Jonathan S. Levin: Indiana cannot ignore market power hospitals wield

Indiana employers have pushed for more affordable hospital prices for years, and last year’s reforms were a meaningful result of that effort. But there is no evidence yet that employers are paying lower hospital prices. What is clear is that the health care systems with the greatest market power continue to have some of the highest prices in the country.

That market power is the product of consolidation, and Indiana is one of the clearest examples. From 2011 to 2020, health care spending per capita grew 48% in Indiana compared with 35% in comparable Midwestern states. Indiana’s commercial hospital prices rank ninth highest in the nation, with employers paying roughly three times what Medicare pays for the same services at the same hospitals. A recent New York Times essay by Zack Cooper made a similar argument nationally, noting that Americans direct their anger at health insurers when hospital prices are the real driver of health care costs.

The financial burden of these prices is substantial. The average cost of employer-sponsored insurance for a family in Indiana totals $24,725 per year, including employer contributions that otherwise could have gone toward wages. That’s roughly 34% of Indiana’s median household income, and it doesn’t include deductibles and cost-sharing payments.

In many Indiana communities, patients and insurers face highly concentrated hospital markets with few options. In markets dominated by a single health system, insurers have little choice but to include it in their networks regardless of price. Indiana’s insurers are also highly consolidated, but their leverage is limited when the dominant system controls most hospital beds in a region. Insurers also lack incentives to push down prices because costs are passed along directly to self-insured employers and through higher premiums for fully insured employers.

Indiana policymakers have quantified the cost of consolidation. Hospitals involved in mergers from 2005 to 2015 saw inpatient price increases 13.2% higher than hospitals that didn’t merge. Fort Wayne illustrates the point. According to bed count data from the Health Care Affordability Lab, Parkview Health controls approximately two-thirds of the hospital beds in Fort Wayne and operates more than 200 physician group locations nearby. Health care prices there are 29% above the national average for inpatient care and 73% above average for outpatient care.

Vertical integration compounds this problem. Indiana’s largest hospital systems increasingly employ physicians directly or acquire physician practices. In the Kokomo metropolitan area, Ascension and Community Health Network control 90% of the hospital market while also employing most physicians in the region. When the same system controls both referrals and admissions, competitive alternatives shrink and prices generally rise.

Given this market structure, claims that Indiana hospital prices have come down deserve scrutiny. The analysis cited to support that argument measures prices at the health system level, averaging hospital prices with physician practices owned by those systems, which obscures what employers and patients in specific communities pay for hospital care. By that broader measure, Indiana’s five largest systems averaged 252% of Medicare in 2024, but the rate rises to 293% when looking at hospital prices alone.

That same precision matters when discussing which hospitals are driving Indiana’s affordability challenges. Smaller and rural hospitals face genuine financial pressures, and their closures can have devastating consequences. But the systems driving Indiana’s affordability problems are not the ones at risk of closing. The policy tools for supporting vulnerable facilities are separate from the question of whether large systems with market power should face greater accountability for what they charge.

Indiana has started to address the prices among these large systems. House Enrolled Act 1004 (2025) established a benchmarking framework to incentivize the state’s five largest nonprofit health systems to keep their hospital prices at or below a statewide weighted average by 2029 to keep their nonprofit status. Lawmakers also required hospitals to offer direct-to-employer plans at or below 260% of Medicare. In the state’s April 2026 report, all five of the big health systems met this threshold, which is encouraging. In our conversations with employers, many are engaging in productive discussions with hospitals on new purchasing arrangements.

But the work is not finished. Given the depth of consolidation in Indiana, additional policy changes will still be needed to improve affordability and slow the growth of hospital prices. Policymakers should continue working to bring hospital prices in line with what Hoosier employers and workers can afford.•

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Levin is vice president of health care economics and policy research at Employers’ Forum of Indiana.