Health reform — who passed it, how it works and whether it’s legal — is all but certain to remain a leading issue in the run-up to the 2012 elections.

Even though the rhetoric has cooled, last year’s health care overhaul remains divisive. Kaiser Family Foundation tracking polls consistently find a national split in public opinion about the law.

Fears over Medicare reform appear to have steered Tuesday night’s special congressional election, a harbinger of where Democrats hope to focus national debate.

The scrutiny has been so great, former Massachusetts Gov. Mitt Romney (R) recently delivered an unusual speech intended to both defend and distance himself from his state’s near-universal health care law.

Among the GOP’s bushel of would-be presidents, Romney’s dramatic health reforms command all the press — but rival Tim Pawlenty may have overseen the more radical changes, at least on paper.

Before taking a prominent, if largely symbolic role resisting last year’s national health care overhaul, the former Minnesota governor signed off on a series of legislation that refashioned his state’s health care system. Here’s a primer on those changes and where Pawlenty stands on broader reforms.

Minnesota’s Ambitious Reforms

In officially declaring his candidacy for president this week, Pawlenty argued that he “know[s] how to do health care reform right,” adding, “I’ve done it at the state level. No mandates, no takeovers, and it’s the opposite” of the reform law.

Pawlenty is pointing to a package of reforms passed in 2008, which:

• Established a new statewide health improvement program, focusing on obesity and personal health;
• Increased health care data collection and reporting;
• Expanded insurance offerings for low-income residents;
• Developed tools to encourage consumer advocacy and increased health care decision-making; and
• Supported major payment reform and care redesign.

While other state reform efforts, like Massachusetts’ health care overhaul, focused on expanding coverage first and controlling costs second, Minnesota’s reforms were heavily weighted toward payment reform. A joint report from the Commonwealth Fund and National Academy for State Health Policy noted that Minnesota’s “landmark legislation” contained numerous provisions with “significant potential to achieve overall health care cost savings.”

For example, legislators introduced new provisions to encourage development of patient-centered medical homes and backed a change that brought capitated-type payment to the state’s Medicaid program. The state also is developing a new “provider peer grouping” system, which would require providers to publicly report their compliance with recommended measures of care. The plan is intended to steer patients to low-cost, high-performing providers.

Plan Not Without Challenges

While Pawlenty has touted his reforms, Minnesota Public Radio suggested that the changes have yet to deliver on the key ambition: reining in costs.

For example, the state’s baskets-of-care experiment — where providers can receive bundled payments to deliver a set of health care services — “hasn’t really lived up to its potential,” according to MPR.

As of February, no providers had signed on to the state’s baskets of care, out of concern that the bundles paid too little and lacked comprehensive services, putting them at risk of losing funds for each patient seen. Some providers had worked out similar agreements with private insurers, notes a research fellow at the University of Minnesota’s School of Public Health.

Meanwhile, the state’s experiment with accountable care organizations introduced new challenges for participating hospitals and affected patients.

In early 2010, Pawlenty signed off on a deal to cut annual spending on Minnesota’s General Assistance Medical Care program — which at the time covered about 32,000 low-income adults, many of whom were homeless and had chronic conditions — from $219 million to $91 million. Under a radical shift, four state hospitals agreed to become “coordinated delivery systems” and provide medical and sometimes social services to an unknown number of GAMC patients beginning in June 2010, while receiving lump sum payments from the state.

However, many hospitals opted out of the program, arguing that serving an unknown number of patients with a reduced budget would not be feasible, especially given that GAMC patients cost an average of about $12,000 annually to treat and often have multiple chronic diseases.

The remaining participating hospitals later encountered logistical challenges in enrolling and triaging GAMC patients, many of whom switched providers under the model. Three of the four organizations quickly reached their cap on GAMC patients, which meant that about 18,000 former GAMC clients were receiving charity care or no care at all by fall 2010.

Outlook: Pawlenty Retains Focus on Health Spending

Minnesota’s bumpy road to realizing Pawlenty’s health care goals reflects a core tenet of health reform: even the best-intended plans tend to meet real-world complications. Achieving the state’s ambitions may require reforms to the reforms. But “as Minnesota learns, so will the nation,” the Commonwealth Fund researchers noted.

Meanwhile, Pawlenty has retained his focus on health care. His national campaign kicked off this week with a pledge to overhaul Medicare as part of a greater approach to addressing federal spending.

