The Senate parliamentarian told Dianne Feinstein (D-Calif.) on Wednesday afternoon that her proposal to create a National Insurance Rate Authority runs afoul of reconciliation rules, Feinstein told HuffPost after the conversation.
"I'm crushed it's out," she said. But she added that she would bring it up with him one more time to try to make the case that it would be a legitimate use of reconciliation. "I'm going to make one last effort with the parliamentarian," she said.
It'll be a difficult effort. Reconciliation rules require that legislation must have a direct and substantial effect on the budget to qualify for the majority-vote procedure. Merely an incidental budget effect is not enough. Feinstein's rate authority would save the government money by reducing private insurance premiums, which would then reduce the amount of subsidies needed -- but such an effect is apparently too indirect for the parliamentarian to give it the thumbs-up.
Including the Feinstein's rate authority would be a risky move for Democrats. If Senate Republicans are able to alter the package in any way through parliamentary points of order, then it must go back to the House for yet another vote -- the last thing Speaker Nancy Pelosi wants. If the Senate passes the House version unchanged, it goes directly to the president for his signature.
Feinstein introduced her measure as a stand-alone bill in reaction to radical premium increases in California. Obama embraced the idea, including it in his proposed changes to the bill passed by the Senate.
Congressional observers such as health care blogger Jon Walker have speculated from the beginning that the rate authority proposal would be ruled out of order under reconciliation.