Hospitals remain fully committed to making health care more affordable, and we are pleased to see the most recent RAND Corporation study recognizes that reducing the cost of care requires close collaboration between hospitals and employers, such as direct-to-employer models.
However, the RAND analysis ignores a major factor driving cost increases – big insurance companies that negotiated existing contracts and dictated market dynamics for years.
By focusing solely on the hospital side of the health care cost equation and ignoring the structural factors that drive health care spending, this report does a disservice to the much-needed effort to make health care more affordable. It will take all of us – hospitals, insurance companies, drug companies and others – to create an affordable health system that works for all Hoosiers.
Insurance companies are using the RAND data to extract cuts from hospitals, even during the pandemic, when hospitals have experienced significant financial challenges. These reductions were not returned as savings to employers or consumers who need relief now. This underscores how insurers use their clout to negotiate contracts that are profitable to them for the benefit of shareholders – not Hoosiers.
In early August, large insurance companies posted record profits during the pandemic, with Anthem reporting its net income doubling from $1.1 billion in 2019 to $2.3 billion in the second quarter of 2020.
This August, Bellwether Research conducted a statewide poll that showed 74% of Hoosiers said they were concerned about insurance company profits with just 18% expressing concern about hospitals. Three quarters of Hoosiers worry that the financial toll from COVID-19 will force hospitals, especially rural and safety net hospitals that care for the poor and those without insurance, to close.
Hospitals are not sitting on the sidelines when it comes to the effort to make health care affordable. Our members are large employers, and in some cases, the largest employer in their community. We know that the status quo is not an option.
Hospitals understand firsthand the need to manage health care expenses and keep premium increases to a minimum while providing quality benefits in a competitive marketplace.
As we have highlighted throughout the past year, hospitals across the state are working directly with employers on arrangements that bypass traditional insurance. These models, called direct-to-employer arrangements, are taking hold across Indiana and show great promise when it comes to improving quality and reducing costs.
Examples include arrangements with local governments, school districts and even large companies. Direct-to-employer arrangements frequently include locating services in or close to the workplace, making it easier for employees to access services, manage chronic conditions and identify potential health care conditions before they become serious.
Savings accrue directly to businesses, allowing them to invest in other areas, including wages.
We encourage employers to continue to seek out these arrangements with local hospitals.
Providing Hoosiers with access to quality, affordable health care will require collaboration on the part of the many players that comprise the health system. The authors of the RAND report acknowledge that a singular focus on hospital prices does not address larger issues, including the incentives for insurance companies to negotiate in a manner that drives costs up instead of down.
Hospitals remain fully committed to creating a system that works for everyone and makes Indiana stronger and healthier.
Brian Tabor is president of the Indiana Hospital Association.