Pawlenty sees Minnesota health law as U.S. model

Kaiser Health NewsAugust 9, 2011 

WASHINGTON — GOP presidential hopeful Tim Pawlenty scorns the health plans engineered by President Barack Obama and former Massachusetts Gov. Mitt Romney, even linking them with the term "Obamneycare." Instead, the former Minnesota governor is brandishing a health plan his state passed in 2008 as a model for the nation.

Pawlenty, who was governor from 2003 to 2010, boasts that he "passed health care reform the right way. No mandates. No takeovers. If I could do it in Minnesota, we could do it in Washington."

While Romney and Obama were adding millions of uninsured people to a broken health care system, Pawlenty says, he was getting to the root of the biggest problem: costs.

Critics, though, argue that it's too early to know whether the Minnesota law will lower costs and noted that it does little to expand insurance coverage. Others complain that while Pawlenty signed the law, he didn't show much leadership in getting it passed.

Former Sen. Dave Durenberger, R-Minn., who first got to know Pawlenty when he was Durenberger's driver, said it was Democratic legislators — not Pawlenty — who led the charge on the state law. "You have to put a priority on changing things," he said. "You've got to provide leadership. He never did that."

Some of the changes the Minnesota law made also can be found in the later federal overhaul. The state changed the way that physicians, hospitals and other medical providers are paid, rewarding them for high-quality care and for coordinating care for chronic conditions such as diabetes through health care "homes."

For some conditions, medical providers are paid one fee to cover all the costs of related services. One pot of money, for example, pays for a patient's knee replacement, from preoperative services to anesthesia and rehabilitation. The federal law also contains provisions to pay providers more for high-quality care and to test similar payment restructuring.

The state law created a tool to compare costs and quality information and a program to encourage Minnesotans to stop smoking and to lose weight to prevent conditions such as cancer, heart disease and diabetes. In 2009, about 63 percent of Minnesotans were overweight or obese, and 17 percent used tobacco. The state estimates that the program could bring 10 percent of overweight adults back to the normal range and get 6 percent of smokers to stub out their tobacco. The result could be $1.9 billion less in total health care spending by 2015.

As Pawlenty seeks to gain momentum in the race for the GOP nomination, he's continuing his focus on costs and spending. He says the government must put an end to runaway expenditures on entitlement programs such as Medicare and Medicaid. He also says he supports high-deductible health savings accounts in which consumers pay a large portion of their initial health costs but can put aside pretax income to cover those expenses.

Pawlenty has said he supports the Medicare plan that House Budget Committee Chairman Paul Ryan, R-Wis., proposed recently, which would raise the eligibility age from 65 to 67 and change the program so that seniors get help with paying the premiums for private insurance plans. Currently, Medicare pays whatever is necessary to provide a set of specified benefits.

"Social Security and Medicare are on a pathway to insolvency, and Washington must act now," he said. "We must get our fiscal house in order with real spending cuts and with real structural reforms that stop the spending spree before it bankrupts our country."

But Pawlenty also said in May that he'd prefer to allow seniors to stay in the current Medicare system, if they wished, and to have other choices as well. He also wants to insure that doctors and other medical providers who are deemed to be providing high-quality care get the highest pay.

He favors revamping Medicaid, which covers low-income people, to give the states block grants that would allow them more flexibility to run the program as they see fit. Currently, the states fund Medicaid jointly with the federal government. States operate individual programs, but they must abide by a long list of federal requirements to get the federal money.

Pawlenty took office in 2003 after vowing not to raise taxes. But Minnesota faced a budget deficit of about $4 billion. He quickly reduced funding to many programs, including Medicaid, according to Brian McClung, who was Pawlenty's spokesman at the time and is now a campaign adviser.

Unlike most states, Minnesota traditionally has enjoyed a high rate of insurance among residents, so Pawlenty was under little pressure to expand coverage. For low-income residents who didn't qualify for Medicaid — mainly childless adults — the state offered two additional subsidized health insurance plans.

Still, consumer advocates say, it was a constant battle to maintain the state's coverage levels. "The first place Governor Pawlenty looked when there was budget trouble was cutting people off of health care," said Liz Doyle, the policy director of the consumer group TakeAction Minnesota.

By the end of Pawlenty's second term, Minnesota still ranked high in coverage but had lost some ground. Uninsured people accounted for 6.1 percent of the state's population in 2001 and 9 percent in 2009, according to Minnesota government figures; that's half the national average.

As he was positioning himself for a presidential campaign, Pawlenty was the subject of intense criticism in 2009, when he used his line-item veto authority to try to end the state's General Assistance Medical Care program, which then was serving about 33,000 low-income adults. State expenditures were growing by about 30 percent every two years, according to McClung, who said that was because it was a fee-for-service-style program.

Pawlenty wanted to shift participants to MinnesotaCare, another state program for people without insurance. Consumer advocates and Democrats in the legislature fought the change because they feared that administrative requirements would make it more difficult for some people to remain covered. In the end, Pawlenty and the Democratic-controlled legislature agreed to change the program so that the state would give hospitals a set amount of money to care for eligible people in their areas.

But that was unrealistic for thousands of people, Doyle said, because only a handful of hospitals chose to participate, shutting off access for those in other areas.

Durenberger calls Pawlenty a moderate in many areas and praises him for establishing a health care commission to study the issue soon after he became governor. But he's critical of aspects of Pawlenty's approach to health care.

"Once he found that solution, he was like most Republicans," the former senator says. "Arm everyone with a high-deductible option and give them skin in the game and you have the answer."

(Serafini is the Kaiser Family Foundation's Robin Toner distinguished fellow, based at Kaiser Health News. The fellowship honors the late Robin Toner, The New York Times' longtime health and politics reporter, whose work often framed the public debate on health issues. Kaiser Health News is an editorially independent news service for the foundation. )

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