Legislators wrestle with high health care costs in interim task force

By: - August 24, 2023 6:30 am

Ball State economist Mike Hicks, left, details the role of health care monopolies in Indiana’s health care prices to a legislative committee. (Whitney Downard/Indiana Capital Chronicle)

High health care costs dominated much of the discussion during this year’s legislative session and a three-hour meeting Wednesday continued the debate during the interim. 

But action in the sphere is slow-moving, as demonstrated by an introduction from the Indiana Department of Insurance (IDOI) to the Health Care Cost Oversight Task Force. Much of the onus of new health care regulation falls on the relatively small agency, as outlined by IDOI Commissioner Amy Beard.

Task force co-chair Sen. Chris Garten, R-Charlestown, and Sen. Ed Charbonneau, R-Valparaiso, greet each other before a committee meeting. (Whitney Downard/Indiana Capital Chronicle)

She detailed new positions created by the department and the pursuit of outside contracts to comply with rules established back in 2020 to regulate Pharmacy Benefit Managers (PBMs) and establish an All-Payer Claims Database to compare prices for common procedures at competing hospitals. 

“We want to make sure that we have the right expertise,” Beard said of the hirings. “The (All-Payer Claims Database) is going to be a repository of data that will lead to more transparency, theoretically, and help with health care costs.”

A new law requires the department to gather and analyze information from non-profit hospitals and compare prices to Medicare as well as licensing PBMs. But results won’t appear before the committee before December 2024.

Task force co-chair Sen. Chris Garten, R-Charlestown, noted that the latest budget included substantial funding increases to support the department’s growth. When asked, Beard said the next key step would be securing personnel. 

A nuanced, multi-pronged problem

Wednesday’s meeting included presentations from two experts, Indiana University professor Nir Menachemi and Ball State economist Mike Hicks. Both discussed the need to transition from fee-for-service — a health care model that critics say incentivizes more transactions over quality of care — to value-based service. 

But Menachemi focused his efforts on bolstering the state’s lagging public health while Hicks pointed to hospital monopolies as a key culprit. 

“I think there’s a lot … to think about on the importance of prevention, as opposed to (just) curative care,” Menachemi said. “How healthy someone is, is a function of their behaviors … (and) Indiana is frequently ranked low on health rankings.”

The Health Care Cost Oversight Task Force was assigned to study and make recommendations on the following topics

  1. Indiana’s costs compared to other states
  2. How to reduce costs
  3. Reporting requirements
  4. Availability of value-based care
  5. Impact of market concentration
  6. Impact of prohibiting anti-competitive practices/ encouraging competition
  7. Reestablishing comprehensive health insurance association policies
  8. Pharmacy benefit managers
  9. Competition in the commercial insurance market
  10. Innovation in the design of health insurance plans

In contrast to peers, Hoosiers smoke at higher rates and exercise less — both areas public health is designed to combat — and Menachemi applauded legislators for boosting public health in the most recent legislative session.

He said that total Hoosier health care costs and premiums were roughly around the national average.

“Would we benefit from more competition? No question, yes. I still don’t think that’s the (only) issue here,” Menachemi said. 

Or a simple solution

In contrast to Menachemi’s recommendation for a multi-stakeholder collaboration to tackle a multi-pronged issue, Hicks called it fairly simple.

“It’s easy to miss the forest for the trees,” Hicks said. “… I’m going to say right up front: Indiana has a serious hospital monopoly problem.”

He pointed to five or six major non-profit hospital chains he said had stifled competition through acquisitions and mergers, pushing costs higher in Indiana than prices were for comparably unhealthy states.

“It cannot be just health care outcomes that are driving this car,” Hicks said. “… This is not health care spending in Indiana, these are the profits to IU Ball Memorial Hospital (in Muncie) that go directly to Wall Street and cannot be reinvested in our businesses and our standing operations.”

According to data he analyzed from the Indiana Hospital Association, giving birth in Muncie could cost four times as much as a delivery in nearby Anderson — or $20,397 versus $5,029. 

Hicks called for lawmakers to better enforce the Sherman Antitrust Act and to use penalties for entities that fail to make timely reports, especially for the non-profit systems he said reinvested profits in the stock market rather than lowering prices.

Lawmakers asked clarifying questions but didn’t delve into solutions or recommendations in the first of four scheduled meetings for the task force.

Garten said that — in contrast to the technical expertise of Wednesday’s meeting — the Sept. 29 meeting would focus on testimony from stakeholders and the public.

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Whitney Downard
Whitney Downard

A native of upstate New York, Whitney previously covered statehouse politics for CNHI’s nine Indiana papers, focusing on long-term healthcare facilities and local government. Prior to her foray into Indiana politics, she worked as a general assignment reporter for The Meridian Star in Meridian, Mississippi. Whitney is a graduate of St. Bonaventure University (#GoBonnies!), a community theater enthusiast and cat mom.

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