These Employers Took On Healthcare Costs, and the Fight Got Nasty
‘Employers were mad,’ Gloria Sachdev, CEO of Employers’ Forum of Indiana, says. KAITI SULLIVAN FOR THE WALL STREET JOURNAL
Indiana group’s bruising battle for legislation to limit hospital fees is spurring employer groups in other states to follow suit
A bruising battle over hospital costs in Indiana previews a growing trend: Employers are sick of the ever-rising price of healthcare, and they are ready to do something about it.
The fight started with the simple goal of helping Indiana employers learn what they were spending on hospital services received by their workers. Gloria Sachdev, who is chief executive officer of the Employers’ Forum of Indiana, launched research that produced a stunning takeaway: They paid the most out of all the states studied.
“Employers were mad,” said Sachdev. “Literally pounding-on-the-table mad: ‘This is ridiculous. We’ve got to do something about this.’ ”
A drive for legislation, ultimately supported by companies including the engine maker
Cummins and Chrysler’s parent, Stellantis , turned into a brawl. An employer-backed group targeted patients’ phones with digital ads about high prices when they visited hospitals. Hospitals warned of cuts to crucial medical services and government price fixing. There was cursing.
The resulting law, passed by Republican lawmakers with bipartisan support, contained significant actions for tackling high healthcare costs.
Now the Indiana campaign—and Sachdev, who testified in Congress earlier this year—is getting attention well beyond the state. In places including Texas, Florida and Maine, employer groups are pushing for legislation blunting hospital costs, saying they are fed up with increasing rates and fees, as well as the failure of private efforts to contain them.
Employers “haven’t had a voice saying, ‘We’re mad as hell, and we’re not going to take it anymore,’ ” said Chris Skisak, executive director of the Houston Business Coalition on Health. “Gloria just lit the fuse, we’re all launching the rocket.”
In Texas, Skisak’s group helped create an advocacy organization known as Texas Employers for Affordable Healthcare, which is pushing for policies it says will bring down hospital costs. Employers in Florida are setting up their own group to lobby on issues of healthcare expense and quality. The Healthcare Purchaser Alliance of Maine has begun closely tracking legislation and testifying on bills that could affect cost and pricing transparency.
Behind the burgeoning clashes is one of the biggest—and increasing—expenses for American companies: their employees’ healthcare.
Most working-age people get their health coverage through their jobs, and employers either pay an insurer to provide the benefit or bear the cost of medical claims themselves. The cost now tops $22,000 a year for a family on average, according to the health-research nonprofit KFF.
Hospital care is the single biggest component, amounting to about $449 billion in 2021, the federal government estimates.
When Sachdev, a pharmacist by training who is now 54, became CEO of the Employers’ Forum of Indiana, she was shocked that her members often didn’t know what prices they were paying for surgeries or other medical services, because hospitals and insurers kept them secret.
The research she launched tapped the employers’ own insurance claims, which were analyzed by the think tank Rand Corp. and gauged relative to Medicare’s rates. Rand reported, in 2019, that Indiana had the highest prices among the 25 states in that year’s study by that measure, more than three times Medicare’s. (In the most recent version released last year, Rand ranked Indiana’s hospital prices seventh among U.S. states.)
Al Hubbard, a former chair of the Indiana Republican Party who has also been a White House official, was upset enough by the findings to start a lobbying group, Hoosiers for Affordable Healthcare. Sachdev became its vice chair.
The group pushed for changes including a law that would require major Indiana hospital systems to rein in prices to a national average—or face penalties.
Employers also wanted to limit where hospitals could levy charges known as facility fees, which are often added on top of the price of a medical service, partly to cover hospitals’ overhead.
Al Hubbard started the lobbying group Hoosiers for Affordable Healthcare. PHOTO: KAITI SULLIVAN FOR THE WALL STREET JOURNAL
Hoosiers for Affordable Healthcare used bare-knuckle tactics to drive support for the proposals. It arranged for ads to appear on the phones of people visiting hospitals—using so-called geofencing technology that targets digital devices in proximity to a specific location. One version displayed the multibillion-dollar value of the hospital system’s cash and investment portfolio, and said it “can afford to cut prices.”
Another ad displayed a young girl with a breathing apparatus covering her mouth and nose, with the message, “Why can’t Mom and Dad afford her hospital bills?”
The ads suggested that viewers “Join the fight to lower hospital prices!” with a link to where they could sign up to join Hoosiers for Affordable Healthcare.
Outside the Indiana State Capitol, the organization hired trucks to circle with billboards identifying hospital systems and their profit margins. “Hoosiers pay twice as much for hospital care as neighboring states like Michigan!” one proclaimed.
Inside, representatives of big employers such as Cummins and Stellantis testified about their healthcare costs.
Outside the Indiana State Capitol, Hoosiers for Affordable Healthcare had trucks circling with messages on prices. PHOTO: CATALYST PUBLIC AFFAIRS GROUP
Phil Terry, former chief executive of an Indianapolis-based beer distributor, told lawmakers he was ready to support a Bernie Sanders-style single-payer system. Terry said that he isn’t a political supporter of the Vermont senator, but that the Rand data helped convince him U.S. healthcare is so broken that only a complete makeover would work.
Hospitals pushed back. They rallied executives from around the state to defend their practices to lawmakers and warn about the effects of government regulation of pricing. “Despite financial challenges, Indiana hospitals are reducing healthcare costs for Hoosiers,” one of their ads said.
The fight sometimes got nasty. Matt Bell, a lobbyist working for the Hoosiers group, said one hospital official called him after learning of the geofenced ads and, using an obscenity, demanded that they be stopped. Some large hospital systems withdrew from the Employers’ Forum.