Health care costs among top Indiana legislative priorities

State lawmakers and businesses alike have long denounced Indiana’s high health care prices but haven’t yet penalized any industry players. Advocates hope for more in the 2023 session, set to start Monday, with an intense focus on the state’s hospitals.

Hoosiers have some of the highest costs in the nation despite its overall low cost of living and below average salaries. The latest report from the Rand  Corp., a not-for-profit public policy research organization, found that the Hoosier State’s hospital prices are the seventh highest in the country, a slight decrease from previous years.

“(Hospitals) do everything they can to prevent competition but then they want to have the freedom to price (services) any way they want to,” said Al Hubbard, the chair of Hoosiers for Affordable Healthcare. “If you don’t have competition, then you exploit the situation and that’s what the hospitals are doing.”

Brian Tabor, the president of the Indiana Hospital Association, said hospitals are committed to doing their part to reduce prices, saying pricing will decrease over time due to new transparency initiatives.

“We are confident that we are headed in the right direction, but we are also at a time where hospitals across the state are facing tremendous financial strain, and the wrong policies could have devastating impacts,” Tabor said. “There’s no question we still need to address affordability for Hoosiers, and hospitals are doing our part. But until all sectors across health care are at the table and there is equal transparency, we aren’t going to make long-term progress.”

Legislators passed a bill in 2020 creating a claims database, establishing a hospital price transparency tool in hopes that Hoosiers could shop around for the best prices. But the needle hasn’t moved enough to generate savings.

“People don’t shop around for prices after meeting their deductibles because they view it as free (through their insurance). When people are dealing with a fragile health situation they’re not shopping around; they do what their doctor tells them to do,” Hubbard said.

Public health funding in jeopardy

Just before the 2022 session, House Speaker Todd Huston and Senate Pro Tem Rodric Bray sent letters to health insurance companies and health care systems warning that if the corporations didn’t reduce their prices, the General Assembly would.

Indiana University Health, the state’s largest health care entity, announced shortly after that it would be freezing their prices through 2025, which some decried as a “gimmick” since their costs far outpaced national averages. Speaking on behalf of the state’s hospitals, the Indiana Hospital Association promised to lower overall health care costs but rejected “heavy-handed government intervention.”

But hospitals have routinely noted that Hoosiers have some of the worst health outcomes in the country, including higher smoking rates, more diabetes diagnoses and high rates of maternal/ infant mortality. These contribute to the state’s higher-than-average health care expenditures and need to be addressed, hospitals argue.

Local health programs typically address those issues but haven’t been effective due to Indiana’s poor public health funding, which ranks 47th in the country. The Governor’s Public Health Commission, of which Tabor was a member, reported that Indiana spent just $45 per person in public health dollars compared to the national average of $91.

Tabor said hospitals needed stability at this time, not more interventions, to recover following the years of stress that stretched the health care system during the COVID-19 pandemic.

“I hope this is a session about investing in health care, not making an already fragile system more vulnerable,” Tabor said. “Hospitals, and really the whole health care system, have barely begun to rebuilding from years of stress which stretched our resources beyond belief. We must make sure hospitals and caregivers have the resources they need and reject policies that would destabilize the system in these volatile times.”

But Republican leaders drafting the budget seemed skeptical that they could meet the commission’s recommended $243 million annual request, even though one-third of Indiana’s counties spend $10 or less per resident on public health.

“I found (it) a little bit difficult to swallow,” said GOP Senate leader Rodric Bray in November, adding that local departments might not be able to handle so much money at once.

In response, proponents amended their ask, proposing that the state phase in its funding over the biennium and cutting their request in half, to $120 million, for the 2024 fiscal year.

“We’ll have to discuss that because it’s ongoing,” said Sen. Ryan Mishler, who leads the budget process for the chamber. “That’s not a one-time deal, that’s ongoing, so we have to really take a hard look at that.”

But funding the second year at the full $243 million would be “tight,” Mishler said.

Hospitals under more scrutiny

Sen. Travis Holdman, R-Markle, says he has a way to pay for public health improvements: shift the cost to hospitals.

