They may issue 3 types of instructions: change laws providing for spending, change laws providing for revenues, or change the public debt limit. As such, it is a narrowly tailored process.
In the second phase, committees respond with recommended changes. These recommendations are then combined into an omnibus bill in the House. The bill then moves to the Senate for consideration. Ultimately, both chambers must agree on the final content of the bill. Differences between the 2 chambers must be resolved one of several ways. They can be resolved in conference committee or through an exchange of amendments. A chamber may also choose to adopt the other chamber’s bill without changes.
Perhaps the most important feature of budget reconciliation is the way it works in the Senate. Procedural rules and time limits expedite the process, and thanks to a provision, Section 313 of the Budget Act, colloquially known as the Byrd rule, provisions allowed in any reconciliation bill are limited. The big news coming out of Washington last week is related to the Senate parliamentarian’s decisions related to the Byrd rule. Under the Byrd rule, provisions are considered extraneous if they:
- Do not produce a change in outlays and revenues,
- Produce changes in outlays and revenues in areas not in compliance with a reconciliation directive,
- Are outside of the jurisdiction of the committee submitting the provision,
- Produce changes in outlays and revenues that are only incidental to non-budgetary parts of the provision,
- Increase the deficit in fiscal years beyond those covered by the reconciliation measure,
- Or amend Title II of the Social Security Act.
What Was in the House’s Bill?
The bills proposed by the House and Senate include numerous health-related provisions, and many are highly technical. In general, the House’s bill focuses most of its cuts on things controlled by the Energy and Commerce Committee. Ways and Means included a slate of proposals that would decrease revenues. Several different models show an increase in the federal deficit as a result of the proposed bill.
Spending cuts come from 3 major areas. Changes to major federal health programs would reduce spending by more than $900 billion over the budget window. The bill also makes changes to supplemental nutrition assistance (SNAP) and student loan programs. These changes may affect dentists to some degree. Shifts in Medicaid spending and eligibility may impact patients, adult dental coverage, decisions about reimbursement, and other policies. Changes to student loans, particularly related to Public Service Loan Forgiveness, would impact new dentists and dental students, and any policy that changes what people eat has implications for oral health care.
When it comes to dental care, a major topic of conversation has been spillover effects resulting from cuts to other areas of healthcare spending. The $900 billion in health program cuts are generated by adjusting Medicaid to impose work requirements, increase eligibility checks to twice a year, cap provider payments at Medicare rates, reduce the Federal Medical Assistance Percentage (FMAP) to states covering undocumented immigrants, introduce new cost sharing for Medicaid expansion enrollees, and end new or increased provider taxes designed to draw down federal funds. The bill also includes administrative changes governing health insurance enrollment rules under the Affordable Care Act (ACA).
Decreases in revenues are the result of extensions of provisions from the Tax Cuts and Jobs Act of 2017. The bill would also expand some individual and estate tax provisions including an enhanced standard deduction and child tax credit, deductions for qualified business income, and estate tax exemption. It also includes headline grabbing temporary deductions for tip income and overtime pay. Some provisions do boost revenue, but the bulk of Ways and Means’s proposal reduces projected tax revenues.
The American Dental Association (ADA) is advocating for dentists on the revenue side of the equation. The House bill removes the ability of dentists to deduct state-level pass-through entity tax payments on their federal returns. The result would be a net increase in their overall tax burden.
Senate Revisions and Parliamentarian Rulings
After passing the House, the Senate took up the task of passing a bill. Remember, Senate rules for reconciliation bills set limits on what can be included, and the Senate’s opinions about the specifics of any given provision may differ from the House’s. As such, whatever comes out of the Senate will in all probability be meaningfully different from the House’s bill. Once the Senate version passes, both chambers will have to find common ground prior to sending a final version to the President’s desk.
