Republican lawmakers in Indiana are setting government price controls on hospitals so that employers can afford health care costs. Under Indiana state law, the five biggest nonprofit hospitals are prohibited from charging working people with employer coverage more than a set limit for their health care, reports Phil Galewitz and Samantha Liss for KFF Health News. Hospitals have until 2029 to reduce their prices or could lose their not-for-profit status and pay millions in taxes.
As of now, the hospitals must offer employers direct contracts to cover the health care costs of their employees. They cannot charge more than 260 percent of Medicare for an array of procedures. Insurers would be cut out of these contracts. If hospitals don’t comply, they face $10,000 a day in penalties. Rising hospital costs are driving up health care costs considerably.
Mike Braun, Indiana’s governor, believes these laws are critical. In his words, “government has to intervene because healthcare is run like an unregulated utility.” Indiana will base its price cap on the average cost of inpatient and outpatient services in the state.
Of course, Medicare and Medicaid have always controlled hospital and physician costs. And, they cover more than 135 million Americans. But, these government price controls have never applied to the 165 million working Americans with employer coverage.
Indiana is following in the footsteps of a few other states. Vermont limits hospital rates for people with employer coverage. And, Washington and Oregon limit hospital rates for state employees with state health insurance. While the states limit these rates, Oregon allows hospitals to charge twice Medicare’s rate and still has seen tens of millions of dollars in savings.
New York and Colorado are looking to limit hospital rates as well. But, hospitals are arguing that these rate controls do not affect labor costs, technology costs, and the cost of supplies, all of which are ballooning. Those costs need regulation as well.
What’s noteworthy in Indiana is that hospitals charge some of the highest rates in the country, but doctors are among the lowest paid in the country.
Here’s more from Just Care:
- Without hospital price regulation, expect gouging
- Hospital prices demand government attention
- Hospital prices out of control, competition not working
- Corporate health insurance is killing hospitals
- Medicare for All reemerges as the smartest way to guarantee Americans affordable health care
