A First Look at Pawlentycare

As the national health-care debate developed last year, Republican Minnesota Gov. Tim Pawlenty offered his two cents repeatedly and with enthusiasm. His instructions were always the same: Follow Minnesota's example.

Since Pawlenty's name first popped up on Sen. John McCain's short list for vice president in 2008, he has become an increasingly regular figure in the national spotlight. Today, Pawlenty completes his second and final term as governor—and his wide open schedule will open the door even wider to speculation about whether he will run for the Republican 2012 presidential nomination.

As a frequent guest on national talk shows and vice chairman of the Republican Governor's Association, Pawlenty has tried to articulate a brand of "Sam's Club" conservatism—promoting smaller government, lower taxes and the free market. But it has been his market-based policy-making, including in the arena of health-care reform, that truly illustrates his approach to governance.

Pawlenty began with modest reforms. Following his 2002 election, he created the Governor's Health Cabinet to bring together the heads of state agencies responsible for health care purchasing, regulation and delivery. He spearheaded the Smart Buy Alliance, a public-private partnership which allows employers and groups to buy health insurance for their employees and members and sets uniform performance standards and reporting requirements. And the administration helped launch Minnesota Health Info, an online clearinghouse of health information where consumers can learn he cost of the 100 most common procedures. Pawlenty also signed into law the Flexible Benefit Plan which allows employers to eliminate mandates they deem unnecessary in the insurance plans they offer.

At the end of his first term, Pawlenty implemented QCare, the first of a slew of changes that sought to make good on the administration's health-care mantra for his second term: to make Minnesota's health-care system even more market-driven, patient-centered and quality-focused.

The Quality Care and Rewarding Excellence program identifies quality measures, sets aggressive outcome targets for health-care providers and, most significantly, makes comparable measures transparent to the public while altering both private and public payment systems to reward outcomes rather than the number of patients seen.

Palwenty also implemented reforms to change how tax dollars are used on the state employee health care plan. "Employees in Minnesota can choose any clinic available to them in the health-care network they've selected," Pawlenty told me via e-mail, describing the plan. "However, individuals who use more costly and less-efficient clinics are required to pay more out-of-pocket... Employees overwhelmingly selected providers who deliver higher quality and lower costs as a result of getting things right the first time."

The result: no or very low premium increases in the state employee insurance plan.

But it was Pawlenty's second term that brought the most significant changes to Minnesota's health-care system. In 2007, he signed legislation creating a new uniform billing and coding process across the entire state—a major change which has increased efficiency in the system and is expected to ultimately lower health-care costs. The following year, Pawlenty enacted what Cal Ludeman, the Commissioner of the Minnesota Department of Human Services, called the "most historic bipartisan health-care legislation yet."

The 2008 Health Reform Bill allowed for a number of unparalleled changes in Minnesota health care. Minnesota became the first state in the nation to create a provider peer-grouping system which will publicly compare clinics and hospitals on cost and quality. This information is already available to providers and will be available to Minnesota consumers in February.

The bill also included a program called Bridges to Excellence, an incentive-based pay-for-performance system. Clinics which improve their quality of care by performing well against benchmarks regarding specific illnesses (like diabetes) receive pay increases from private and public payers. Finally, Minnesota has become the first state to require physicians contracting with state plans (essentially all doctors) to send prescriptions to pharmacies by e-mail by 2011.

The Politics of Health-Care Reform

While the Minnesota legislation is estimated to have the potential for cost savings of about 12 percent by 2015 (about $6.9 billion), not everyone agrees with Pawlenty's policies.

Conservatives claim he's not as conservative as he'd like to appear. The same day Pawlenty issued an executive order "directing state agencies to decline all discretionary participation in the federal health care legislation" because he "thinks [Obamacare] is an intrusion by the federal government into personal health care matters and it's an expansion of federal spending that does nothing to make health care more affordable," he said he would accept $263 million in federal funding for Medicaid.

"We're going to take the money for those things that we were going to do anyhow and for the Medicaid [money], we were going to do that anyhow," Pawlenty told the Minneapolis Star Tribune.

In 2009, the Mercatus Center at George Mason University released an index which analyzed each state via its personal and their personal and economic freedoms. The study, "Freedom in the 50 States," concluded Minnesota has some of the highest health mandates in the country.

That hasn't diminished criticism from the left, however. State Senator Linda Berglin (DFL-Minneapolis; DFL is Minnesota's Democrat party) has been one of Pawlenty's most outspoken critics throughout both terms. Berglin is co-chair of the Health and Human Services Budget Committee and opposed many of the health-care reforms Pawlenty implemented during both terms, favoring instead Obama's federal health-care plan.

Last year, the Minneapolis Star Tribune reported, she and Pawlenty butted heads on expanded Medicaid coverage for the poor.

Pawlenty didn't think states could afford or should pay for the extra costs. Berglin chided Pawlenty for his ignorance, saying he didn't "seem to realize that the federal government will pick up most of that cost."

But perhaps Pawlenty's most controversial reform was to the General Assistance Medical Care (GAMC) safety net program, which offered aid to 35,000 poor Minnesotans per month.

In February 2010, the DFL-controlled state legislature passed a bill which would have extended this particular funding for the poor by $170 million. Pawlenty vetoed the popular bill despite strong support for it in both houses of the legislature and vigorous lobbying by hospitals. The Senate voted to override his veto but the House lacked votes to do the same.

As an alternative, Pawlenty offered to create a newer, less expensive program. Local political observers say the GMAC veto uproar proved Pawlenty's conservative roots are strong and his decisions are consistent: He tows a hard line when it comes to spending and always offers an alternative solution.

Health Care On The Road

While traveling the country promoting other candidates through his Freedom First political action committee—and most likely himself for 2012—Pawlenty says health-care comes up often.

"It's clear that Americans do not support Obamacare, particularly the individual mandate," Pawlenty told me. Instead, he said, they want "increased consumer choice, improved quality, and lower cost health care. Obamacare provides none of these - and frankly, it does the opposite."

He recently likened Congress' tendency to hand out "free stuff," to an "open bar" saying, "It's time to close it up."

Pawlenty said his national health-care reforms would differ from Obama's and mimic Minnesota's. "Any federal reform should be based upon the principles of improving quality of care, providing consumer choice, lowering health care costs and promoting transparency in the healthcare industry," he e-mailed.

In a February op-ed in the Washington Post he outlined five "common-sense ways to tackle runway health-care costs." These included: patient-incentive programs, pay for performance, liability reform, interstate health-care insurance and modernization of health insurance.

Longer term, he e-mailed, the financing of the public health coverage programs will need to be addressed: "The Federal government's health care programs, including Medicaid and Medicare, are unsustainable and need to be reformed. We have to reform and re-style Medicare for a 2010 forward leaning health care delivery system that pays on health-care outcomes.

How will Pawlenty's record and prescriptions translate with voters if he runs for national office?

Ludeman says that depends on who people think should handle their health care: "If people are preoccupied with a single payer health-care system this governor is not interested in that a lick. Anything that leads in that direction is wrong."

If Pawlenty runs for the GOP nomination, he will still need to bolster his national image even as he can claim a health-care record any conservative politician would be glad to tout. But as as the start of the 2012 cycle looms and the popularity of Obama's health-care plan declines, Pawlenty's health-care policies are sure to become an ever-greater part of the debate.