Critics watching closely Pawlenty's decision on health care grants

Gov. Tim Pawlenty has to decide Wednesday whether to apply for a million-dollar grant that's available under the health care reform law, and a lot of Minnesotans will be watching what he does.

The politically divisive health care reform law will provide hundreds of millions of dollars in grants to help states put the law into action over the next few years. In most cases, these grants require governors to ask for them. The same is true for additional Medicaid dollars available through the federal stimulus legislation.

Pawlenty is like many Republican governors who have chastised Congress for overspending during a recession but also face dire economic forecasts at home. The federal money they're on record for opposing, could help their states soften the blow of record-breaking budget deficits.

For Pawlenty, the stakes are even higher because he's seriously considering a presidential run. Carleton College Political Science Professor Steven Schier said there's a lot of agitation from the tea party movement in the GOP right now to turn down all federal spending.

"Now Tim Pawlenty walks into a situation like that and there's a lot of pressure in terms of his presidential candidacy to say 'no' to any federal money that might come to Minnesota as a result of health care reform or the stimulus," Schier said.

About two weeks ago, Pawlenty declined to apply for a $1 million grant that was available to Minnesota under the health care reform law. Minnesota was one of only five states that did not apply for the money, which is designed to help states regulate insurance rates better.

The governor's spokesman said Pawlenty was unwilling to sign up for a new federal program with "undefined terms and potential long-term state obligations."

But with a multi-billion dollar budget deficit looming, the decision drew fire from DFL critics who accused the governor of putting presidential ambitions above the state's welfare.

Most recently, Pawlenty refused health reform funding for educating young people about sexual health issues, but accepted some money to promote abstinence-only education.

The grant application due Tuesday is also for $1 million to jumpstart Minnesota's health insurance exchange. The exchange is a central part of the health reform law and is designed to let consumers compare and buy health insurance policies.

Pawlenty's office said no decision has been made yet.

State Rep. Tom Huntley, DFL-Duluth, who's also a member of the legislative health care commission, said they should seek the money to set up an exchange.

"Ultimately if we don't do it, the feds will do it for us," Huntley said. "I would just as soon have Minnesota regulate its own insurance exchange than have the federal government do it. I think we can do a much better job; we already do a very good job of regulating health insurance companies."

But these million-dollar grants are minor compared to the funds Pawlenty will have to make a decision about next month. Lynn Blewett, a University of Minnesota health policy expert, said an extension of the federal stimulus legislation would provide Minnesota with at least $230 million in Medicaid funding.

"We're going into a legislative session now where $200 million is a significant amount and it would help to have that in the bank," Blewett said.

The governor's office said Pawlenty hasn't made a decision on the Medicaid money but is considering it. He said Minnesota deserves to have its share of the program as long as it doesn't overly restrict the state in the future.

"Are there any strings attached to it if we do take it? What kind of commitments does that require the state to make?" Pawlenty asked. "Would that tie the hands of the next governor in some way that might limit their choices when they have to put together their budget on relatively short notice?"

Carleton College Political Science Professor Steven Schier said Pawlenty's decisions on federal grants under the Obama administration could signal Pawlenty's larger ambitions down the road.

"If he says no, he's seriously focusing on running for president," Schier said.

The deadline for a decision on the Medicaid money is September 24.

(MPR reporter Tom Scheck contributed to this report.)