OPINION: Hospital monopolies are an urgent legislative problem

Since the end of the Great Recession, more than a quarter of economic growth in Indiana has been swallowed by ballooning healthcare cost growth. Our healthcare spending is a clear national outlier, ranking only behind Alaska. Since the end of the Great Recession, increased healthcare costs absorbed a stunning one-third of growth in Hoosier family incomes. For about half of Indiana families, just the extra cost of healthcare monopoly prices is more than their combined property and income taxes.

One effect of this is that for a decade, Indiana’s economy grew at only half the pace of the nation as a whole. Healthcare cost growth is a top three leading cause of our dismal economic recovery, and a drag on Hoosier families and businesses.

Of course, higher healthcare costs have helped one part of our economy. The most profitable industry in Indiana is the not-for-profit healthcare sector. For example, one well-known not-for-profit network in the state earned $25,000 in profit per employee in 2019. That’ll be about a billion dollars in 2019, even after their generous $500 per worker year-end bonus.

The healthcare lobby wants you to believe that they are so profitable because Hoosiers are much less healthy than other Americans. That is condescending and pompous nonsense. While there’s plenty of need for better health among our state’s population, the cost problem in Indiana healthcare is due primarily to monopoly pricing among our state’s large not-for-profit networks.

Thankfully, the General Assembly is taking action and there are several bills designed to weaken the monopoly power of hospitals. While these bills are nowhere near enough to remedy the problem, the most promising is a bill requiring broad healthcare price transparency. This legislation would require every transaction, from every medical facility to be reported to an independent contractor who will report prices online for all the world to see. The law would also end gag rules that prevent price information from making it to consumers, businesses, insurance companies and competitors.

Monopoly hospital systems tremble at the prospect of this. The very basis of their ability to create and sustain their monopolies comes from withholding competitive pricing information from the people who pay medical bills—insurers, businesses and families. They are also worried about another part of this bill that would require non-profit hospital boards to hold semi-annual public meetings to discuss rising cost.

This bill is not a panacea. Few of us consumers will be able to pick and choose our healthcare according to price. What the price transparency bill will accomplish, is to pull back the veil of ignorance about pricing that Indiana’s hospital monopolies have exploited over the past two decades. The bill also helps remind somnolent not-for-profit hospital board members about their obligations under the state’s non-profit law. It will also force them to answer questions in the communities in which they live.

Of course, this bill has not passed, and hospital lobbyists are busy trying to weaken it to the point of irrelevancy. It remains to be seen if this much first step will come to pass this year. Still, that won’t be enough to shield Indiana from painful national scrutiny over the monopolization of its healthcare markets. As one political consultant told me, it would be political malpractice to ignore Indiana’s healthcare cost crisis in the midst of a national election. To put this in context, the New York Times has been far more aggressive about reporting Indiana hospital monopolies than any media outlet in the state.

Perhaps the most interesting legislation of the session involves ‘surprise billing.’ For those of you who don’t know, surprise billing is what often happens on vacation. Many of you have experienced taking a kid to a local clinic away from your local hospital for something routine, like an ear infection only to be billed the equivalent of a year of car payments. Two proposed bills would cap the price a provider can charge in such ‘out of network’ cases.

This bill offers plain, old-fashioned price controls. This is a stunning, if unwitting, admission that the current efforts to deliver reasonable market-based healthcare in Indiana have failed miserably. Of course, the hospital lobby opposes the heart of this bill. That is a cynical and myopic view of a very real healthcare problem that will worsen in the years to come.