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The large Indiana hospitals say they want to do their part to lower the cost of health care for Hoosiers. Then they should do the right thing and lower their prices. Stop raking in record profits year after year in excess of 15%, stop shifting funds around to mask the bottom line and simply negotiate responsible reimbursement rates in line with the national average. That is how they can help Hoosiers.
But that is not the approach of too many large metropolitan hospitals. Instead, they lay the blame on everyone else, including the health of Hoosiers, without acknowledging what study after study continues to show. Indiana hospitals operate at higher costs than nearly all other hospitals in the country. Not only do they refuse to acknowledge this fact, but they also try to deflect by arguing the wrong metrics are being analyzed or that the statistics are outdated.
They promote their transparency by saying their financial statements are filed with the Indiana Department of Health and that estimates of services are available online. However, absent from that information is any type of transparency as to what makes up those costs. Health insurers must publicly file rates with the Indiana Department of Insurance and those filings must outline all aspects of what goes into the rates, including profit. Consumers can review those rates on the Department of Insurance’s website. Nowhere can that same information be found for hospitals because they are unregulated. A “black box” exists in the health care system, concealing how hospitals arrive at the exorbitant costs they charge. For large hospital systems, the job of hiding their costs is easy because they are sheltered by their not-for-profit tax status.
Small county and rural hospitals face true financial burdens, and the insurance industry will continue to look at ways to work with those facilities to maintain their viability. Meanwhile, Indiana’s large systems continue to seek ways to bolster their bargaining power with the clear goal of protecting outrageous margins.
The Indiana General Assembly has called on health insurers and hospitals to provide solutions to assure that Hoosiers are not paying more than the national average for hospital services. The health insurance industry has collectively committed to work with employer partners to push back against the bargaining power of the large hospitals which has been created through mass consolidations. The employers who live in the same communities as the medical providers who serve their employees are strategically situated to apply the necessary downward pressure on high hospital costs, a burden they should not have to bear.
Hoosier businessman Al Hubbard’s organization, Hoosiers for Affordable Healthcare, has done a great job of rallying employers to say, “enough is enough.” He has rightfully questioned the efforts of all stakeholders to do their part.
The challenges submitted by the Indiana General Assembly and Hoosiers for Affordable Healthcare have been heard by the health insurance industry loud and clear. Indiana health insurers will not hide behind confusing statistics or attempt to deflect from their responsibility to lowering costs. They acknowledge the critical role they will play in lowering the cost of care for all Hoosiers.
The real question is, when will the large Indiana hospitals come to the table and acknowledge their obligation to do the same? •
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Marty Wood is president of the Insurance Institute of Indiana.
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We will be waiting a very, very long time if we expect hospitals to voluntarily reduce prices. Employers, insurance companies and consumers have tried to reduce prices for years, no success. Combined, Medicare and Medicaid represent over 50% of health care spending. After decades of experience with every conceivable payment methodology, they no longer negotiate with healthcare providers. They set prices with a “take it or leave it” mentality. It works. My advice to the State Legislature, peg commercial pricing to Medicare/Medicaid payment rates. It has been proven by every statistical measure that Indiana hospitals are way out of line by this measure. Tough problems require tough solutions.