- The Washington Times - Thursday, August 18, 2011

Having already rejected a multimillion-dollar federal grant because of a fear of entangling regulations, Oklahoma Gov. Mary Fallin said in an interview she hopes to keep President Obama’s health care law at bay while cultivating her state’s own path to expanded insurance coverage.

Under pressure from conservatives, the Republican governor declined a $54 million grant from the U.S. Department of Health and Human Services in April, two months after she had initially accepted the money to help the state set up an exchange mandated under Mr. Obama’s signature health care law. The action, she said at the time, would allow the state to bypass a federal exchange while setting up a network governed chiefly by the private sector.

It was hard to reject such a large sum of money, Mrs. Fallin said in an interview this week with editors and reporters at The Washington Times. But the former congresswoman who became her state’s first female chief executive in January, said she was deeply skeptical that the administration would grant the promised flexibility in setting up exchanges.

“You just told us you want us to have some leeway to develop innovative systems, but yet you’re tying our hands,” she said, recounting an early meeting with administration officials on implementing the new law. “In the end, they’re going to have specific things we have to meet.”

Mrs. Fallin and dozens of fellow GOP governors are holding out hope that the Supreme Court will derail the law sometime next year. The court is likely to hear cases filed by nearly 30 states, including Oklahoma, challenging the law and in particular the mandate on individuals to purchase health insurance or pay a fine.

“A lot of governors are sitting back, saying, ‘We’re going to do what we think we have to do minimally, but we’re still kind of waiting to see what the requirements are,” she said.

The election of Mrs. Fallin, who served 12 years as lieutenant governor, helped usher in a sea change in state politics: Republicans controlled the governor’s mansion and both legislative chambers for the first time, allowing the freshman governor to check a number of reforms off her to-do list — without the protest unrest that other rookie GOP governors faced.

The state enacted tort reform, putting a $350,000 cap on medical malpractice awards and eliminating certain forms of liability. Lawmakers also approved a system to grade schools based on their performance and made it easier for schools to lay off ineffective teachers.

And by halting automatic cost-of-living raises for state workers, coupled with other pension reforms, the new GOP majority reduced the unfunded liability of the state pension fund from $16 billion to $10 billion, Mrs. Fallin said. She said the process went far smoother than in states such as Wisconsin, where new GOP Gov. Scott Walker faced massive demonstrations and a brief boycott by Democrats in the Legislature.

“I didn’t have people walking out of my capital, and shouting and yelling and protesting for days,” she said, adding that Oklahoma has a public employees’ association, but no union.

Mrs. Fallin made waves this past spring when she rejected the health care exchange grant for which her predecessor, Democrat Brad Henry, had applied. Like other so-called “Early Innovator” grants, the funding was to be used for developing technology for the insurance exchanges that other states could use as well.

“After we got to looking at the federal health care bill, looking at some of the rules and regulations and strings attached, per se, with the money, we were afraid it was going to tie us into implementing some of the provisions of the federal health care bill we find objectionable,” she said.

At the time, it was the largest refusal of a federal grant tied to Mr. Obama’s health law by any state.

But it’s unclear exactly what federal regulations Ms. Fallin avoided by turning down the grant. State officials are still waiting on many of the exchange regulations, which the administration is releasing in waves, and every state is required to establish a federally approved exchange, regardless of how much federal funding it accepts.

If by January 2013 state officials do not show adequate progress toward setting up an exchange, the federal government will step in and run it for them.

The rejection was driven by conservative Republicans in the state Senate, who thought that accepting the funding tied Oklahoma too closely to the federal health care law. They also rejected legislation setting up an exchange run by the state — a decision that disappointed the governor.

On another issue, Mrs. Fallin said she strongly backed an expansion of the $7 billion Keystone XL pipeline project to bring tar sands-based Canadian oil through the heartland and Oklahoma and on to markets in the Gulf Coast. State oil and gas interests strongly favor the pipeline, but environmentalists have raised questions about its safety.

Mrs. Fallin said she and state officials have pressed Secretary of State Hillary Rodham Clinton to approve the project, with a decision expected in the coming weeks.