There are significant health care cost disparities across the state of Wisconsin according to a Health Insurance Cost Rankings Report released by Citizen Action of Wisconsin. The report, which evaluates the cost of health care across Wisconsin’s cities and regions, also provides data on the quality of health insurance plans offered in each Wisconsin city and region.
The report’s key findings include a determination that hyperinflation of health insurance costs for large group health insurance is a long-term trend. Specifically, large group health insurance costs—meaning premiums and deductibles—have more than tripled in Wisconsin since 2000. Group health insurance costs have also not risen evenly across the state. Regional rates of inflation varied between a low of 170 percent in Madison to 365 percent in Green Bay, 254 percent in Oshkosh, 247 percent in Appleton, and 226 percent in Milwaukee. Additionally, statewide, costs in the individual market rose 28 percent when 2015 and 2016 premiums were combined.
Cost disparities are substantial across the state. Generally, Southeastern and Central Wisconsin—Milwaukee, Racine, Wausa—have the highest costs, while Madison has the lowest. In addition to the existence of the disparities, the report highlighted that the variation between the highest and lowest cost areas was significant. For example, there is a 30 percent cost variation between the highest cost metro area (Milwaukee) and the lowest cost metro area (Madison). The difference amounts to a $2,221.48 difference for a single policy each year. Broken down into annual costs, the average cost of health coverage in Milwaukee was about $9,456, while, in Madison, the average cost was about $7,235. The largest cost disparities arise in the individual market, where the highest cost areas—Wausau, Stevens Point, Wisconsin Rapids, and Marshfield—are 69 percent higher than the lowest cost areas—Madison, Appleton, and Janesville/Beloit. That 69 percent variation amounts to a difference of $4,470 per year for individual coverage between the cost extremes.
Cause and Quality
The report also examined the causes of the disparities. Health insurers regularly assert that cost variations result from underlying differences in medical cost. However, because, in Wisconsin, there are dramatic variations in relative cost within regions for different types of insurance, the report suggests that the variations are caused by distortions in the insurance market itself. As an example of the phenomena, in the Fox Valley, large group insurance is above average in terms of cost whereas the individual market costs are below average. The report also identified that there was no clear correlation between the cost of a plan and the quality of health care received. For example, some of the state’s lowest cost areas had the highest quality insurance plans.
Costs are rising in Wisconsin and they are not rising evenly across the state. The result is that residents in certain areas of Wisconsin are being, in effect, penalized for their geographic location. To remedy the issue, groups like Citizen Action of Wisconsin have called on the state legislature to find solutions to lower costs through Medicaid expansion, prescription drug cost reforms, and public insurance rate reviews. Now, the question remains: Will the state legislature answer the call?