Transparency and accountability: the path to meaningful health care pricing reform
House Bill 1004 introduces measures to increase transparency in hospital pricing and to put pressure on exorbitant cost.(Getty Images)
As the voice of Indiana's manufacturers, the Indiana Manufacturers Association (IMA) is deeply concerned about the escalating cost of health care — particularly hospital prices — which place Indiana businesses at a significant competitive disadvantage. Transparency and accountability are the answer.
The Employer Price Transparency Study – Round 5, conducted by RAND, has consistently shown that Indiana's hospital prices are among the highest in the nation, ranking 8th overall. Hoosier employers and employees are paying nearly three times what Medicare pays for the exact same services at the same hospitals — an average of 297% compared to the national average of 254%. This alarming statistic demonstrates a clear need for reform.
These inflated hospital costs have a direct and negative impact on Indiana's manufacturing sector. Every dollar spent on excessive health care charges is a dollar that cannot be invested in workforce development, technological advancements, or business expansion.
In a global marketplace, our ability to compete hinges on our efficiency and our ability to attract and retain a skilled workforce. The current high cost of health care in Indiana makes it more difficult for manufacturers to offer competitive benefits packages and to allocate resources strategically for future growth.
Since self-funded employers pay directly for their employees' health care claims, escalating hospital prices translate to immediate and substantial increases in their expenditures. These rising costs force employers to allocate more resources to health care, potentially diverting funds from other critical business areas. Ultimately, the financial burden of high hospital prices significantly affects the sustainability and competitiveness of all employers, but most acutely self-funded insurance models.
House Bill 1004 takes meaningful steps toward addressing this issue. It introduces measures to increase transparency in hospital pricing and to put pressure on exorbitant costs. For instance, the bill establishes a hospital facility fee excise tax for charges exceeding 265% of Medicare facility fees.
Under this legislation, nonprofit hospitals would be mandated to report aggregate data on billed services and their comparison to Medicare reimbursement rates. Nonprofit hospitals charging more than 300% of their modified Medicare reimbursement rate could forfeit their nonprofit status. These provisions are critical for bringing much-needed transparency and accountability to our health care system.
The passage of HB 1004 is not just about lowering health care costs; it is about strengthening Indiana's economy and ensuring a prosperous future for our manufacturing industry and its employees. By addressing the issue of high hospital prices, we can free up valuable resources that can be reinvested in our workforce, making Indiana a more attractive place to do business and create jobs.
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