Gov. Mike Braun is putting his ideas into action when it comes to the state employee health insurance plan.
For 2026, the plan—which provided health care benefits to nearly 26,000 state employees and their dependents in 2025—features significantly lower out-of-pocket costs for members who use the plan’s “narrow network” that limits choice.
Employees in the Indianapolis area seeking care from Ascension St. Vincent or Franciscan Health facilities will pay much less than those seeking care at Indiana University Health or Community Health Network.
For example, the annual deductible for a single person in one plan is $3,000 versus $6,000.
In addition, the new insurance plan drops coverage for GLP-1 medications—including Eli Lilly and Co.’s Zepbound—that are prescribed for obesity treatment.
Indianapolis-based Lilly—which is rapidly expanding its manufacturing sites to produce GLP-1s—said it was “disappointed” by the state’s change, calling obesity a serious chronic disease.
The state said GLP-1 coverage for obesity is among several factors contributing to increased costs and that the change was made to keep the plan affordable. GLP-1 drugs are typically covered on employee insurance plans for type 2 diabetes but not for obesity, meaning patients can pay hundreds of dollars or more a month out of pocket.
Changes to Indiana’s employee health insurance plan reflect many employers’ struggle to adjust employee health care plans in the face of hefty price increases.
And more changes are possible for the state plan in coming years. This year, the state sent requests for information to providers about potential direct-to-employer, or DTE, arrangements, in which an employer contracts directly with a hospital or health care provider. The idea is to reduce costs further, through an even narrower network.
The state employee health plan is massive, covering 25,910 workers—more than 55,650 people when dependents are included. In the first half of 2025, the plan’s medical-claims spending was up 19.2% over the same period in 2024, according to the Indiana State Personnel Department.
With its changes to employee health insurance, the state said it is seeking to keep employee premiums affordable, maintain access to quality care and make sure the health plan is financially viable for workers and taxpayers over the long term.
The Business Group on Health, a nonprofit that represents employer interests, reported that U.S. employers anticipate a median 9% increase in health care costs for 2026. But the group said the spike would be cut to 7.6% as employers made changes to health insurance plans.
The organization said employers increasingly are looking to better manage costly chronic conditions and to motivate workers to take charge of their own health through preventive care and screenings.
The change also builds on the Braun administration’s efforts to pressure hospitals to lower costs and to encourage patients to think more like consumers. Much of Braun’s approach dates back to changes he made to his company’s health plan in 2008, when he ran Meyer Distributing.
“A lot of our health care plans, the ones that are the richest plans out there, cost three to four times as much as other plans that actually have much better results,” Braun said in October to the Indiana Mental Health Roundtable.
More narrow networks
While in the private sector, Braun said, he learned to shift his focus in health care to emphasize prevention and wellness rather than “expensive remediation” after health problems arise.
The state employee health plan, administered by Elevance Health’s Anthem Blue Cross and Blue Shield of Indiana, offers a variety of services that include virtual doctor visits, a 24-hour nurse line and state contributions to workers’ health savings accounts.
The premiums state workers will pay for their health coverage in 2026 remain unchanged from 2025. The state’s share of the costs, however, is increasing—a 12% hike for two consumer-driven health plans offered by the state and 11% for its traditional PPO plan.
Changes to the plan design still mean state workers and their families might face much higher costs, depending on where they seek care—thanks to the network narrowing that results in lower out-of-pocket costs for Anthem’s Tier 1 HealthSync plans.
In 2026, for example, a single person will continue to pay $33.06 every two weeks for coverage under the state’s lowest-premium, most popular option—called Consumer Driven Health Plan 1.
The employee will face a $3,000 annual deductible (the amount the member owes before the plan begins to pay for some or all coverage) for staying in the “high performance” network, which features care from Ascension St. Vincent and Franciscan Health for major hospital systems and OrthoIndy for orthopedics.
But starting in 2026, that employee will face a deductible of $6,000—up from just $3,500 this year—for seeking care from the state’s Tier 2 In-Network list of providers, which includes most facilities in the state, including IU Health and Community Health.
The 2026 out-of-pocket maximum for that employee will be $4,500 for Tier 1 HealthSync (same as this year), compared with $7,500 for Tier 2 In-Network providers (up from $5,000 this year).
Potential cost differences are even higher for state workers seeking care out of the plan’s provider network, with a deductible of $7,500 for a single person, up from $3,500 this year.
