Health care costs are a target of Indiana’s policy proposals

Lawmakers continued to wrestle with high health care costs in Indiana on Thursday, determining what state actions would be effective in strengthening the free market.

Two national experts testified before the committee on the practice to share what other states have done and review options, but lawmakers seemed frustrated by the need to take action.

“… in a (true) free market we shouldn’t be doing (this). In a free market, people would know what to pay for what … we don’t have that,” said Sen. Chris Garten, R-Charlestown. “What bothers me is that we have to get involved in this from a regulatory perspective and legislative transparency.”

Garten, at the beginning of the meeting, noted that Indiana was recently ranked 10th worst in the nation by Forbes when it comes to health care, demonstrating the need for continued research and analysis.

“The study should serve as a reminder of why we are here; Hoosiers deserve better,” Garten said.

The price of monopolies

Brent Fulton, a California research professor, shared policy proposals to address Indiana’s “highly” concentrated health care and insurance markets — based on his presentation last October on the state’s monopolies.

“Our number one problem in the United States when it comes to health care (is) prices. We actually visit the doctor less than other countries, we go to the hospital less … (but) when we go to the doctor, when we go to the hospital, we pay very high prices,” Fulton told the committee.

The lack of competition occurs when systems buy smaller chains, known as horizontal mergers, or buy networks of doctors in vertical mergers.

A state can strengthen its merger review authority—Massachusetts, for example, has a merger review commission, and the attorney general also plays a role in enforcing competition. After the merger, Fulton discussed ways to limit anticompetitive contracts, increase price transparency, and introduce regulation of hospital rates.

He acknowledged other options — including a state health care affordability commission, site-neutral payments and a reevaluation of the tax-exempt status of nonprofits — but Fulton didn’t expand because he said those are covered elsewhere. The latter, in particular, is the focus of Indiana economist Mike Hicks, who often criticizes Indiana’s largest nonprofit systems for making billions in profits that he says are invested in the stock market instead of being sent back. of the locals.

But each move has its drawbacks. Regarding price transparency, Fulton noted that providers can then coordinate their prices and those that offer affordable procedures may see an opportunity to raise their prices.

“The role of government in the market is to ensure that the market functions; these markets are not functioning,” Fulton said. “There aren’t a large number of sellers competing on price… or quality.”

State pricing, as explored earlier this year in a bill that would set prices at 285 percent of Medicare rates, is something commonly done to reduce health care costs in Europe. But choosing a price can be “complicated,” Fulton said, and can easily go wrong if not done right.

Pricing still leaves room for profit

Instead of setting prices at 285 percent of Medicare rates, lawmakers instead tasked the Family and Human Services Administration with studying where hospitals are located — though at least one national expert thinks that’s a good move.

“I really think it’s … in my opinion, a healthy opportunity for hospitals to make profit margins, because of course they have to make some level of profit,” said Maureen Hensley-Quinn, senior director at the National Academies for state health policy.

“However, we are seeing … across the country, not just in Indiana, that some hospitals are being paid by private plans up to four to five times the Medicare rate, without a clear understanding of whether this has actually helped improve quality or is simply driving up prices.” “

The National Academy of Public Health Policy is an organization of government policymakers and stakeholders that highlights government solutions to common problems. Hensley-Quinn shared solutions other states have tried and types of reforms.

High levels of market concentration have left employers and consumers with few levers to address health care costs, Hensley-Quinn said, sharing sample legislation her organization has developed. In particular, she discussed site-of-service language, a bill ultimately weakened by industry pressure last session after hospitals said it would force them to close their doors or reduce services.

“(Procedures) like a colonoscopy or an MRI that can be done off a hospital campus. But typically once consolidation happens, providers will drive patients to a hospital campus…,” Hensley-Quinn said. “And then those services are more expensive.”

Lawmakers were intrigued by her presentation of data showing a lack of correlation between hospitals that care for publicly insured patients and their private insurance costs, challenging an argument that came up repeatedly during the legislative session.

Indiana hospitals say they need to charge private insurance policies more to make up for losses in care for poor Hoosiers covered by state insurance programs like Medicaid — which they say have an unsustainable and outdated reimbursement rate.

But a National Bureau of Economic Research study included in the presentation found that hospitals are more likely to invest in new technology or raise wages when rates are adjusted.

“When hospitals received an unexpected 10 percent increase in Medicare payment rates, they did not lower their prices,” the presentation said, as cited by the National Bureau of Economic Research.

Hensley-Quinn said this is showing up in other states: Medicaid and Medicare adjustments don’t always correlate with reductions in private health care spending, but rather stay flat.

But she and lawmakers stressed that many sectors of the industry have problems, including insurers who pass costs on to employers while reaping profits and pharmacy managers who fudge drug prices.

“The lack of transparency is throughout the health system; this is not unique to hospitals,” Hensley-Quinn said.

The Health Care Spending Oversight Task Force, led by Garten, will meet once more to discuss the report’s final recommendations on Nov. 13.

The Indiana Capital Chronicle is an independent, nonprofit news organization that covers government, politics and elections.

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