Indiana passes law threatening non-profit status of expensive hospitals
Indiana's governor, Mike Braun, has signed a landmark bill that would strip charity hospitals of their non-profit status if they continue to charge high prices.
The legislation, the first of its kind in the United States, followed uproar across the state after a Guardian series in October that investigated how one major Indiana non-profit hospital system bought up its competition, then hiked its prices, leaving businesses and patients struggling to pay their medical costs.
In the wake of the Guardian investigation, Braun, then the Republican gubernatorial candidate, and his Democratic rival both criticized the hospital system, Parkview Health, for its high prices, and lawmakers vowed to take action against the non-profit chain, which charged some of the highest prices in the country despite being based in Fort Wayne, Indiana, the US's most affordable metro area.
Braun signed the legislation into law on Tuesday. It comes at a time of growing concern across the US about healthcare costs and medical debt.
To implement the law, the Indiana office of management and budget will first study prices across the state and come up with a price benchmark for non-profit hospitals in consultation with the legislature, according to the bill's author, Martin Carbaugh, a Republican representative who represents a district that includes Fort Wayne. Non-profit hospitals will then have until 2029 to get their prices under that average, though Carbaugh hopes some will lower their prices before then as they negotiate with insurers.
'We'll start to see the downward pressure put on them right away,' he said. 'The hospitals know they can't just go for broke and raise costs, only to have to lower it again in 2029.'
According to data compiled by Hoosiers for Affordable Healthcare, an Indiana advocacy group, the legislation could result in average price reductions as large as 40% for Parkview, and similarly sized cuts for other large state hospital systems.
'It's gonna be beneficial to everybody,' said Doug Allen, a small business owner who has struggled to keep up with Parkview's healthcare costs for his employees. 'Maybe people won't be hurting so bad. Maybe they won't think twice before coming to the hospital. Almost everybody around here is on a payment plan with Parkview. Everybody owes money to Parkview.'
Parkview Health did not respond to requests for comment but has previously said it is committed to lowering healthcare costs.
In a statement, the Indiana Hospital Association said it was 'concerned by the potential loss of non-profit status for hospitals based on meeting an unknown statewide average commercial price in the future. This does not take into consideration the uncertainty of rising cost pressures such as tariffs, inflation, and other significant economic factors that will further threaten the financial stability of Indiana's health care ecosystem.'
The group added that it looks forward to 'continuing our work with legislators and Gov Braun's administration on future solutions that strike the right balance of lowering costs while maintaining access for Hoosier patients'.
The US spends far more on healthcare than other large, wealthy countries, a trend that has been exacerbated by decades of hospital consolidation limiting competition in the healthcare sector.
Carbaugh said he was aware of how high healthcare prices are across the country and said Indiana's legislation might be a model for other states too.
'It's great to be a leader,' he said. 'I'm happy to be part of leading that charge.'
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