Holdman, chair of the Senate Tax and Fiscal Policy Committee, suggested levying a tax or assessment on hospitals and health insurance companies that aren’t adequately serving the community. He said the entities, which pay no taxes, funneled profits to Wall Street investment accounts, accumulating so much in their accounts and reserves that many could operate for over a year without charging anyone.

“What are they doing to return the community benefit that they pledged to provide because of their not-for-profit status?” Holdman said at a December conference. “I would give kudos out to Parkview Hospital in northeast Indiana. They’re developing and establishing a grocery story in an area of Fort Wayne that is a food desert.”

He said that effort–along with encouraging smoking cessation and reducing maternal and infant mortality rates–would go further in benefiting the community than paying thousands of dollars to name a stadium or local YMCA.

Hospitals have repeatedly been targeted by Ball State University economist Mike Hicks, who highlights the role of monopolies in Indiana’s high health care costs.

Market researchers confirmed some of Hicks’ criticisms this summer, reporting that vertical integration and mergers drove prices upward, increasing per capita health care spending by 48% between 2011 and 2020. That study found that Parkview Health, the same entity Holdman praised, had a monopoly in the northeast corner of the state, leading to higher monthly premiums than the rest of the state.

Tabor pushed back on the discussion of monopolies, noting that just two insurance companies control nearly 75% of the Indiana market. Indeed, some mergers between hospitals–which opponents said decreased competition–stabilized vulnerable health care entities.

“What’s ironic about the discussion of consolidation is that most hospitals that have become part of a health system would not have survived on their own, so we need to be careful that we don’t actually worsen access to care by weakening our Indiana providers,” Tabor said.

But Hubbard didn’t seem to agree with Tabor, saying decreased competition hurt Hoosier consumers.

“If these were for profits, we’d be going after them. It all has to do with their pricing. And what we discovered, what RAND (studies) discovered, is that the guys which happen to be nonprofits are the ones who have exorbitant prices,” Hubbard said.

Hubbard said every hospital nationally struggled with staffing in the wake of the COVID-19 pandemic, in which overworked healthcare left the industry in droves. But Hoosier hospitals still have some of the nation’s highest prices, even in a state with a lower-than-average cost of living and earnings potential.

“The easy way to fix this is to pass a law that says you cannot charge above the national average … this is what we did with worker’s comp and it worked. We used to be one of the most expensive states in the country and now we’re in the middle of the pack,” Hubbard said. “If we can’t get it done with incentives then we will come back and ask for a hard ceiling.”

Focuses outside of hospital prices

Beyond high health care costs and public health, the 2023 session will also be the first regular session since the General Assembly passed a near-total abortion ban in the summer. While some conservatives argue that the ban doesn’t go far enough–since the law allows exceptions for rape or incest–leaders probably won’t pursue amendments due to divisions in their respective caucuses.

But other topics from the abortion ban discussion could re-emerge, including contraceptive access and government support for families–both of which received enhanced funding in a bill designed to accompany the abortion ban.

Rep. Rita Fleming, D-Jeffersonville, has long pushed to expand contraceptive prescriptions to pharmacies, a more convenient option for many Hoosiers – especially those in areas with shortages of nurses or doctors.

“We know that most abortions occur among women with unintended pregnancies. So if we really want to get at the root issue–if we want to decrease abortions–then it makes sense to decrease unintended pregnancies,” Fleming said.

Legislators narrowly rejected an amendment expanding contraceptive access in the special session on a 48-49 vote which included support from several crucial chamber Republicans.

“I do think that there are people on both sides of the aisle who understand that increasing access to birth control … is a great idea. I truly think that regardless of who carries it, that it will pass in the house,” Fleming said.

Beyond reproductive health care, Fleming said that Indiana needed to increase its number of providers, especially in public health and mental health.

“We need to incentivize providers to work in Indiana and help with these mental health issues,” Fleming said. “We need to help people understand that it can be a chronic process and you can’t just treat somebody at a single visit, it’s ongoing.”

Additionally, the retired OBGYN said that she wanted to reduce administrative burdens to free up doctors to spend more time with their patients, saying that physicians averaged 15 hours each week managing pre-authorizations or denials for necessary procedures.

The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.