Utah is suing the federal government over the constitutionality of health care reform, but like many states in this position, it’s also taking steps to implement the law. In fact, according to Dessert News, the state is moving quickly to establish a health exchange for small businesses:

Starting on Sept. 1, the Beehive state’s first health care exchange for small businesses will officially begin operation. On that same day, the federal version of the Utah Comprehensive Health Insurance Pool, which covers people with high-risk health conditions, will also start offering coverage. [...]

In the meantime, the state is set to launch its own health exchange designed for small employers — of two to 50 employees — in which companies will give their workers money they will use to purchase insurance coverage from a wide array of plan options tailored to their specific needs. Exchanges for larger employers will follow in a few weeks.

The tension between states implementing reform on one hand and suing the federal government on the other, is well pronounced in Utah, which has joined Florida’s challenge to the individual mandate, but has also established a special task force to implement the measure.

According to local health advocates on the ground, moderate to conservative Republicans are working diligently to assert local control over how reform is implemented and maximize Utah’s autonomy over the measure — all the while paying lip service to the repeal meme. The state has applied for the rate review grants announced earlier this week and is considering all other funding opportunities. Utah officials are conducting what was described to me as “daily” meetings with HHS officials about implementation, some of which include the governor’s adviser on health reform, John T. Nielsen and Utah Lt. Governor Greg Bell, a moderate Republican.

The tension in the state seems to rest between moderate and conservative Republicans, the latter of which is not too happy about the state’s partial embrace of reform. State health advocates I spoke to warned me that if the November elections bring the hard liners into power, any progress on implementing the measure could be reversed. But the willingness to at least give reform a try is itself surprising.

One Utah involved in state health issues speculated that even the repeal and replace advocates realize that “this is how they have to do reform and it is important to get started and try out some of these ideas.” “I wonder if they’re not thinking well, the only way to prove reforms are wrong, is to give them a good college try,” this person told me.

When HHS sent out the first round of rebate checks to seniors who fall into the so-called doughnut hole of Medicare Part D, Republicans accused the administration of “hiding the whole truth” and argued that prescription drug costs would still increase for seniors. “What the administration, however, will not mention at today’s event is that for every senior who gets a check, more than three other seniors will see an increase in their prescription drug insurance premiums,” Senate Minority Leader Mitch McConnell (R-KY) said in early June. He went further: “The reason for this is that the health care bill Democrats forced on Americans earlier this year requires higher government mandated minimum standards for everyone. So those who opted for anything below that minimum will now see their premiums go up. And the number of seniors in this category far, far outnumbers those getting a check.”

At the time, FactCheck.org questioned McConnell’s assertion, pointing to a CBO report which found that premiums would increase by “about 4%” in 2011, but “beneficiaries’ out-of-pocket spending on prescription drugs apart from those premiums would fall, on average, as would their overall out-of-pocket drug spending including premiums.” Yesterday, the CMS further disproved McConnell’s predictions. According to the agency, most seniors will pay about the same for prescription premiums in 2011, while those with the highest costs will pay less:

The average monthly premium charged by Medicare drug plans for standard coverage will rise to an estimated $30 in 2011, an increase of $1 over 2010, or about 3 percent, said Donald Berwick, Medicare administrator. …Nonetheless, seniors with high drug costs can look forward to a noticeable improvement next year.

That is because the new health care law will begin to close the coverage gap known as the doughnut hole. Medicare recipients in the gap will get a 50 percent discount on brand name drugs and 7 percent on generics. The discounts will gradually increase until the gap finally closes in 2020.

Republicans are still dedicated to repealing the drug rebates, however, and have described the checks as “a colossal waste of money” that the country can’t afford.