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High Healthcare Costs in Indiana May Be Responsible for Businesses Choosing Elsewhere

By Jack H. FarnbauchNovember 14, 2019

When people think about Indiana, they associate it with a low cost of living and affordable housing. It should follow then that Indiana has affordable healthcare, right? A recent Indianapolis Star feature looked at whether Indiana’s high health care care costs have proven a deterrent in attracting new businesses to the state. And the results were that yes, Indiana has driven away some new business by its high healthcare costs. 

Several factors likely contribute to why Indiana registers some of the highest hospital prices around. Those in the hospital industry note that Indiana’s population scores poorly on many health metrics, such as smoking rate and obesity. Unhealthier people are more likely to rack up high health expenditures. Other experts point out that Indiana residents and employers have a preference for so-called open networks, which do not restrict where employees can seek care. Narrow networks tend to serve as a bargaining chip for the entity negotiating hospital prices. The end result of these factors lead to much higher prices on employer-sponsored insurance. 

About a year and a half ago the Employers’ Forum and Rand Corp. researcher Chapin White collaborated on a study using hospital costs shared by employers that showed that on average Indiana outpatient care prices were more than three times those of Medicare. The study provided a rare look at what hospitals charge employers who provide insurance to their employees. The study called the prices “shockingly high” and notes that out of 22 states for which claims data was available Indiana sits on the high end for average hospital costs.

This problem also appears to be getting worse because of these “wide” network choices. General Motors, for instance, entered an agreement last year with Henry Ford Health Center in Michigan to provide health care for about 24,000 of the automakers' salaried employees. The plan would cost up to $900 less annually than GM's next cheapest plan. Under the plan, employees would face steep charges if they opted to go out of network.

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