Indiana Targets Hospital Price Hikes with New Law Backed by Gov. Braun

In a move that promises to shake up Indiana’s health care landscape, Governor Mike Braun has ceremonially signed into law a major piece of legislation aimed at reining in nonprofit hospital pricing and bringing much-needed transparency to medical billing.

The measure, authored by State Representative Martin Carbaugh (R-Fort Wayne), tackles a growing concern among Hoosiers—skyrocketing hospital bills from institutions that operate under the nonprofit label while posting profit margins far above national norms.

“Nonprofit hospitals should be operating in the public interest, not padding profits,” said Carbaugh. “This law is about fairness, accountability, and putting patients first.”

According to state data, Indiana’s five largest nonprofit hospital systems have maintained profit margins between 9 and 17 percent since 2017—substantially higher than the national nonprofit hospital average of 3 percent. Carbaugh’s legislation, House Enrolled Act 1004, takes direct aim at that discrepancy.

Under the new law, the state’s Office of Management and Budget will analyze pricing data from 2023 and 2024 to establish a benchmark average for hospital services. Beginning in 2029, large nonprofit hospitals with annual revenues exceeding $2 billion will be required to align their pricing with that statewide benchmark—or risk losing their nonprofit status.

That provision carries significant weight. If hospitals fail to comply, they could forfeit their tax-exempt designation, exposing them to millions in taxes and regulatory changes.

“This newly signed law ensures that nonprofit hospitals remain accountable to their patients and help reduce the financial strain on Hoosiers who are already burdened by high medical costs,” Carbaugh said.

The legislation also includes a major restructuring of how Indiana allocates federal Medicaid dollars, particularly to strengthen health care access in rural areas. A newly created Managed Care Assessment Fee will help fund the state’s Medicaid program without placing as much burden on Indiana’s general fund—an effort lawmakers say will stabilize funding for low-income and underserved communities.

While the bill received broad support from Republicans, reactions from Indiana Democrats were more cautious. Several acknowledged the need for increased transparency and greater accountability in hospital pricing, but raised concerns about what they described as the legislation’s punitive approach.

State Rep. Maureen Bauer (D–South Bend) expressed unease about the potential unintended consequences of revoking nonprofit status: “Instead of these punitive measures, let’s work together to find solutions that address health care costs without compromising the quality and accessibility of care.”

Other Democrats warned that blunt tools like tax-status revocation could end up reducing access to care, especially in rural and low-income communities. They called for a more balanced approach—one that pairs pricing benchmarks with additional investment in public health infrastructure and safety-net hospitals.

Even with those reservations, the new law marks a significant step in Indiana’s broader effort to make health care more affordable and transparent. As the ceremonial pens are put away, the pressure now shifts to the hospital networks to prove they can fulfill their nonprofit missions—and deliver care at prices Hoosiers can actually afford.