Healthcare visit turns into $1300 bill and an ask for pricing transparency
Melissa Dietrich found herself with a surprise $1,300 bill for routine blood work that should have been covered by insurance. She had to spend hours on the phone to negotiate it down.
One day Melissa Dietrich, a self-described farm girl from outside Fort Wayne, was like any other number of Americans spending hours on the phone to negotiate down a surprisingly high medical bill.
The next, she was whisked into the Indiana Statehouse to meet Gov. Mike Braun and his wife Maureen, whom Dietrich would sit next to at the State of the State address.
There, she served as a physical embodiment of one of Braun’s foremost issues and one of the largest battles within the legislature: tackling the rising and opaque cost of health care.
The fight over health care costs at the Statehouse has been muddied by power, money and finger-pointing, as influential groups have pushed their own narratives about who to blame for high costs. The lobbying giants haven’t even agreed on the basic question of whether Indiana actually has an outlier health care cost problem to begin with, though reputable studies insist the state does.
Industry leaders among hospitals, insurance and drug manufacturers spend several hundreds of thousands a year on lobbying and political contributions, landing frequently among the state’s top spenders.
But Braun has effectively planted his flag in the debate, not only by expressing openly his skepticism of the hospital and insurance lobby, but by appointing Gloria Sachdev as his secretary of health ― the former director of the Employers’ Forum of Indiana, which commissioned a series of studies directing the blame onto hospital fees.
Though the legislature has broadened its focus in recent years beyond just hospitals, looking at pharmacy benefit managers, physician noncompetes and price transparency, legislation targeting hospital bills have proven some of the toughest to negotiate.
Braun has already written roughly a dozen health-related executive orders attempting to enact more price and financial transparency, including one requiring a study of how much nonprofit hospitals pay to the community in the form of charity care, compared to the value of their tax exemptions. Meanwhile, lawmakers are debating a bill proposing price controls on the largest nonprofit hospitals, but it’s already been scaled back.
“I don’t think the last administration had any interest wrestling with the biggest industry in our state,” Braun told IndyStar. “Now that we’re getting some real conversation going, they’re coming in and doing what they shouldn’t be doing. They’re trying to water down these reforms. They ought to be helping us more in terms of what they can do to reform themselves, not to perpetuate a broken status quo.”
In the same speech where Braun said the issue has been in the past “too tough to tackle because of entrenched special interests,” he gave a shoutout to Dietrich.
Dietrich’s story is relatively simple, but emblematic: She’s 49 years old, no major health issues to speak of, works nights for a national retailer and helps on the family farm. Just after moving to her current job in 2022, she went in for an annual wellness visit and bloodwork. She gave the provider her new insurance card.
Yet, she got a bill around $1,300, for what should have only cost her a copay of $35 with her new insurance. It was only after hours on the phone with her employer, her insurer and the hospital that she got the bill down to about $300.
“Everybody that I’ve talked to consistently rolls their head, rolls their eyes, not at me, but just at the situation, because everybody can relate to this,” she said. “Some people unfortunately just suck it up because they don’t have the time or the energy to fight back.”
A rough-and-tumble fight
There’s been no shortage of drama amid the rhetoric war, and there are powerful players on all sides.
When Sachdev, a pharmacist by trade, started leading the Employers’ Forum in 2015, she unanimously heard from members that their highest pain point was the affordability of health care. She cold-called a Rand Corp. researcher to commission a study of the prices being paid by self-insured employers at Indiana hospitals, compared to what Medicare reimburses those hospitals for the same services.
In 2019, a second iteration came out looking at 25 states and gathering data from more than just self-insured employers. That study put Indiana’s hospital prices at the top of the chart.
That caught the attention of Al Hubbard, founder of E&A Industries, former chair of Indiana Republican Party and an influential voice in Indiana policy circles. He formed a nonprofit Hoosiers for Affordable Healthcare and asked Sachdev to serve on the board.
A third Rand study released in September 2020 found Indiana’s hospital prices were sixth highest out of 49 states. The following year, Indiana’s legislative leaders cited this and a Harvard University study showing similar rankings in a letter to hospital and insurance executives urging them to find their own solutions or else legislators will force solutions upon them.
IU Health was the only large nonprofit hospital system to announce a price freeze to bring their prices in line with national averages. Otherwise, industry leaders’ responses to that letter from lawmakers offered no specific plans.
So the 2023 legislative session saw some of the first attempts at tackling the hospital-price issue head-on. A House priority bill sought to penalize hospitals that don’t keep their prices charged to commercial patients in line with a certain threshold ― a percentage of Medicare, modeled after the Rand studies. The Indiana Hospital Association pushes back against Rand’s methodology with force, referencing studies of their own that argue Indiana is not actually an outlier and suggesting the real drivers of higher bills are prescription drug costs, health plan administrative costs and pricy physicians.
By session’s end, that became a data-collection bill, punting real action to the 2025 legislative session.
Hence, 2024’s six-way Republican primary for governor held significance for industry leaders. Two months before the election, IU Health CEO Dennis Murphy sent an email to about 25 of his hospital C-suite peers, imploring them to donate to the campaign of Brad Chambers, who he deemed most sensitive to the industry’s concerns. And he specifically cautioned against Braun, whose ideas he said would “very harmful to our industry.”
Hubbard, meanwhile, of Hoosiers for Affordable Healthcare, had given $10,000 to both Braun and Chambers by this point. He would go on to give Braun an extra $20,000.
Braun hasn’t forgotten about what happened during his primary.
“They didn’t like my running for governor because I’ve been talking about this,” he said.
