Indiana hospital care: Employers and workers paid $2 billion above the national average
New analysis shows that $1.6 billion would have come from 30 non-profit hospitals – and employer groups are now urging state lawmakers to take legislative action.
Indiana employers and workers paid more than $2 billion above the national average for hospital care in 2020.
“Indiana’s hospital prices are among the highest in the country and are driven in part by high levels of provider concentration, which makes it difficult for these prices to come down to more reasonable levels without policy intervention,” said Chris Whaley, Ph.D., a RAND Corp. economist, who assisted the Employers’ Forum of Indiana in its analysis of their data.
The Employers’ Forum of Indiana is urging the state legislature to take action during its current session. “Each year without a statutory benchmark to keep hospital prices at the national average results in further billions of dollars in costs being passed on to Hoosiers and their employers,” said Gloria Sachdev, president and CEO of the organization.
The national average for commercial hospital facility prices is 260% of the rate Medicare pays hospitals. Prices in Indiana are 329% of the Medicare rate, which is the fourth-highest percentage in the nation.
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The facility prices of only the subset of non-critical access, nonprofit hospitals above the national average is 365% of Medicare. Bringing the prices of this group down to the national average would represent a more than 28% decrease and would have resulted in a savings of $2.037 billion for Indiana working families and their employers in 2020.
That savings would represent a reduction in net income for Indiana’s non-critical access, non-profit hospitals from $3.5 billion to $1.5 billion and a reduction of the net income margin from 18.6% to 8.8%. Of the potential savings, $1.6 billion would have come from 30 hospitals that are owned by five non-profit health systems.
The Indiana Manufacturers Association welcomes this additional information as more evidence of the impact on Indiana businesses and their employees. Manufacturing businesses employ more than 550,000 Indiana workers and are the largest sector providing health care benefits in the state.
“This is just the latest information to come out showing how much more is being charged to Hoosier employers, employees and their families for hospital care in this state,” said Brian Burton, president and CEO of the association. “A $2 billion difference between what these large non-profit corporations are charging and what is being charged on average in other states is an enormous problem. The IMA again calls on legislators to act now to reduce these inpatient and outpatient hospital prices. A little over one month remains for legislators to reduce the $2 billion price gap and put more money in the pockets of health care payers.”