New law imposes 3-year ban on building nursing homes

A three-year moratorium on construction of most new nursing homes around Indiana will become law a year after the failure of a similar bill sparked a legislative ethics investigation.

Gov. Mike Pence announced Friday he would let the bill become law without his signature despite his concerns about restricting free-market principles.

The law will impose the construction moratorium through June 2018.

Supporters say the moratorium is needed because Indiana has thousands of unused nursing home beds, which are costing the state millions in annual Medicaid costs based on a payment formula that includes construction costs.

“As a strong advocate of free-market economics, I hesitate to support any restriction on commerce, but in an industry that derives 85 percent of its revenue from state and federal sources, we must always consider the impact of our policies on the cost to taxpayers," Pence said in a written statement. "Despite my reservations, I am willing to allow a partial moratorium to become law without my signature because, on balance, it serves the interests of Indiana taxpayers and gives industry time to adjust to anticipated changes to long-term care."

A similar proposal failed in 2014 after private lobbying by then-House Speaker Pro Tem Eric Turner, whose family business faced losing millions of dollars in revenue. Turner resigned from the Legislature in November.

“Hoosiers should know that this is a partial moratorium that includes several prudent exceptions that will not restrict construction of replacement nursing facilities and the construction of new nursing facilities in counties where occupancy rates exceed 90 percent," Pence said. "This legislation also will not impact the construction of assisted living and independent living facilities, which remain key to the state’s overall long-term care strategy.”