Indiana healthcare costs must come down. According to the RAND 4.0 study conducted last year, Indiana has the seventh highest hospital costs in the nation. There is no reason our healthcare prices should be higher than all our neighboring states of Illinois, Kentucky, Ohio and Michigan. Hoosier patients, and the employers paying for their medical care are bearing the brunt of these costs due to practices that are unfair and irresponsible. Thankfully, Indiana legislators have shown some courage in recent years to try and inject competition and transparency back into the healthcare marketplace to lower costs across the state.
Last year, the state legislature recognized the issues facing our healthcare system and began to rein in costs through free market solutions. Legislation was passed outlawing the most predatory practice going on within hospitals today called “dishonest billing.” Patients who received care at a doctor’s office were able to be billed using the same forms as if they received the care on a hospital campus, routinely the most expensive place to receive medical care. In my business, I know my customers would immediately begin looking elsewhere if I began shipping product via flatbed truck but charged them air freight rates. Not an exact comparison, but dishonest billing is dishonest billing, and thanks to our legislative leadership, such revenue-generating tactics can no longer be used to increase margins. This is good for consumers and it is good for employers.
Our employees are the greatest asset of our business, and their healthcare is important to me. As I learn more about why healthcare costs so much, I am discovering additional areas where progress is needed. This coming year, it is my hope that the General Assembly will look at eliminating Indiana’s Any Willing Provider (AWP) laws. These are laws mandating that health plans accept all legally licensed providers into their networks, regardless of performance or patient safety records. While the idea behind AWP laws is to provide more choices for consumers seeking medical care, these laws actually prevent competition between healthcare systems to provide the best service possible and have become counterproductive.
By requiring health plans to accept any provider willing to join their network, providers are disincentivized from negotiating reasonable terms for inclusion. Guaranteed entry for providing the bare minimum is causing Hoosiers to pay higher prices for lower quality medical services. The cost of sacrificing quality under the false pretense of higher accessibility is then passed on to employers.
The economics of healthcare are difficult enough to understand, but these laws appear to undermine the ability of health plans to perform quality and patient safety checks on providers, potentially exposing patients to substandard care. Our local media has reported that half of Indiana hospitals ranked “C” or lower in national rankings on patient safety, and 20 hospitals incurred Medicare penalties in 2022 due to confirmed, preventable patient harm. A glance at the state’s reporting on hospital medical errors shows that we cannot continue putting people at risk by promoting quantity over quality.
Hoosiers, along with the 80% of large private and public employers who self-fund their health plans, can no longer afford financial burden. Employers must lead the way on this issue and let our legislators know how important a full repeal of existing AWP laws would allow the private market to function as intended by promoting competition and negotiation. This would lead to more reasonable medical service prices and enable health plans to focus on quality and safety. Indiana legislators should embrace a more market-driven approach to healthcare and repeal AWP laws to reduce costs by unleashing the power of competition and choice.
Brandon Reeve is the CEO and Owner of Applied Fabricators in Greenfield.
