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Indiana’s top legislative leaders are turning up the pressure on hospitals and health insurers to lower the “out-of-control costs” of health care, saying prices in Indiana are well above the national average and need to come down.
House Speaker Todd Huston and Senate President Rodric Bray sent a joint letter Tuesday to 20 hospital and insurance executives, telling them to submit a plan by April 1 that would lower Indiana’s hospital prices to the national average or lower by 2025.
“Absent a viable plan, we will be left with no choice but to pursue legislation to statutorily reduce prices,” the letter said.
The letter did not say what kind of legislation might be drafted to address the cost of health care in Indiana. But it signaled that the Indiana General Assembly would not hesitate to wade into one of the most complex and regulated industries in the nation unless the players took sufficient steps to lower prices.
The letter pointed out that Indiana’s hospital facility fees—or the expenses charged by hospitals to cover their overhead and keep the doors open—are the fifth-highest in the country, according to a 2020 study by the RAND Corp.
The study also found that Indiana ranks sixth in the nation for hospital price disparities—ahead of New York, California, Massachusetts and other larger states with higher costs of living—when it comes to what privately insured people pay for care compared to what Medicare would have paid for the same service.
“The ability of Hoosiers to pay hospital prices that are often 50% or more above the national average is untenable and unfair,” said the letter from Bray and Huston. “To ensure the economic viability of Hoosiers’ health care payers, we need your help to address this issue.”
Several hospital systems based in Indianapolis, including Indiana University Health and Community Health Network, referred questions Tuesday to the Indiana Hospital Association, a trade group that lobbies on behalf of its members.
Brian Tabor, the association’s president, called the letter from Bray and Huston “disappointing.” He said the RAND study conflated unit costs of health care with Indiana’s relative health care costs, which he said were in line with neighboring states.
“I think it sort of perpetuates this notion that Indiana is a health care cost outlier,” Tabor said. “And I don’t think that’s helpful in trying to create a collaborative environment to address affordability.”
He added that several hospital systems have recently taken steps to freeze or lower prices.
Last month, Indiana University Health, which charges the highest hospital fees in the Indianapolis area, said it is freezing prices through 2025 to help get in line with national average prices.
And last summer, Parkview Health System in Fort Wayne said it reached an agreement with insurer Anthem Blue Cross and Blue Shield of Indiana to provide more affordable services. According to the RAND study, Parkview was the most expensive hospital system in Indiana, when compared to Medicare.
Details of that agreement were not made public. Anthem did not immediately respond to IBJ for comment on the Parkview agreement or the letter from Bray and Huston.
But some groups have said Indiana hospitals charge excessively high prices, citing numerous studies, including the RAND study. One group, Hoosiers For Affordable Healthcare, says a large portion of the cost of hospital care is shouldered by Indiana employers and their workers, which they say holding the state back and hurting Hoosiers’ wallets.
“Please join Hoosiers for Affordable Healthcare in thanking Speaker Huston & Senate President Pro Tempore Bray for their leadership in lowering the cost of hospital care for Hoosiers!” the group tweeted on Tuesday.
The letter from Huston and Bray took pains to thank Indiana doctors and hospitals for their work during the pandemic. But in a press release, Huston, R-Fishers, said he has have heard from numerous Hoosiers and employers who are “rightfully frustrated and overwhelmed” by health care prices.
“The time is now to bring stakeholders together and craft a plan that would deliver tangible savings to payers,” Huston said in written remarks. “Our goal is to maintain a high-quality of care while bringing costs down.”
Bray, R-Martinsville, said in a press release he understands that health care pricing structures are complicated.
“But that’s not an excuse to ignore the problem and let prices grow—at a rate significantly higher than inflations—at the expense of hardworking Hoosiers and business owners.”
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About time……start on the drugs too…Healthcare cost are out of control….
Hospitals, health systems, insurers, and clinicians must do their part to promote efficiency, improve quality (which lowers costs), and reduce expenses. But at the same time, the legislature can do their part, which to date they have failed to do, which would include effective tobacco and nicotine (including vaping) restrictions, providing universal pre-K, increased support of K-12 education to include expanded physical and health education, development of green spaces and community recreational facilities, eliminating food deserts, and increasing healthcare coverage through continued expansion and support of HIP 2.0. We are all in this together. Improved health and health care value in IN is in everyone’s best interest: Citizens, providers, and legislators.
Great response – Edward F.
Great to see some action taken. We need to approach the out of control costs from many angles.
Primary prevention is clearly an important strategy to improve population health and reduce healthcare expenditures, as noted by Edward F.
Another proven strategy is to systematically reduce low value care, which are tests and treatments that are not needed based upon medical evidence and patient preferences. A number of published studies estimate that low value care and wasteful practices constitute as much as 30% of healthcare costs. There are policy levers to reduce low value care such as Value Based Insurance Design and Accountable Care Organizations, as well as on the ground efforts to help front line providers identify and reduce low value care tests and treatments. Other states have formed collaboratives to address these issues consisting of large employers, healthcare payers (Insurance companies), and health system leaders. I hope that Indiana legislators consider reducing low value care as a part of their effort to reign in healthcare costs.
Maybe, just maybe, instead of cutting $1B in taxes (see one of today’s other stories), the legislature could use those funds to address some of issues Edward so succinctly described
Prevention. Do you not live in the community? Most Hoosiers cannot practice basic prevention, like not eating fast food every day. Yet, we all demand to have access to PPO networks. The hospital groups know this and have leveraged to negotiate for higher reimbursement rates from insurance carriers. We have to start to embrace narrow, high-performance, integrated networks AKA HMO. The medical groups have to be held accountable for their fee schedules. None of them could operate on the medicare reimbursement rate alone, but they should not be able to charge 3 x what medicare would pay.
A simple certificate of need would cut down on the construction of new “hospitel” complexes.
Look at the new IU Methodist complex, being built less than a block away from a building that is less than 20 years old.
Wouldn’t more hospitals lead to more competition and thus lower prices?
republicans want to interfere with private business and regulate profit margin- isn’t that communism/socialism? I agree that healthcare cost are out of control but I don’t think our Indiana legislature will make anything better
I thought the Republican party stood for small government and free markets. How does a legislative takeover of the Indiana healthcare system fit with that model. How did that price control thing work out for Nixon? Government overreach? Hmm… Where have we heard that recently?
Republicans don’t believe anything that they used to. They’re now so scared of minorities “taking their place” that they are willing to destroy America. Their dream is to turn America into a fauxocracy like Hungary or Russia.
Ohh…have the university buy up all of downtown and make it a tax free and healtth care free zone.
Why are Legislators just recognizing this problem? I signed up for Medicare last year and in Washington Township, which is in both Marion & Hamilton counties; if I lived 10 blocks north, I would bet a better deal living in Hamilton instead of Marion. The agent’s explanation is that Marion is older, sicker, and poorer; so we pay more. Everyone should be charged the same rate for Medicare services as we all paid the same price as we worked and drew a paycheck. We also have more people who & EMTs do not pay Social Security taxes because they are part of the government; Police, Fire Teachers, Military, Health Care, Union Members in general. They all have their own systems which we have to bail out when they go broke; but they do not contribute to the public pool We also have more government buildings that do not pay property taxes. Everyone should get the same deal – Steven Pettinga, Indianapolis