Op-ed: Indiana legislators’ proposed hospital price controls bad for Hoosiers
Nonprofit hospitals and their dedicated staffs have spent the past three years heroically battling COVID-19.
Now, these same hospitals that cared for so many of us and our loved ones – at great financial and emotional expense – are under attack from some legislators who are being misinformed by special interest groups, which stand to gain from their misguided efforts.
The series of bills in question, ostensibly designed to limit hospital costs (certainly a desirable objective by itself) would have the perverse effect of forcing nonprofit hospitals to cut services or potentially close, limiting access to clinical care, reducing the workforce, making recruiting and retaining physicians more difficult and significantly deterring the attraction of new businesses to Indiana. In fact, the bill would be so detrimental to hospitals that current versions specifically exempt all government-owned municipal and county hospitals as well as for-profit hospitals which refuse to treat the poor and elderly on Medicaid and Medicare.
Likewise, the bills propose no price controls or caps on insurance companies or on businesses that supply pharmaceuticals, medical devices, medical equipment or staff to hospitals. These proposed bills are patently unfair and quite simply reflect bad policy.
What are nonprofit hospitals asking the legislature to do instead of cowing to the insurance industry? Quite simply, to look at what we believe are the true drivers of health care costs and to address the root causes of the expense dilemma.
Medicare, Medicaid and charity patients make up approximately two-thirds of all hospital patients, none of whom pay the true cost of the care they are receiving. Indiana has not increased Medicaid reimbursement rates in more than 30 years. Imagine getting by on your 1990 income. This stagnant reimbursement regime means someone else has to pay, namely patients covered by commercial insurance (employers).
Insurance companies reimburse Indiana physicians at the fourth lowest rate in the country. This low reimbursement rate effectively requires hospitals to supplement the difference by increasing physician salaries to make up for the under-payments by insurance companies. Without the additional financial support of hospitals, there would be fewer primary care physicians and specialists in Indiana to serve Hoosiers.
Indiana has grossly underfunded public health spending, ranking 45th nationally. While Indiana spends less on preventative care and wellness than almost all other states, it has the dubious distinction of ranking near the top for smoking, drug abuse, lack of prenatal care, obesity, and water and air pollution, all of which markedly increase the cost of care in Indiana as compared to other states.
Indiana effectively taxes hospitals to meet the state’s Medicaid obligation. Rather than allocating all the funds necessary to support the Medicaid program for the poor, our legislature instead assesses nonprofit hospitals to generate additional matching funds from the federal government, requiring Franciscan to pay taxes of $113,000,000 per year, only one of many taxes it pays.
In addition to these core structural issues, a few of our legislative leaders appear to have been influenced by special interest groups to attack nonprofit hospitals for creating capital reserve funds used to reinvest in staff, modern facilities, equipment and to prepare for downturns in the economy or other unexpected crises such as a pandemic. Unlike the for-profit sector of the healthcare economy, nonprofit hospitals do not exist to increase quarterly earnings and distribute profits to shareholders. Instead, they reinvest funds to better serve the most vulnerable and infirmed and to prevent illness, not just treat it.
We ask Indiana residents to contact their local legislative leaders and urge them to vote against the proposed legislation. We strongly suggest our legislators address the true cost drivers by increasing Medicaid reimbursement to all providers, increasing funding for public health programs and eliminating the subsidy the state receives from hospitals through the hospital assessment fee. These components will dramatically improve the health of Hoosiers, attract businesses to the state and maintain access to health care services.
Without intervention, the care Hoosiers and their loved ones will need in the future may not be available.
Thomas Parent is the chairman of the Franciscan Alliance Western Indiana Board of Directors. Calvin Bellamy is the chairman of the Franciscan Alliance Northern Indiana Board of Directors.
This article originally appeared on Lafayette Journal & Courier: Op-ed: Legislators’ proposed hospital price controls bad for Hoosiers