Report Finds Health Care Costs Rising Faster Than Wages in Wisconsin
UW report argues health care costs are a 'pay cut' for workers, burden on businesses.
Connor Tarter (CC-BY-SA)
Like most people with a chronic medical condition, Alexandria Binanti has frequent health care costs. She needs medication, lab work and regular doctor’s visits to help her manage her diabetes.
Binanti isn’t offered health insurance in her job as head of a business development nonprofit in Lake Geneva. For several years, she’s bought insurance through the ACA Marketplace.
But she recently dropped her insurance altogether after she realized she could get better prices paying cash for her care at certain clinics.
“I’m considered middle class-salary rate,” she said. “So I don’t qualify for a lot of the state-funded programs, but I don’t make enough to pay $600 per month (in premiums) plus $1,500 per month in medication until my deductible.”
Binanti is far from the only Wisconsin worker to struggle to afford rising health care costs in recent years.
A new report from the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy found health care costs in the state have risen far faster than wages.
Ananth Seshadri, center director and co-author of the report, said increasing costs hurt Wisconsin’s economic competitiveness because insurance is often tied to employment.
“Rising health care costs are effectively a pay cut for workers and a tax on employers,” Seshadri said in an email. “Families are paying more in premiums and deductibles, while wages are suppressed. For employers, these costs are forcing real tradeoffs — cutting hiring, reducing investment, or raising prices.”
The report points to federal data that shows consumer prices for medical care services, which includes the cost of care and insurance, in the Midwest increased by 140 percent between 2000 and 2025. By comparison, the median household income in Wisconsin increased by around 83 percent during nearly the same period.
Consolidation leading to higher hospital prices
Seshadri said high hospital prices are the main driver of cost increases hitting consumers and their employers.
“Wisconsin hospitals have significant market power, and in many regions there’s limited competition,” he said in an email. “That allows dominant systems to negotiate much higher prices with insurers.”
Bobby Peterson, attorney and executive director of public interest law firm ABC for Health, said large-scale health care payers like the federal Medicare program have the ability to tell hospitals what they’re willing to pay. But he said that isn’t the case for most employer-sponsored insurance plans.
“We need to think about ways of combining those risk puddles into big pools to help provide the leverage that (employers) need to help bend that cost curve down, bend those prices down,” Peterson said.
Some data indicates high hospital prices have hit Wisconsin harder than other states. The UW report cites a survey by the RAND corporation that found Wisconsin hospitals charge private insurers an average of 321 percent of Medicare rates.
It’s the fourth highest rate in the country, according to the survey, and the highest in the Midwest. Seshadri’s report points out that the hospital prices were voluntarily reported by employers, which could affect the accuracy of the RAND survey’s comparisons.
Wisconsin Hospital Association president and CEO Kyle O’Brien pointed to this “flawed” data as one of the reasons to discount the UW report.
The WHA declined WPR’s request for an interview. But in the statement, O’Brien said the paper fails to acknowledge the “massive amount” of health care dollars that are absorbed by the insurance industry and “never make their way to a hospital or provider and leave patients to pay for their own care.”
In her work in business development, Binanti said she frequently hears from local employers about how the high cost for care is affecting their business.
“Within the last two years, it’s been an extremely big issue, to the point where there’s great (workers) that are considering leaving their jobs because they can’t afford medical coverage and they have to look elsewhere,” she said.
For people who have to buy insurance outside of their job, many have been affected by the end of the enhanced premium tax credits.
The pandemic-era program, which expanded eligibility and the amount of assistance offered to folks to help pay for plans, expired at the end of last year. That was despite an effort by Democrats in Congress to renew the credits that led to the extended federal government shutdown last fall.
Binanti said the loss of the enhanced tax credits meant she had to choose a lower-tier plan when signing up on the marketplace at the end of last year. She carefully chose her plan because it was supposed to help cover her medications right away instead of after meeting her $11,000 deductible. But after she signed up, the plan reclassified her medications, pushing her to drop the coverage.
Looking ahead, she’s not sure if she’ll try to sign up on the marketplace again or consider a different option.
“Honestly, I’ve been looking for other jobs because I need insurance at some point,” she said. “I can’t be in limbo forever. I don’t want to leave my career. I’ve established a great working relationship. I work in community betterment, and so it would really suck to have to go to a corporate place, nine-to-five grind that just pays my health insurance. But it might become a need.”
Report: Health care costs rising faster than wages in Wisconsin was originally published by Wisconsin Public Radio.
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