Indiana must protect employer-driven health care choices

By JIM MERRITT
Guest Columnist

Across Indiana, businesses of all sizes work hard to provide quality, affordable health benefits for their employees and their families. But recent efforts – both at the state and federal levels – threaten to take those choices away.

Legislation like Indiana Senate Bill 140 and House Bill 1606 introduced last month, along with misguided proposals being considered in Congress, unfairly target pharmacy benefit managers (PBMs) under the guise of reform. These efforts would strip employers of the tools they rely on to offer quality prescription drug coverage at an affordable price, ultimately raising costs for businesses and workers.

Employers and their employees are the first ones to feel the growing costs of health care, and they depend on PBMs to push back against those increases. PBMs play a critical role in our healthcare system, helping health plan sponsors offer the pharmacy benefits their employees need at a price the employees can afford. On average, PBMs save employers and families $1,040 per person each year by leveraging their scale to negotiate lower prices and rebates. As a result, PBMs make it possible for businesses to offer high-quality, affordable benefits while keeping premiums and out-of-pocket costs in check. PBMs give employers flexibility and a wide range of choices so that each health plan sponsor can design the benefits that best suit their needs. A national survey of nearly 700 employers found that “88 percent of survey respondents expressed satisfaction with their PBMs’ ability to provide the lowest costs for employees at the pharmacy counter.”

The value of PBMs extends far beyond employers and those who rely on prescription medications. The University of Chicago Economics Professor Casey Mulligan found that PBMs create an annual $145 billion value for society. Mulligan’s research highlights that PBMs’ impact goes beyond the employer-PBM-patient relationship. They benefit the entire healthcare system – including drug manufacturers, pharmacies, and government programs – by introducing cost-saving mechanisms and competition that help lower prices.

However, lawmakers are targeting PMBs and creating a spider web of regulations to disable them. Proposals like spread-pricing bans, government-mandated pass-through pricing, and “delinking” policies would strip away these cost-saving mechanisms, leaving businesses with fewer choices and higher expenses. These misguided policies claim to help patients, but in reality, they would increase healthcare costs by over $26 billion annually – a devastating hit for small businesses, workers, and families.

Legislation like SB 140, considered in Indiana, would add a $10.64 tax on many prescriptions filled in the state and even ban employers from offering specific lower-cost pharmacy options, such as mail-order. Mail-order is a convenient and affordable option that helps patients stay on the medicines they need by ensuring they get their prescriptions delivered right to their doors.

As someone who spent years in the Indiana legislature, I know the importance of allowing businesses to operate with flexibility and market-driven solutions. Employers – not government mandates – should decide how to structure their health benefits. When companies have the freedom to choose the best options for their employees, they can better control costs, improve coverage, and provide stability for their workforce.

Weakening PBMs would force businesses to make difficult decisions – either absorb higher healthcare costs, shift those costs to employees through higher premiums and out-of-pocket expenses, or reduce their benefits altogether. None of these outcomes help working families.

Instead of interfering with employer-driven health plans, policymakers should strengthen the private market and ensure businesses retain the tools to keep health care affordable. Indiana’s workers and employers deserve policies that protect their benefits, not those that make coverage more expensive and complicated to access.

Legislators should reject harmful policies undermining employer choice and free-market competition in health care. The right approach is straightforward: support businesses, protect the private market, and preserve the flexibility that keeps prescription drug costs under control for Hoosier families.

Jim Merritt is a former member of the Indiana State Senate, serving 30 years.