By Al Hubbard and Brian Blase
February 4th, 2022
When most people hear the word “nonprofit” they think of a benevolent organization driven by a desire to serve the community. This is certainly true of the public’s perception of nonprofit hospitals, which—like charities and churches—don’t pay federal, state and local taxes. Yet many large nonprofit hospitals charge unjustifiably high prices, which have led to irresponsible costs, exorbitant executive salaries and wasteful capital projects.
According to a Rand Corp. analysis, hospital prices in Indiana are an estimated 3.4 times as high as Medicare rates and the fifth highest in the country. A Harvard study estimated Indiana’s hospital prices are 3.6 times Medicare rates and the third highest in the country.
High hospital prices increase the cost of insurance. Every dollar an employer pays for employee health insurance is one less dollar for wages and to hire more people. If Indiana’s hospital prices were to drop to the national average, family income could rise by as much as $2,500 a year. For Indiana’s hospital prices to be at the national average, all else being equal, they would need to decline by more than 20%.