New state law will undercut medical cost control efforts

In a recent Quinnipiac poll about personal financial concerns, voters cited health care costs as No. 1.

And when those same voters were asked to rank how difficult it would be to pay an unexpected bill of $1,000 immediately, half of voters (51%) said it would be very or somewhat difficult.

Unfortunately, these challenges are likely to worsen for the 3.46 million Hoosiers who get their insurance through their job because of Indiana Senate Bill 189. The new law will make it harder to manage mounting health care costs.

By eliminating some of the tools employer plans use to mitigate out-of-network costs, this new measure ensures that costs will continue to spiral and that patients will ultimately pay the price.

Specifically, large employer plan sponsors are concerned about the interaction of SB 189 with a federal law intended to protect patients from surprise medical bills. Under the No Surprises Act, billing disputes among plans and providers may be directed to an independent dispute resolution process.

Congress intended that process to be a limited, last-resort mechanism to settle out-of-network claims when other negotiations fail to resolve the issue.

Sadly, rather than curbing costs, the process has become a profit engine for a small concentration of out-of-network provider groups.

A recent Health Affairs article examining the issue found that the number of cases entering the resolution process continues to grow. About 3.4 million disputes were filed between 2022 and July 2025, and the pace of filings is not abating.

Dispute resolution has become a significant driver of medical cost inflation, with mass claims and high administrative costs exceeding $5 billion between 2022 and 2024.

This is not "free" money; someone pays these higher costs. And the reality is that those costs ultimately cascade down to health plans, employers and patients through higher premiums and cost-sharing adjustments.

Network participation remains voluntary for hospitals and practitioners, who are free to negotiate their own terms. If the agreements aren't to their liking, they can simply walk away, making this an issue best left to the private market - and free from government interference.

But since SB 189 strips away one of the ways hospitals and providers can be encouraged to join insurance networks and reduce health care costs, the law essentially guarantees that the current surge in medical costs will continue to squeeze employers and working families across the state.

Importantly, SB 189 also raises serious federal preemption concerns that are guaranteed under the Employer Retirement Income Security Act.

Namely, the Indiana law includes an overly broad definition of "health carrier" that includes "any other entity that provides a plan of health insurance, health benefits, or health care services." Since ERISA prohibits states from controlling the design or administration of benefit plans established under and governed by this federal law, there are significant concerns about how the new Indiana law will affect plans already governed by ERISA.

Politicians often talk about making health care more affordable. But at the same time, they pass laws and regulations - at the request of hospital lobbyists, big pharma, Wall Street-owned provider groups and other health industry giants - that actually increase costs for patients.

SB 189 may be the best example of this in any state legislature so far this year.

This law should be repealed. At a minimum, SB 189 should be amended so that it no longer violates federal ERISA law, which protects the high-quality health benefits of millions of Hoosiers who work for multi-state employers.

Costs. Concern. Confusion. All three of those words come to mind as employers prepare for the implementation of SB 189. It's not too late for the legislature to fix this before your health care costs go up even more.

James Gelfand is president and CEO of The ERISA Industry Committee.