How Do Reconciliation and Executive Order Work?

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The steps that have already been taken to begin the process of repealing the ACA include a budget resolution and an executive order. However, there are certain legal and practical limitations on what can be accomplished through budget reconciliation and executive orders.

Budget Reconciliation Process

On Jan. 13, 2017, the U.S. Congress passed a budget resolution for fiscal year 2017 that will be used to draft legislation to repeal certain ACA provisions. This budget resolution is a nonbinding spending blueprint that is used to create federal budget legislation through a process called “reconciliation.” House and Senate committees targeted Jan. 27, 2017, to draft a budget reconciliation bill following the budget resolution, but recognized that the process will likely take longer. Once drafted, a reconciliation bill can be passed by both houses with a simple majority vote.

However, a full repeal of the ACA cannot be accomplished through the budget reconciliation process. A budget reconciliation bill can only address ACA provisions that directly relate to budgetary issues—specifically, federal spending and taxation. A full ACA repeal must be introduced as a separate bill that would require 60 votes in the Senate to pass.

Executive Order

On Jan. 20, 2017, President Trump signed an executive order directing federal agencies to waive, delay or grant exemptions from ACA requirements that may impose a financial burden. The executive order on the ACA is a broad policy directive that gives federal agencies authority to eliminate or fail to enforce any number of ACA requirements, as permitted by law. It does not include specific guidance regarding any particular ACA requirement or provision, and does not change any existing regulations. An executive order cannot, itself, repeal the ACA or any ACA provisions.

Until the new heads of federal agencies are in place, it is difficult to know how the ACA will be impacted. As a result, the executive order’s specific impact will remain largely unclear until the new administration is fully in place and can begin implementing these changes. In any case, the immediate impact of the executive order will likely be small, since it will take time to implement policies, regulations and other subregulatory guidance to carry out the directives. In addition, health insurance policies for 2017 are already in place, and state law, in many cases, prohibits significant changes from being made midyear.

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