Minn. governor directs state to decline health reform

CHICAGO (Reuters) - Minnesota Governor Tim Pawlenty directed state agencies on Tuesday to decline all discretionary participation in federal healthcare reform, throwing up roadblocks to President Barack Obama's goal of providing health insurance to all Americans.

"Obamacare is an intrusion by the federal government into personal health care matters and it's an explosion of federal spending that does nothing to make healthcare more affordable," the Republican governor said in a statement.

Since Obama signed the landmark reforms into law in March nearly half of the states have mounted a fight against it.

Pawlenty, a potential candidate for president, said he signed an executive order prohibiting Minnesota's executive departments from submitting applications to the U.S. government for program grants and demonstration projects under the healthcare reform plan that are not required by law or approved by his office.

"The office of the governor will evaluate federal funding opportunities on the basis of whether they will support existing state initiatives or programs, or whether such federal funding opportunities create new encroachments by the federal government under the recently passed federal legislation," the statement said.

Members of the Democratic-Farmer-Labor Party-controlled legislature said Pawlenty's directive could affect more than 100 healthcare funding opportunities and they planned to hold hearings on the impact and legality of his action.

"Agree with it or not, the Affordable Care Act is now the law of the land," said State Representative Paul Thissen in a statement. "This new federal money available to Minnesota is no different than the federal money we receive for transportation, education or any other federal return on our state tax dollars. This is politics over good policy at its worst, and Minnesotans should be outraged."

In June, Pawlenty announced Minnesota would not participate in early Medicaid enrollment that is part of the healthcare reform law, pointing out it would cost the state $430 million over the next three years. He also cited uncertainty over the federal government's ability to fulfill future spending obligations for the program, which expands Medicaid eligibility to low-income adults without children in 2014.

Earlier this month a U.S. judge allowed Virginia's lawsuit against the healthcare plan, which says that the federal government cannot compel a person to purchase health insurance, to proceed. Arguments on the merits of the case are set for October 18. Before then, arguments over the Obama administration's motion to dismiss a lawsuit by 20 other states are set for September.

Also in August, Missouri voters approved a measure that would forbid the federal government from penalizing people who do not buy health insurance.

The states are charged with implementing many of the plan's elements, and some are concerned they will not have enough time, money or federal support to meet assorted deadlines.

Indiana's Republican Governor Mitch Daniels said in June that his state was having doubts about creating one of the exchanges authorized by the law where individuals can buy selling affordable insurance.

At least 18 states have opted not to operate high-risk insurance pools, as well, leaving it to the federal government to operate the subsidized healthcare coverage for those who have been denied insurance.

(Reporting by Karen Pierog, additional reporting by Lisa Lambert in Washington; Editing by Andrew Hay)