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How are health care costs affecting the Indiana economy?
Health care is complex, and providers, insurance companies and other stakeholders must collaborate to make it more affordable. As the Indiana Hospital Association has said consistently, hospitals are committed to bending the curve while maintaining the quality and access Hoosiers expect.
Reducing the cost of health care requires action, but we must do so in full possession of the facts. Some have used various studies to paint Indiana as an outlier, which is not only inaccurate but hurts economic development efforts. According to national data, health insurance premiums in Indiana are below the national average and almost all states in our region. We can build on the strength of Indiana’s existing health care system while reducing costs, but we must do so without blaming one segment like hospitals.
Maintaining the status quo is unacceptable. Indiana needs to step on the gas when it comes to moving away from our current, broken fee-for-service system to one that emphasizes value and shared risk. Our members are actively deploying innovative value-based care arrangements, including direct-to-employer contracting with hospitals, which is proven to improve outcomes and reduce costs.
After a slow start, these efforts are gaining momentum. A recent Health Affairs article notes the transformative shift in contracting happening in Indiana. One way to accelerate this trend is to provide better transparency—about hospitals, physician services, drug costs and insurance companies. We were pleased to see Gov. Eric Holcomb’s robust 2020 legislative agenda include several items which we believe will go a long way to making health care more affordable and making Hoosiers healthier, including the creation of an all-payer claims database, or an APCD.
Establishing an APCD would be a significant step forward for Indiana. About 20 states already have or are building this source of all health insurance claims information. Patient confidentiality is, of course, protected, but businesses and consumers can more easily access cost and quality information. Policymakers can use the data to drive meaningful cost reduction and improved outcomes across Indiana for those enrolled in commercial and government plans. Because the information comes from insurance companies, Hoosiers will have access to more accurate information about their expected out-of-pocket costs including medical components and pharmaceutical expenses.
Indiana hospitals are supporting transparency along with consumer protections like a state fix for “surprise billing.” But to achieve longer-term solutions, we should look at every area of the health care sector. In Indiana, two insurers control 72% of the state’s commercial market, according to the American Medical Association. Nationally, three pharmacy benefit managers process 74% of all drug claims. The Indiana General Assembly’s Legislative Study Committee on Health Care passed recommendations with overwhelming support calling for oversight of pharmacy benefits managers.
A holistic approach will be needed to truly transform the way that we deliver and finance health care. Let’s take a fact-based, comprehensive approach to creating a system that works for all of us.•
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Tabor is president of the Indiana Hospital Association. Send comments to ibjedit@ibj.com.
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Inpatient and and outpatient facility services account for over 50% of medical costs. There is no objective argument that proves the state of Indiana is competitive with surrounding states with these charges. We are not. Just ask employers with facilities in neighboring states or prospective employers that hire site surveys when considering locations how Indiana ranks in hospital charges. Not competitive. No hospital wants to talk about procedure charges as a percentage of Medicare because that takes the mask off. Indiana must address this inequality if we want to continue to be an economically viable business location.
Thanks Gerry J. How simplistic.
It must be nice to live in the comfort of the “465” area, have numerous healthcare options and completely ignore the economic consequences a new “hospital tax” would have on those communities with less economic opportunities. Those areas where the hospital might pay the highest wages and be the largest employer in the area.
I hope those in the legislature are less simplistic when contemplating healthcare costs and also examine the record profits being made by the insurance industry.
Keep in mind that simply targeting the hospitals in this state could have lasting economic consequences in many rural counties, leading to job loss and more economic uncertainty. Creating a bigger problem and less healthcare options for those already struggling.