Republicans Take First Major Step Towards Reconciliation

Last week, the House voted 216 to 214 to adopt a Senate-passed budget resolution that allows both chambers to use the reconciliation process. This process enables Senate Republicans to bypass the 60-vote threshold in the Senate, known as the filibuster, provided that both House and Senate Republicans work in unison to draft the measure.

The budget resolution contains instructions for committees to draft legislation that meets certain spending targets, which are key for reconciliation. The House Energy & Commerce Committee, for example, is instructed to identify $880 billion in spending cuts. A growing number of stakeholders, as well as some moderate Republicans in districts with sizeable Medicaid populations, have expressed concerns about cutting Medicaid which could jeopardize their support for the package. Conversely, there’s a group of House Republicans who want the package to go further and do not want to be sidelined by the Senate whose GOP members may be wary of enacting significant cuts to Medicaid.

When Congress returns at the end of the month, House and Senate Republicans will begin scheduling markups of the various committees’ reconciliation packages before they are finalized by their respective Budget Committees. Throughout this process, public pushback and feedback from the Senate Parliamentarian will be closely monitored. The Senate Parliamentarian plays a crucial role in determining whether the provisions of the reconciliation package comply with the Byrd Rule, which restricts the inclusion of extraneous matters in reconciliation bills. This scrutiny could significantly slow down the advancement of a reconciliation package that aims to extend the 2017 tax cuts, raise the debt limit, and implement sweeping cuts to programs like Medicaid.

Why the debt limit?

The statutory debt limit, first enacted in 1917, has been raised over 100 times to allow the government to meet its existing financial obligations. In recent years, it has become a political flashpoint, requiring bipartisan agreement, especially in a divided Congress, giving both parties leverage to negotiate policy concessions. House and Senate Republicans plan to raise the debt limit by $5 trillion in the final reconciliation bill. Achieving this with only Republican support is challenging, but it is their strategy to avoid working with Democrats, who would gain considerable leverage in negotiations. If there is no significant progress towards lifting the debt limit by June, the pressure to resolve the crisis will intensify. As the “default date” approaches, financial market volatility will increase, pressuring lawmakers and the administration to reach a resolution. The “X” date is expected to occur sometime this summer, possibly as late as August but potentially as early as June, complicating matters for Republicans if the process extends into the summer.

What else are we watching?

As it relates to the tax portion of the reconciliation package, we are closely monitoring potential changes to the charitable deduction. Since 1917, the federal government has provided taxpayers with a deduction for charitable donations to encourage giving and ensure nonprofits can continue providing vital services. In 2022, 501(c)(3) nonprofits alone accounted for nearly 13 million jobs, and associations supported more than 1 million jobs nationwide. Changes to the tax-exempt status of nonprofits and associations would be highly disruptive. We are collaborating with a coalition of stakeholders to advocate against such changes.

Healthcare Workforce Update

With the Conrad State 30 and Physician Access Reauthorization Act introduced in both chambers, we are actively working to build support for these measures, primarily measured by the number of cosponsors. Both bills received significant bipartisan support in the last Congress, and it is crucial to demonstrate similar support this Congress. We are also coordinating with the offices leading the Healthcare Workforce Resilience Act to ensure its introduction in the coming weeks. Additionally, we are monitoring legislation aimed at increasing funding for graduate medical education, expected to be introduced this spring in both chambers.

The timing of these bill introductions will depend on the offices’ capacity to introduce them amidst the reconciliation package and other fiscal year 2026 budget matters. We will provide updates on the timing of these measures as they become available.

Closing Word

When Congress returns from recess, the four-week sprint to Memorial Day will be crucial for the reconciliation package’s prospects. As discussions on Medicaid and other care delivery issues unfold, AAPPR is ready to share our unique perspective. We will provide further updates and next steps in the coming weeks.