Pawlenty offers his prescription for health reform

On the same day a U.S. Senate committee approved a sweeping health care reform bill, Gov. Tim Pawlenty unveiled his own more modest plan he says will rein in health care costs in Minnesota.

Pawlenty said he wants Minnesota to be the first state in the nation to allow the purchase of medical insurance plans from other states. And he's also proposing a significant makeover for state-subsidized health care programs.

Gov. Pawlenty said regardless of what ends up in a federal health care measure, changes are needed soon to make Minnesota's health care system more efficient and affordable. He said one step in that direction would be allowing Minnesota residents to purchase health insurance plans sold in other states, which state law currently prohibits.

"We're going to ask the Legislature to change that law, so Minnesotans can go into the national health care marketplace and purchase their health care from a variety of states, from a variety of vendors," said Pawlenty, "and use that as a way to get more competiton, more choice, and hopefully, affordability and more quality in the health care delivery system."

Pawlenty said Minnesota families are currently paying up to 7 percent above the national average for health care premiums.

The Republican governor did not criticize the three entities that currently do the lion's share of business in the state -- Blue Cross and Blue Shield of Minnesota, HealthPartners and Medica -- but he said there are comparable insurance plans available elsewhere that are less expensive.

"I don't see where Minnesotans buying insurance from a Mississippi company is going to help Minnesotans improve their health care."

Pawlenty said the out-of-state plans would have to meet strict consumer protection standards. And he said the Department of Commerce would measure quality, effectiveness and price.

"They would do a review, rank the states across the country in terms of those kinds of considerations, and at least in the initial phase of this, Minnesotans would be able to choose from the top 20 states by those measurements," he said.

Minnesota currently requires health maintenance organizations that sell coverage in the state to be not-for-profit. Pawlenty's proposal would open the door to for-profit plans.

The leader of a trade group that represents the dominant Minnesota HMOs said more than 190 companies already sell policies in the state, and reducing regulations on them might do more to curb premiums than what the governor is proposing.

"I don't see where Minnesotans buying insurance from a Mississippi company is going to help Minnesotans improve their health care," said Julie Brunner, executive director of the Minnesota Council of Health Plans. "That's what we should be about."

Pawlenty is also proposing that taxpayer-subsidized health programs -- MinnesotaCare and Medical Assistance -- operate more like state employee health care.

For MinnesotaCare and Medical Assistance, Pawlenty wants to create incentives for participants to choose care that's both high in quality and low in cost. People would still have choices, but they might end up paying more out of pocket if they continue to choose a clinic that ranks low on a cost-to-quality scale.

In addition, those in MinnesotaCare who are on the higher end of the income eligibility scale would be on a high-deductible insurance plan. The state would put a set amount of money on a card for participants to use toward the deductible, encouraging people to seek care that gives the most value, Pawlenty said.

"If you manage well, you could save money and roll it over from year to year and accumulate more money," said Pawlenty. "If you manage it poorly, then you may find yourself paying more out of pocket until the insurance kicks in."

Legislators won't get a vote on the governor's proposals until February. But Democrats are already weighing in with mixed reviews.

Rep. Tom Huntley, DFL-Duluth, chair of the House Health Care and Human Services Finance Division, said he sees some good ideas, such as a highly regulated approach to allowing insurance purchases in other states. But Huntley said the state employee model might not work for all MinnesotaCare enrollees.

"A lot of the people on MinnesotaCare have a higher illness burden than the general public. So what works in one area might not work in another," said Huntley.

Sen. Linda Berglin, DFL-Minneapolis, chair of the Health and Human Services Budget Division in the Senate, said she doesn't see anything in the governor's proposals that would actually save the state money.

Berglin said she doubts that out-of-state insurance companies would be eager to do business in Minnesota. And she says the people enrolled in state-subsidized health care can't afford additional costs.

"When you have low-income people having higher out-of-pocket expenses, they tend to avoid seeking care. And the care ends up costing more, not less," said Berglin.

Gov. Pawlenty has been a frequent critic of the federal health care plans backed by President Obama and congressional Democrats. He's also frequently mentioned as a likely GOP presidential candidate in 2012. So it wasn't surprising that the Democratic National Committee also weighed in on Pawlenty's proposals.

"If Governor Pawlenty had been paying attention to the health care debate, he'd know that Democratic plans already include major improvements in health care technology to lower costs and improve care, as well as insurance portability," the DNC's national press secretary said in a statement.

(The Associated Press contributed to this report)

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