What the Headlines Missed in Governor Pawlenty’s Health Policy Speech

Gov. Tim Pawlenty recently made waves in a health policy speech when he said he believed Minnesota should move toward universal health coverage and that “as a goal, we should start by covering all kids.”

Headlines and news stories declared his speech a striking policy reversal.  The Star Tribune called it a “sweeping policy departure.” Minnesota Public Radio called it an “about-face.”   

Policy reversal?  Some ideas were indeed new, but nothing was inconsistent with Pawlenty’s past positions.

Granted, “universal” anything sounds a tad liberal for a conservative governor.  Most people probably equate the term universal health coverage with European-style, 100-percent government-funded health care systems; what the policy world calls single-payer systems.  There are, however, different routes and approaches to such coverage.  The conservative Heritage Foundation, for example, has been thinking for years about ways of achieving universal coverage.  It’s a goal, in other words, that can be shared by conservatives and liberals alike.

Allow me to suggest a few different headlines the media could have more accurately run:

Governor Endorses Consumer-Directed Approach to Health Care Reform.  “Incentives work,” Pawlenty declared.  Those two words were possibly the most important of his speech, as they spotlighted the fact that cost containment in health care can be achieved only by injecting the same free market incentives that, for instance, keep computer costs down while computer quality goes up. 

To that end, Pawlenty called for transparency in the price and quality of medical care, two essentials for effective consumer decision-making.  But if consumers are to make better choices regarding cost and quality, incentives must be different.  Men and women must also be in fuller control of their health care dollars. 

As things now stand, consumers — as opposed to third parties such as insurance companies and government — usually don’t have a clue about what various treatments and procedures cost.  But without greater price sensitivity on the part of patients and their families — the kind, for instance, found in Health Savings Accounts — putting brakes on runaway costs will be infinitely more difficult.

Governor Pledges Not to Expand the Present Broken System.  Twice the governor assured the National Institute of Health Policy audience he would not endorse expanding a broken system in order to expand access.  In doing so, he effectively pledged not to enlarge MinnesotaCare as it’s currently constructed in order to cover up to 90,000 uninsured children.  Specifics remain to be seen, but Pawlenty’s commitment to consumer-directed reform suggests he has significant market-based reforms in mind.

Governor Cautiously Considering the Massachusetts Plan.  Governor Pawlenty referenced Gov. Mitt Romney and the Massachusetts plan as a source for his ideas.  The Massachusetts plan, not incidentally, draws heavily on the work of the Heritage Foundation.  Under both the Massachusetts and Heritage plans, getting to universal coverage requires mandating that all people get health insurance, combined with a subsidy to those who truly can’t afford it.  Pawlenty had good things to say about both provisions. 

He also spoke highly of Heritage’s original concept of a health insurance marketplace in which insurance would become more portable from job to job and individuals would gain many of the tax advantages enjoyed by businesses.  At the same time, he had concerns about controlling costs, citing already creeping prices in Massachusetts and inevitable political pressures to increase minimum levels of benefits.

Governor Hints at Radical Medicaid Reforms.  The governor made a special point to conclude by questioning the effectiveness of the entire HMO delivery system. He knows that each Minnesotan with health coverage through Medicaid — aside from portions of the elderly and disabled — have coverage through an HMO.  If he thinks HMOs fail to deliver, then Medicaid must also fail to deliver.  He would not be the first to suggest that HMOs fail Medicaid recipients.  

Mindful of HMO limitations, as well as traditional fee-for-service Medicaid limitations, reformers in Florida, South Carolina, and West Virginia are piloting a variety of incentives more conducive to both healthy and cost-conscious decisions.  One would hope these are the kinds of reforms Pawlenty has in mind.

— Peter J. Nelson is a Policy Fellow with Center of the Americant Experiment, a conservative think tank in Minneapolis

Permission to reprint in whole or in part is hereby granted.