The Other Republican Health Reformer

by Dan Diamond, California Healthline Contributing Editor
The Other Republican Health Reformer

As governor, one GOP presidential candidate oversaw dramatic health reforms in his state. His name? Tim Pawlenty.

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:

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

On the Hill

Spotlight on Waivers

In the Courts

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