While complimenting a Medicare reform plan by House Budget Committee Chair Paul Ryan — a controversial proposal to privatize the program — Pawlenty has said he would develop his own strategy to rein in health costs. His ultimate proposal would base care payments on “better health care outcomes and better results,” Pawlenty told the Daily Caller.

Pawlenty’s approach to health care will certainly get more attention as his presidential campaign continues. Until then, here’s a look at what’s happening in health reform beyond the North Star State.

Rolling Out Reform

• HHS recently announced more than $35 million in grants to help states set up information technology systems to run health insurance exchanges. Under the reform law, states by January 2014 must create insurance exchanges that provide coverage options for individuals and small businesses. The “establishment grants” will go to Indiana, which will receive $6.8 million; Rhode Island, which will receive $5.2 million; and Washington state, which will receive $22.9 million. The funding represents HHS’ second round of insurance exchange planning grants (Baker, “Healthwatch,” The Hill, 5/23).
• A draft white paper approved last week by a subgroup of the National Association of Insurance Commissioners seeks to help state insurance commissioners define the roles of health insurance educators under the federal health reform law. Under the overhaul, each state exchange must award grants to educators — called “navigators” — to educate the public on enrollment and provide referrals for consumers with complaints. The draft white paper now is forwarded to a larger NAIC committee, which will revise the plan before the entire panel approves it. HHS is expected to release its regulations on navigators in June or July (Norman, CQ HealthBeat, 5/19).
• U.S. employers should expect health care costs to rise by 8.5% in 2012, according to a report by PricewaterhouseCoopers‘ Health Research Institute. The report identified three main drivers of the upward cost trend, including consolidation among health care providers, increased cost-shifting to private payers and stress-induced illnesses caused by the recession. The report said the federal health reform law will not affect 2012 prices significantly because the provisions that go into effect before the full implementation in 2014 are “small changes for which employers already have fully accounted” (Healthcare Finance News, 5/18).

On the Hill

• On Monday, Sen. Jon Kyl (R-Ariz.) introduced legislation (S 1049) that would repeal several provisions in the federal health reform law, including a tax on health insurers. The bill — which was co-sponsored by Sens. John Barrasso (R-Wyo.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.) and Pat Roberts (R-Kan.) — also would repeal requirements that most employers provide insurance for employees; restrictions on flexible spending accounts; and language that would grandfather in certain plans so that they are not required to comply with all of the overhaul’s requirements (Adams, CQ HealthBeat, 5/23).
• Last week, Sen. Michael Enzi (R-Wyo.) sent a letter asking HHS to formally submit the medical-loss ratio regulations in the federal health reform law, contending that agency officials failed to properly submit paperwork for the rule. HHS officials said they have receipts showing that Congress received the paperwork. However, Enzi spokesperson Joe Brenckle said, “According to the Senate parliamentarian, the rule was never formally submitted by the vice president’s office, and thus has never been referred to a committee.” Brenckle said that if HHS claims they submitted the paperwork, Enzi is asking the agency to resubmit it (Adams, CQ HealthBeat, 5/19).

Spotlight on Waivers

• Last week, several conservative groups sent a letter urging governors and state insurance commissioners to seek waivers from two provisions in the health reform law. The groups include Let Freedom Ring and Grover Norquist‘s Americans for Tax Reform. The groups urge states to seek waivers for “mini-med” plans and from medical-loss ratio regulations. The groups wrote, “Whether or not you support the health care overhaul as a whole, applying for waivers from these provisions is a common-sense step that every governor should take” (Millman, Politico, 5/19).
• Reports that nursing homes are seeking waivers from a provision in the federal health reform law that mandates certain coverage levels have drawn criticism from employers in other industries. Neil Trautwein, a vice president at the National Retail Federation, criticized nursing homes for seeking what he considers to be special treatment. Mark Parkinson, president of the American Health Care Association, noted that many nursing homes care for large numbers of Medicaid beneficiaries. He said, “As states cut Medicaid we are looking for options that would allow those members to comply with the law” (Reichard, CQ HealthBeat, 5/17).

In the Courts

• Judges from the Sixth U.S. Circuit Court of Appeals in Cincinnati have asked lawyers in a lawsuit challenging the constitutionality of the federal health reform law to submit briefs on whether the case is alleging imminent injury. The court will review the October 2010 ruling by U.S. District Court Judge George Steeh in a lawsuit filed by the Michigan-based Thomas More Law Center. In a letter to the lawyers, the judges wrote that they are seeking to determine whether TMLC can allege imminent injury even though the individual mandate — which is the basis of the lawsuit — does not take effect until 2014 (Norman, CQ HealthBeat, 5/17).

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