Tired of watching its employers struggle to afford the cost of healthcare, Republican-controlled Indiana is trying a traditionally liberal tactic to control costs: setting government price controls on hospitals.
Under a law enacted last year, five of Indiana’s largest nonprofit hospital systems cannot charge patients covered by job-based health plans more than an established price cap. Hospitals that fail to keep prices below the threshold by 2029 risk losing their tax-exempt status — which would mean owing millions of dollars in state taxes.
Even before that penalty kicks in, the law requires these hospitals, which control nearly half the state’s hospital market, to offer direct-to-employer contracts — bypassing insurers — and stay within limits set by the state. Hospitals that don’t comply face a $10,000-a-day penalty.
Many other Indiana hospitals must comply with this provision beginning in September.
Indiana’s law comes amid growing frustration with rising insurance costs and hospital prices, the biggest driver of growing healthcare costs.
Government price controls, of course, are nothing new in healthcare. Since the mid-1960s, the federal government has set prices it pays hospitals for treating Medicare enrollees, as states do for Medicaid patients. Those two government programs cover more than 135 million people nationwide.
But hospitals face no such government limit on what they charge for the more than 165 million Americans covered by employer-paid insurance.
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