Indiana Employer Initiative to Rein-in Hospital Prices Spreading to Other States

Former White House official Al Hubbard and employer groups began lobbying Indiana legislators to make hospital prices more transparent, and more affordable. A recent analysis by RAND found that Indiana’s hospital prices are among the top of the nation. Hoosiers are paying about three times the fees Medicare pays for the same service. The news has employers steaming.

When Sachdev, a pharmacist by training who is now 54, became CEO of the Employers’ Forum of Indiana, she was shocked that her members often didn’t know what prices they were paying for surgeries or other medical services, because hospitals and insurers kept them secret.

Hospitals are adept at protecting their turf (and fees). Hospitals don’t rent those billboards of smiling children along the freeway for nothing! One thing that got Indiana legislators’ attention is when the mood of employers began to change. Legislators worry that it’s becoming harder to lure businesses to move to the state when its health care costs are among the nation’s highest.

Phil Terry, former chief executive of an Indianapolis-based beer distributor, told lawmakers he was ready to support a Bernie Sanders-style single-payer system. Terry said that he isn’t a political supporter of the Vermont senator, but that the Rand data helped convince him U.S. healthcare is so broken that only a complete makeover would work.

“When I have conservative Republican business people telling me they support single payer so they can get out of this process, that concerns me,” said Todd Huston, the Republican speaker of the Indiana House of Representatives.

That’s something that I have said in the past. If hospitals continue to consolidate and raise prices sooner or later even Republicans will resign themselves to support single payer.

The Indiana Hospital Association was critical of comparing the prices employers pay to Medicare, insinuating that is somehow not a fair assessment. It is actually a common metric. The head of the Hospital Association also criticized the initiative, claiming it’s a

“web of funding” tying a philanthropy, Arnold Ventures, to Indiana groups and said it “is known to support government price-setting and other anti-free market solutions to healthcare.”

It’s not clear to me what the Indiana legislature can do. It banned some facility fees but it’s not clear how much that will help. The legislation will require hospitals to submit pricing data to the state, which will compare it to Medicare prices. Perhaps that will enhance employers’ bargaining power. Nonetheless, the initiative has attracted attention from employers and stakeholders from other states.

In Texas, Skisak’s group helped create an advocacy organization known as Texas Employers for Affordable Healthcare, which is pushing for policies it says will bring down hospital costs. Employers in Florida are setting up their own group to lobby on issues of healthcare expense and quality. The Healthcare Purchaser Alliance of Maine has begun closely tracking legislation and testifying on bills that could affect cost and pricing transparency.

Something that may work but was not discussed is for the state to facilitate reference pricing. If all the employers were able to band together and negotiate a reference price it could motivate some hospitals to compete or lose out on business.

Read more at WSJ: These Employers Took On Healthcare Costs, and the Fight Got Nasty