The state said deductible increases were implemented for Tier 2 and out-of-network providers to “intentionally steer health care consumers to higher value Tier 1” network.
“HealthSync is a narrower network of providers who agree to deliver high-quality care at lower contracted rates,” Kirollos Barsoum, spokesperson for the Indiana State Personnel Department, wrote in an email to IBJ. “This is consistent with Gov. Braun’s emphasis on encouraging employees to become informed health care consumers who utilize tools, like price transparency, to shop for the best, most affordable care.
“Additionally, this further aligns financial incentives that drive health systems to provide quality care at lower prices.”
The HealthSync network, used by about 130,000 people in Indiana, is offered by employers across the state, according to Anthem.
Anthem said Indiana care providers are admitted to the network by consistently delivering both exceptional health outcomes and lower overall patient costs. “As a result, HealthSync has delivered significant savings for Indiana consumers, employers, and taxpayers by reducing out-of-pocket expenses and helping keep premiums more affordable,” Anthem spokesperson Jeff Blunt said in an email.
Larger systems
Through legislation and executive action, the Braun administration and state Republicans this year have targeted the state’s large hospital systems, accusing them of driving up health care costs by charging high prices for care.
The GOP-led General Assembly addressed the issue of nonprofit hospital prices and Medicaid funding and reimbursement earlier this year with a law that could strip hospitals of their nonprofit status, starting in 2029, if their prices exceed state averages for individual procedures.
In addition, in a recent proposal from the Indiana Family and Social Services Administration, hospitals could face reduced Medicaid reimbursement if the rates they charge to employer-sponsored insurance plans exceed thresholds set by the Braun administration.
The unusual move is meant to pressure hospitals into charging patients with commercial insurance less by threatening to reduce Medicaid rates, which pay for the care of low-income patients and make up a significant portion of hospital revenue.
The Indiana Hospital Association, which lobbies on behalf of the state’s hospitals, said the proposed changes—which are not final—would result in a potentially $1.1 billion reduction in Medicaid reimbursement for the state’s five largest health care systems—Indiana University Health, Ascension St. Vincent, Community Health Network, Franciscan Health and Parkview Health.
The association also said Indiana’s hospitals have worked to lower their prices, citing a 2024 Forbes report that ranked the state 24th out of 50 for health care costs, an improvement from its 2023 ranking as the 11th most costly state.
Laura Brown, deputy general counsel for the Indiana Hospital Association, said she expects to see more arrangements with narrow networks like the state’s HealthSync, as well as more direct-to-employer contracts.
“Those direct-to-employer arrangements help cut the administrative burden our hospitals see significantly,” she said. “We support employers making that choice to enter into a narrow network with a hospital. “That’s why we are supportive of the state of Indiana looking at that model and really ramping that up through HealthSync.”
Differing approaches to GLP-1s
The state’s elimination of GLP-1 medication coverage for obesity is a major cost-saving measure, and Indiana is not alone in that choice. Ohio, for example, has made the same move, and other states are making changes in their GLP-1 coverage.
Starting in January, Kansas will require covered employees on GLP-1 drugs for obesity to receive prior authorization from Caremark, the state’s pharmacy provider, as well as have a body mass index, or BMI, of at least 35. Typically, a BMI of 30 or more is considered obese.
Kansas said the cost of GLP-1 for obesity has “increased significantly in the last year” and that costs are long term because patients stay on the medications.
In expressing disappointment about Indiana’s total elimination of GLP-1 coverage for weight management, Lilly spokesperson Rachel Sorvig said access to obesity-management medications should be on par with that for other chronic diseases.
“We will continue to work with other stakeholders, including Indiana state officials, to help improve access and affordability to obesity-management medications including Zepbound, for people with obesity, through traditional and non-traditional channels,” Sorvig said in an email.
Barsoum, of the Indiana State Personnel Department, said GLP-1s remain available through the plan for diabetes and other medically necessary diagnoses consistent with the plan’s formulary.
With the change, the state urged workers on GLP-1 drugs for obesity to talk with their doctors or visit Lilly’s direct-to-consumer pharmacy, LillyDirect, or rival Novo Nordisk’s similar offering, NovoCare.
“This change was driven by the high cost of these medications to treat obesity and was one of several changes made to keep the plan affordable,” Barsoum said.
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