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Indiana has an extremely consolidated hospital market, and some of the highest prices to show for it. For years, the state’s largest nonprofit health care systems have charged employers multitudes of what Medicare would pay for the same service at the same hospital.
Employers and employees alike have borne the burden, often with no way to understand what they are paying for, let alone change it. That was the environment in 2001 when I founded the Employers’ Forum of Indiana. Double-digit premium increases had become the norm, and employers had virtually no visibility into whether those rising costs reflected better care or simply bigger bills.
The forum was created to change that.
Since then, we have brought together a coalition of employers committed to improving health care value in Indiana. Along the way, we have become a nationally recognized resource for data and policy, from RAND Corp.’s Employer Price Transparency studies to our own Sage Transparency platform. These tools have helped shine a light on pricing and performance at the hospital level, something employers never had before.
We have also worked with leading economists, lawyers, academics and forensic accountants to give Indiana policymakers the tools and evidence needed to craft smarter legislation. That foundation again proved essential during the state’s 2025 legislative session, as Indiana took bold action to address hospital pricing, consolidation and accountability, advancing reforms that could serve as a model for the rest of the country.
None of it would have been possible without the leadership of Gov. Mike Braun, state Secretary of Health and Family Services Gloria Sachdev (the former president and CEO of the forum) and advocates in the Legislature. Their sustained commitment to tackling high prices and concentrated market power—despite pressure from well-funded special interests—made these wins possible.
This progress also reflects the hard work and dedication of many other value-focused stakeholders whose ongoing efforts were instrumental in passing these reforms.
Reining in hospital prices
According to the latest RAND study, Indiana employers pay the sixth-highest hospital facility prices in the country, averaging 338% of Medicare—more than our neighbors in Ohio (293%), Illinois (273%), Kentucky (253%) and Michigan (204%).
In 2023, Indiana passed legislation championed by the forum that banned the state’s largest five nonprofit hospital systems from billing “facility fees” for outpatient services performed at off-campus locations. These fees were often added simply because a hospital name was on the building, not because the care delivered was more complex or expensive. This year, the Legislature followed through by enacting HEA 1003 to put that ban into effect.
But the real centerpiece was HEA 1004, which tackles the prices themselves. According to three-year RAND data, the Big Five charge, on average, 353% of Medicare rates. Exclude those five from the calculation, and the statewide average drops to 296%.
HEA 1004 does not ask the Big Five to do the impossible. It simply requires them to align with the same pricing standards as their peers by 2029 or risk losing their state tax-exempt status.
Indiana’s major systems are highly profitable by any measure. This legislation simply ensures that large, nonprofit systems are held to a fair and reasonable pricing standard that reflects their mission and the market reality.
Tackling market power and opaque ownership
High prices do not exist in a vacuum—they are reinforced by a lack of competition.
Large systems have historically used their leverage to insert contract clauses that restrict employers’ ability to guide patients toward better-value care. That is why the forum supported HEA 1003, which bans “all or nothing” and “anti-tiering/anti-steering” contract provisions. This change gives employers the flexibility to reward high-performing providers and forces hospitals to compete on price and quality, not just market dominance.
But pricing power is also protected by opaqueness. In many cases, neither patients nor policymakers know who owns health care providers or what financial incentives might be at play. HEA 1666 helps change that. It requires health care entities to report key ownership information, closing an information gap that has long shielded consolidation and conflicts of interest from public view.
Indiana also took steps to support independent physicians by expanding eligibility for the state’s physician practice ownership tax credit. Keeping independent providers in the market is a crucial counterweight to the consolidation driving up prices.
Making the system work for employers
Most employers do not have teams of actuaries or clinical analysts on staff. They rely on third-party administrators and pharmacy benefit managers to manage health plans, and trust that those intermediaries act in their best interest. Too often, however, they do not.
That is why the forum championed SEA 3, which for the first time requires TPAs and PBMs in Indiana to act as fiduciaries—legally obligated to prioritize their clients, Indiana’s employers. This is a simple but powerful shift. It helps ensure that the people entrusted to manage benefits do so transparently, with accountability and in service of value.
A model for reform
Indiana’s health care system did not become expensive, opaque and unaccountable overnight, and it will not be fixed overnight, either. But last spring’s legislative session marks a turning point.
With strong leadership, good data and an organized voice of employers together with value-focused stakeholders, Indiana has advanced policies that address not just symptoms but the structural drivers of high costs.
This is not just a win for Hoosiers. It is a playbook for any state looking to make its health care system more transparent, competitive and fair. And we will keep adding to it until all employers and patients get the value they deserve from the health care system they pay for.•
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Kelleher is the founding CEO of the Employers’ Forum of Indiana and served as the interim president and CEO during the 2025 legislative session.
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