Op-Ed: Ignoring the Market Power of Big Insurance is Driving the Cost of Healthcare

Written by Scott B. Tittle, IHA President

Hospitals are too often portrayed in public debate as the exclusive reason healthcare remains expensive—with consolidation, perceived leverage in insurer negotiations, and physician employment blamed for driving up the cost of care.

These are worthy issues for policymakers to examine. But focusing solely on hospitals ignores a far more consequential force that is hindering healthcare affordability for Hoosier employers:

Big Insurance.

For the sake of transparency, let’s start with the facts about hospital prices, an issue the Indiana General Assembly has intensely scrutinized.

The most recent state-commissioned study found the average commercial prices of Indiana’s five largest nonprofit hospital systems—Ascension St. Vincent, Community Health Network, Franciscan Health, IU Health, and Parkview Health—were 33 percentage points below the statutory benchmark and all had lowered their prices each year of the State’s multi-year study.

Yet, despite this progress, Hoosiers are still facing higher insurance premiums and rising out-of-pocket costs, and employer-sponsored health insurance premiums continue to rise here and nationally.

This is what happens when Indiana’s insurance market is controlled by TWO dominant payors that together command nearly 90% of the market. Of course, I’m talking about Elevance (formerly Anthem) and UnitedHealthcare—which happen to be two of the biggest funders of the Employers’ Forum of Indiana, a frequent critic of hospitals when it comes to pricing.

Think about it. While hospitals have demonstrably lowered their prices, those savings have clearly not reached employers or patients—because the medical bills for Hoosiers with commercial insurance are largely dictated by these two corporate giants.

If you want proof, simply look at the savings that are realized when the Big Insurance middleman is cut out. When employers work directly with their local hospital to form direct-to-employer (DTE) partnerships, the cost of healthcare goes down for everyone.

Community Health Network’s partnership with the City of Fishers led to eliminating premium contributions by its 500 employees and redirected healthcare savings toward employee compensation.

Parkview Health’s partnership with employers, covering nearly 60,000 lives, includes a low-cost plan that offers savings off commercial insurance rates of more than 25%.

The same is true for independent and county hospitals as well. Hendricks Regional Health has more than 600 DTE contracts with employers across the state, collectively saving them $15 million in annual healthcare expenditures.

But critics are right about one thing—hospital consolidation is happening in Indiana due to massive external pressures.

With smaller hospitals operating on razor-thin margins, below the national median, they are getting squeezed by insurers and by the government’s historically low reimbursement for Medicare and Medicaid, forcing some to seek out a partner to avoid closure and sustain access to healthcare in the communities they serve.

Hoosiers living in towns like Winchester, Logansport and Paoli would likely not have a local hospital today if it were not for Ascension St. Vincent, Parkview and IU Health. We should all be thankful for these and other systems working to ensure Hoosiers in rural areas of our state continue to have access to the care they need.

This begs an important question to consider:

Does the public prefer independent hospitals that are struggling financially to remain independent until they are forced to reduce services or close—or, if necessary, to partner with a regional care delivery network that can help sustain local access to healthcare?

The final point of contention is about physician employment.

Maintaining an independent physician practice is very hard to do—especially when doctors are getting bullied by Big Insurance on the commercial market and suffer from the fourth lowest physician reimbursement in the nation.

Rather than get crushed by Goliath, Dr. David and colleagues are forced to seek out hospital employment to keep their practice open for patients given they routinely sustain $100,000 or more in losses operating alone compared to when they are employed by a hospital system.

Indiana hospitals will continue to push back against Goliath and the narratives driven by Big Insurance that are leading Hoosier employers and policyholders to ever higher healthcare costs.

Because the facts are clear:

Our members have answered the call from policymakers to bring prices down. Hospitals are preserving access to care in communities that would otherwise lose it. Yet Hoosiers continue to pay more because the real market power in healthcare remains concentrated in the hands of two dominant insurers.

If Indiana is serious about making healthcare more affordable, the conversation cannot end with hospitals. It's time to apply the same level of transparency and accountability to the insurance industry. That's where the next chapter of healthcare affordability should begin, and we invite groups like the Employers’ Forum to lead that charge.