For stories on the science of healthy living, subscribe to NPR's Health newsletter. Every year Jim Evans faces the challenge of keeping health care costs reasonable for the more than 400 teachers, custodians and bus drivers at Concord Community Schools. Evans, the chief financial officer for the Northern Indiana school district is trying something new this year — negotiating directly with a local hospital.
"We think that it could be significant savings," said Evans. This is possible because of a new state law that goes into full effect on Sept. 1, requiring 75 hospitals to offer employers deals below a new price threshold. Instead of a specific number, it's a multiple of Medicare rates.
The federal health insurance program for Americans 65 and older publishes standardized prices, and that has become a benchmark for Indiana and other states trying to control health costs. "What the law did was it kind of changed the conversation in terms of how we look at pricing," Evans said. "Now it's up to us to take advantage of that." Hospital prices are one of the main reasons why health care is so expensive.
In fact one out of every two dollars of commercial health insurance goes to hospital care. But most employers don't negotiate their own rates. Usually they hire an insurer who negotiates prices, but rarely have insight into how those prices compare to Medicare rates.
For years employers have absorbed the increases — KFF, a nonpartisan health research organization, found prices hospitals charged private insurers went up 30 percent over the last seven years. Indiana and other states including Vermont and Delaware have passed laws over the last few years to place upper limits on hospital prices for people with private health insurance. "This is impacting wage growth," Randa Deaton, CEO of the Employers Forum of Indiana, said about employers struggling to absorb high hospital prices.
"It impacts businesses, it's impacting our workers." The Forum commissioned a study by the policy research organization RAND back in 2017 that found some large hospitals in Indiana were charging three to four times Medicare prices. Since then the Forum has pushed for a slate of reforms to increase transparency and limit prices. "People have exhausted a lot of the low-hanging fruit for improving care and driving affordability," Deaton said.
Extract — continue reading at the source.
