INDIANAPOLIS — Healthcare in Indiana isn't much more expensive than in most of the country, but the average Hoosier ends up paying more for it. A new study by the Richard M Fairbanks School of Public Health at IU Indianapolis explains why:
- Hoosier employers use more self insurance than the national average
- Indiana lacks Accountable Care Organizations
- Indiana has a serious shortage of doctors and surgeons
- Hoosiers are dying faster than other Americans
- Indiana spends very little on public health
Healthcare for the average American costs about $10,191 a year. In Indiana, it costs about $10,517. That is paid for through insurance premiums, employer contributions, and public health spending. But in Indiana, more of that cost comes out of pocket.
The average American has to pay $2,710 out of pocket. In Indiana, the number is $3,155. That's an extra $445 a year, per Hoosier, in out of pocket expenses.
A big part of the problem is that the vast majority of Hoosiers, 2 out of every 3, are coved by "self insurance" plans.
What is self insurance?
Employers have two main ways of providing insurance for employees. Fully-insured plans mean your work pays an insurance company to insure you. More and more employers nation-wide are going this method.
But in Indiana, self insurance is king. For large employers, it can be less expensive to just cover your bills instead of paying for an insurance company. That makes it less expensive for your employer, but not necessarily for you.
Many self insurance plans have high deductibles, so you pay less every check but you have to pay for more out of pocket before the insurance kicks in. And all but the largest employers don't have the negotiating power the big insurance firms do, so they often don't get the same discounts. So even when your insurance kicks in, the services still cost more. Self insurance plans also don't have to follow state insurance regulations like coverage requirements.
But even beyond who pays for the healthcare, there aren't enough people making sure it's done right.
A lack of accountability
Indiana also lacks in Accountable Care Organizations. These are groups that help coordinate care between providers to make sure high-quality services are being delivered without needless waste. The average state has 37 ACOs to help make sure people are getting good care without unnecessary costs. Indiana has only 20.
A report by Change Healthcare found Indiana is one of only four states in the country that doesn't have a state-wide plan to adopt these value-based payment plans.
Not enough doctors
Indiana also has a serious shortage of doctors, even worse than the national average. Indiana has about 8% fewer primary care doctors per person than the American average. There are 14% fewer surgeons per person too. Wages for those jobs are also higher, which pushes up prices for everyone.
But even as Indiana doesn't have enough doctors or surgeons, it has many hospital beds 13% more per person than the national average.
More likely to die
Hoosiers are also less healthy than the rest of the country. Our death rate is 15% higher than the rest of the country, for all causes. For example, heart disease is 10% deadlier in Indiana than it is in the rest of the country, and the gap is widening. The national mortality rate for heart disease has fallen by almost 16% since 2020. But it has actually increase in Indiana in that same time.
Even where Indiana is making progress, it's coming slower than in the rest of the country. Since 2020, the death rate for cancer has fallen by about 4% in Indiana. It's down by more than 22% in the nation overall.
It's especially bad for new moms and babies. Hoosier moms are 35% more likely to die than moms in the rest of the country. Newborn babies are 28% more likely to die than their out-of-state cousins.
Low public spending
And even as Hoosiers face higher death rates and out-of-pocket medical costs, the state government is spending much, much less. The state of Indiana spends less per person than 74% of the states in the country. Federal funding is also lacking for Hoosiers.
For comparison: $45 per person goes to public healthcare in Ohio. It's less than $16 per person in Indiana. That's the second lowest amount in the country.
