Pawlenty restricts health money

In a move that could cost the state $1 billion or more in federal health care funds, Gov. Tim Pawlenty announced an executive order Tuesday designed to keep what he terms "Obamacare" out of Minnesota.

Pawlenty said he will require all state agencies to funnel their federal grant requests through his office in order to "stop Minnesota's participation in projects that are laying the groundwork for a federally controlled health care system" -- unless they are required by law or approved by his office.

State health care leaders and DFL officials immediately blasted the decision. Democrats said it was a crass political move designed to further Pawlenty's ambitions for the 2012 presidential race.

In a rare and unusually sharp statement, heads of Minnesota's most influential medical associations said Pawlenty's step contradicts his earlier embrace of state health care legislation. "The governor's decision just doesn't make sense for Minnesotans," the Minnesota Council of Health Plans, the Minnesota Hospital Association and the Minnesota Medical Association said in a joint statement late Tuesday.

But members of his own party were more supportive.

"He is with the vast majority of Minnesotans," said Rep. Matt Dean, R-Dellwood, who praised the move.

Pawlenty could be closing the door, at least during the remaining months of his term, to more than 100 federal health care grants that would fund projects ranging from diabetes prevention to postpartum care for new mothers to tighter regulation of insurance companies.

"We're not saying we are not going to apply for any of these grants," Pawlenty said, pausing between radio guest spots at the State Fair Tuesday. But he said he wants the state to have "a standard, consistent approach."

While Pawlenty has made no secret of his opposition to President Obama's signature domestic initiative, Tuesday's announcement appears to place him in a new orbit nationally. Other state legislatures and governors have attempted to set up roadblocks to the federal law, but Pawlenty appears to be the only one to do everything in his power to refuse health funds that would send cash directly to the state. "He's out ahead there," said Lynn Blewett, a professor and health policy expert at the University of Minnesota School of Public Health.

It's not clear, however, exactly what impact Pawlenty's order will have. Rep. Paul Thissen, DFL-Minneapolis, said the governor's bold move could be "a lot of political theater" without much effect.

Pawlenty has already cherry-picked among the grants available to the state. He refused more than $1 billion to expand the pool of Minnesotans covered by Medicaid, $68 million to fund a high-risk insurance pool, $1 million to help set up an insurance exchange where consumers could shop for health coverage, and $850,000 for teenage pregnancy prevention. But he did give his blessing to a $500,000 abstinence-only sex education grant that requires $350,000 in matching state money.

He also said in an interview Tuesday that he will likely accept $263 million in health care dollars that are part of a federal economic stimulus bill passed this summer.

Democrats differed Tuesday on how much Pawlenty's decision could cost the state. In the short term, Minnesota lawmakers put the figure at a minimum of $1.5 billion -- most of which is federal Medicaid money the state could still pick up next year when a new governor takes office. The Democratic National Committee estimated it could total $7.8 billion in federal funds. But that includes full implementation of the health care package, which won't happen for nearly another decade.

"Tim Pawlenty's executive order to state employees might as well have read 'You will henceforth work for my presidential ambitions instead of the people of Minnesota,'" said DNC Press Secretary Hari Sevugan.

The university's Blewett also said that Pawlenty's decision to reject federal money for the high-risk insurance pool contradicts his statements about federal encroachment on the health care system.

The federal government has now set up its own high-risk pool parallel to Minnesota's program, but outside the state's control.

Steve Francisco, federal policy director for the Minnesota Council of Nonprofits, said Pawlenty's decision to reject money to establish an insurance exchange will actually restrict consumer choice.

Overall, he said, the decision is most harmful to people without health insurance. "They will be showing up in the emergency room, which is the most expensive kind of health care," he said.

Pawlenty said he didn't know exactly how much money would be blocked through his executive order, but that he would decide based on "a case by case" basis with the state's best interest in mind.

As to Democrats' claim that his executive order is a political move aimed at 2012, Pawlenty replied: "That's what they say about everything." He said his order is consistent with his political history and that Democrats accuse him of political motives to avoid addressing the merits of his policy positions.

But some Democrats said that he is risking the state's health care system.

"Minnesota is at risk of getting left behind as other states take advantage of the opportunities the health reform law provides to improve our health care system," said U.S. Sen. Al Franken, a Democrat who voted for the health care act.

Thissen said the DFL-controlled Legislature had the foresight to require Pawlenty to apply for some federal grants, including a $1 million grant to implement a health care exchange due tomorrow.

But Pawlenty said he doesn't see it that way.

"It doesn't say we have to apply for all of them," he said.

Josephine Marcotty • 612-673-7394