The big news last week was a series of advisory decisions by the Senate’s parliamentarian. Elizabeth MacDonough, who has served as parliamentarian since 2012, indicated that several provisions did not comply with the Byrd rule. The Senate also chose to partially restore the Pass-Through Entity Tax deduction. ADA is still advocating for full restoration.
MacDonough’s advisory decisions rule out provisions related to Medicaid provider taxes and student loans. In many states, including Georgia, provider taxes are used to help fund Medicaid by contributing additional funds to a state’s share of Medicaid spending without drawing from general funds. Georgia does not have a dentist provider tax. It taxes nursing home, ambulance, and hospital providers. Georgia’s provider taxes are low compared to other states, contributing about 12% of total state Medicaid funds. With the senate parliamentarian’s ruling, Georgia lawmakers would continue to exercise discretion over these taxes.
Several student loan provisions were also singled out. According to MacDonough, plans to prevent payments made while dentists are in residency from counting toward Public Service Loan Forgiveness, and a proposed consolidation of payment plan options, fell afoul of the Byrd rule. Addressing dental student loan debt has long been a focus of ADA advocacy, and ADA aims to adjust how students' loans are treated while they are in residency.
Over the weekend, the Senate voted to advance the bill to the floor after revising it to address MacDonough’s guidance. Senate rules allow total of 20 hours of debate; however, this time limit is specifically for discussion. “Consideration,” a term inclusive of both discussion and procedural actions, is not limited by the Budget Act. Senators may continue to offer amendments even after time limits for discussion have been reached.
Why Does This Matter to Georgia Dentists?
The impact of the “One Big Beautiful Bill Act” on dentists and their patients will depend on the specific provisions in the final package. At its core, the bill is about taxing and spending. Government budgets exert a major influence on the lives of everyone. Public sector investment can lead to major breakthroughs, and combinations of public and private sector investment have shaped the United States’ economy throughout its history. Access to government benefits such as SNAP and Medicaid influences what people in the lowest income brackets eat and how they engage with oral health care. Like everyone else, dentists pay income taxes, and the final form of the bill will decide the rules determining said taxes.
The bill's healthcare provisions have received attention from the dental community because of potential spillover effects into the dental space. States have considerable discretion when it comes to Medicaid, and benefits and their administration vary from place to place. For Georgia, several things will not change under a bill like the one proposed, but the bill’s provisions could influence future policy decisions.
The things that will not change stand out. Notably, Georgia is one of a few states that already has a work requirement for qualifying adults receiving Medicaid, and it has not expanded Medicaid under the ACA. Georgia covers adults who would typically fall under ACA expansion through an 1115 demonstration waiver. Many of the bill’s Medicaid related provisions apply solely to expansion states. For example, the remaining provider tax provisions cap provider taxes in expansion states.
Concerns about provider taxes and state directed payments center on a key issue: how states fund their share of Medicaid. Each state shares costs with the federal government, and state policy makers choose how to raise money for their state share. They can also set standards for how certain providers are compensated. Because federal matching funds are tied to state expenditures, state policy determines federal spending. States that are heavily reliant on provider taxes may choose to cut optional benefits, like adult dental coverage, in response to losing revenue due to federal cuts or caps. A change in federal policy may also lead lawmakers to reconsider future investment in optional Medicaid benefits.
The bill will likely have economic effects that influence resources available to individual households. The Congressional Budget Office’s review of the House bill estimates that households in the lowest decile will have on average $1,600 less available to them. Households in middle income brackets see a projected increase of $500 to $1,000, and the top decile would see an increase in about $12,000, a result primarily attributable to lower taxes.
Ultimately, assessing the bill’s potential impact requires informed assumptions and predicting the behavior of local policymakers, an exercise that even the best-informed struggle to do well. Time will tell as the “Big Beautiful Bill Act” makes its way to the president’s desk.
In the meantime, dentists can join advocacy at the federal level through the American Dental Association. At the Georgia level, get involved by becoming a contact dentist, donating to GDAPAC, and attending advocacy related events like LAW Day or annual legislative receptions.
