Soon after Congress passed health care reform, Minnesota Gov. and likely ’12 presidential candidate Tim Pawlenty decried that “we now have the federal government reaching so far inside our society, dictating whether human behavior is good or not.” A few weeks earlier, as the health care debate was raging, he urged conservative activists to “take a nine iron and smash the windows out of big government.”

But if this health care law is such a crazy-secular-socialist-machine-big-federal-government-program, how is it that Gov. Pawlenty has the discretion to reject federal funds to implement it?

Over in Oregon, health reform supporter Sen. Ron Wyden recently indicated he would help the state government pursue a federal waiver, so it can implement its own health care reform, possibly without any individual mandate to purchase coverage.

This produced a big guffaw over Clarence Thomas’ wife’s LibertyCentral.org: “…what right does the federal government require Americans to purchase a product they do not want – or see value in?… Apparently, Senator Wyden has come around to this point of view – but only for his constituents, and only after voting to impose the requirement on all Americans.”

But that doesn’t make any sense. You can’t “impose the requirement on all Americans” and allow for state waivers to that requirement at the same time.

(A less snarky analysis of Wyden’s philosophy to state waivers can be found at the Wonk Room from Igor Volsky.)

The reality is the health care law allows states “much discretion over health care reform” as noted by The New Republic’s Jonathan Cohn.

Medicaid eligibility is expanded. But Medicaid has always been voluntary for the states. If states don’t want the federal rules that come with federal funds, they can reject them and pursue some other way to provide health insurance for the poorest Americans.

The new law creates health care markets called exchanges to further expand coverage to the uninsured. But the states get to take the lead in setting up their own, and they can choose not to. (The federal government can then step in.)

Similarly, before the exchanges come on line in 2014, interim insurance pools for the high-risk are being set up at the state level, but states can refuse to assume responsibility, and several are.

And most notably, as we’re seeing in Oregon, there is a provision in the law that allows states to reject the federal approach to reform altogether, so long as they set up something else that expands coverage at least as much and controls costs at least as much.

That could include either a single-payer system or private market-based approaches.

This isn’t a free-for-all. Our federal government has raised the floor for what is acceptable. But it is not dictating to the states how exactly to reach the goal.

Frankly, I don’t think that is the best way to pursue reforms. Because states with conservative leaders are likely to do the least possible, the overall reform effort may not be as effective as possible.

But as a simple statement of fact, it is far from a federal government takeover of the entire health care system. It is a federal reform effort with considerable flexibility at the state level.

And you can’t complain about a federal government takeover while you are in the middle of exercising state flexibility.