Relations seem to be smoother this year. The Indiana Hospital Association has new staff, including a new CEO, Scott Tittle, who says they’ve had “great conversations” with the administration and legislative leaders.
Murphy, too, the IU Health CEO, said he’s had “productive discussions” with the administration.
“I’m not sure that I disagree with Gov. Braun that the price of health care needs to be managed and needs to come down,” Murphy told IndyStar. “And I think we are working with the administration to figure out how to do that.”
Are hospitals actually to blame?
The predominant rhetoric over the years at the Indiana Statehouse, and corresponding price-controlling legislation, has placed the spotlight on the state’s largest nonprofit hospitals ― systems taking in billions a year in revenue, such as IU Health, Ascension St. Vincent and Community Health Network.
Researchers broadly support the conclusion that hospital prices are what make the United States an outlier compared to other wealthy nations. The U.S. spent twice as much per capita on health as comparable countries in 2021, a Peterson Center on Healthcare and Kaiser Family Foundation study found, and inpatient and outpatient care is the largest category of health spending responsible for that variation.
Why? Because large, consolidated hospital systems can charge higher prices, argue economists like Loren Adler, associate director at the Center on Health Policy at the Brookings Institute.
“There often isn’t any meaningful competition,” he said. “These are generally profit maximizing entities trying to make money. … At the end of the day, it’s hospital prices, the per unit prices, are the thing that is the most out of whack with the rest of the world.”
A study from the University of California, Berkeley, in 2022 found most of Indiana’s metropolitan areas are considered “highly concentrated,” meaning just one or two systems own all the hospitals in a given market. This study’s analysis of 27 hospital mergers between 2005 and 2015 found an increase in prices by more than 10% post-merger.
Hospital leaders point to the complexity of health care pricing. Government payers ― those using Medicare or Medicaid ― make up two-thirds of patients at Indiana hospitals, according to data from the Indiana Hospital Association. By their calculation, the government reimburses for these patients at a rate that’s below the cost of providing the care, and the state’s Medicaid rate hasn’t risen in decades. So hospitals cost-shift to commercial payers, a smaller segment of their revenue base, to make up for that.
Consolidation, too, is what has saved some rural hospitals from going away, Tittle argued.
“I’d suggest that consolidation… shouldn’t be seen as a bad thing, but also making sure that Hoosiers have access to the care they need,” he said.
They also point out, Hoosiers are unhealthy. Indiana routinely ranks in the bottom 10 states in terms of its health outcomes, such as rates of cancer, diabetes and infant mortality.
Patient advocates point to the hospitals’ own audited financial statements, which show operating profit margins ranging ranging anywhere from -5% in recent lean years to 10% other years, depending on the system. They point to the millions hospital executives make in salaries, to the billions nonprofits hold in cash and investments. They point to the marble floors and art fixtures and water fountains adorning some of the largest hospitals’ lobbyist.
“They’re just poor mouthing, but they’re not hurting,” Marni Jameson Carey, president of the advocacy group Power to the Patients, said of hospitals. “They should profit, but not excessively.”
The hospitals argue margins around 5% and bountiful cash reserves are right on target for making sure they can continue operations indefinitely and weather any storms, from global pandemics to cyber attacks.
“We can’t be the corner restaurant that didn’t make it during COVID,” Murphy said. “We have been here for 100 years, and we need to be here for another 100. We can’t go away.”
‘It’s a cabal’
In various public statements, hospitals also generally point a finger at the power insurance companies wield over premiums.
Some advocates believe big hospitals and big insurers are equally complicit in a concentrated system where consumer-facing prices are hard to find. Braun is among this camp, as is Matt Bell, a lobbyist for Hoosiers for Affordable Healthcare. Like with hospitals, there are only a small handful of large insurance companies controlling the Indiana market.
“So where is the impetus for those two to ever enter into a negotiation on behalf of me as an employer?” Bell said. “They’re co dependent, and that’s what we’ve created with the big systems, in my opinion. They get mad when I call it a cabal, but it’s a cabal.”
But insurers argue they aren’t actually on equal footing with the hospitals. Some hospital systems institute “all or nothing” clauses, which say that in order for them to accept a certain insurance network, that network has to take on all the hospitals within that system. Meanwhile, insurers are federally required to have enough doctors in network within a certain distance of all its members. In other words, a given insurer might need a certain hospital more than the hospital needs the insurer. (House Bill 1003 this session would ban all-or-nothing clauses.)
“Negotiations with the systems are barely negotiations,” said Marty Wood, president of the Insurance Institute of Indiana. “The hospitals have the upper hand across the board.”
On the other hand, advocates argue insurance companies don’t have incentive to push back. The Affordable Care Act requires insurance companies to spend 80% of their revenue from premiums on health care and the remaining 20% on administrative costs and profits. But 20% of a bigger number is just a bigger number.
“So the insurance companies pretend that they’re negotiating to the lowest possible price,” Carey, of Power to the Patients, said. “If the hospitals charge more, and they just shrug and say, ‘Oh, the prices are going up. Too bad.'”
Fed up
After her ordeal, Dietrich decided she’d rather drive out of state for care.
That’s because she found a direct primary care provider, a model in which she pays an upfront monthly membership fee to access primary care services without insurance.
So when she needs the occasional checkup or quick fix ― like the piece of wood lodged in her thumb a month ago from working on the farm ― she now drives to a strip-mall DPC office two and a half hours away, in Detroit.
“The only way that I can see to pare it down, is to cut the fluff, get rid of the nonsense,” she said. “We’re tired of the nonsense.”
Contact IndyStar state government and politics reporter Kayla Dwyer at kdwyer@indystar.com or follow her on X @kayla_dwyer17.
