Hoosier Hospitals Charge More For Same Procedures Than Surrounding States, Study Finds

Hoosiers with private insurance pay more for hospital care than residents in 44 other states.

A new study out Friday by the RAND Corporation — a non-partisan research firm — says Hoosiers with private plans pay three times more than Hoosiers on Medicaid.

The findings shed light on the extent to which hospitals rely on private payers for revenue.

Healthcare providers routinely say Medicaid and other government programs reimburse hospitals at rates lower than the cost to deliver those services.

But the study reveals Hoosier hospitals charge more for the same services than facilities in other states.

Indiana Hospital Association President Brian Tabor says transparency is important. He agrees with some of the study’s recommendations, such as adjusting how employers cover their employees. He says Indiana hospitals aren’t solely responsible for their rates.

“The market dynamics we have in the state are not something that has been imposed by hospitals. It is really the way that these large insurers have negotiated on behalf of employers.”

The study’s author disagrees.  

Christopher Whaley, a Policy Researcher at the RAND Corporation says, “Higher prices in Indiana relative to other states is money going to hospitals directly.” 

Some variation is expected, but prices for some of the same procedures in Michigan are half of what they cost in Indiana.

IU Health operates 18 hospitals in Indiana. Researchers found IU Health hospitals charge 23 percent more than the state average.

The health system declined an interview, but in a statement wrote in part, "The study does not factor in quality of care provided."

Study authors say there is not a clear link between hospital price and quality.

The statement continues, "IU Health is the academic health center for Indiana, serving as a primary training site for students and residents of Indiana University School of Medicine. IU Health operates referral hospitals for adults and children that treat the most complex cases in Indiana with its highly skilled physicians. This unique role for IU Health in Indiana necessarily results in higher costs that are reflected in the RAND study rankings."

While the cost of delivering care does vary, and specialty services are more expensive to offer, there is little evidence Indiana hospitals operating costs are significantly higher than those of surrounding states.

The data were compiled between 2016 and 2018, and do not account for the effects of COVID-19 on hospital finances.