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Health costs differ throughout state

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Also by Teresa Welsh:

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by Teresa Welsh

Thursday, December 6, 2007

Health care costs are 26 percent higher for residents of Eau Claire than residents of Madison, according to a study released Tuesday by a grassroots public interest organization.

Citizen Action of Wisconsin studied the costs in different regions of Wisconsin of the same health plan provided by the state to its employees. Some residents are paying nearly $4,000 more per year for the exact same family insurance plan.

"It really points to a very dysfunctional health care market when the cost variation is that great for the same health insurance benefits," said Robert Kraig, program director for Citizen Action and author of the report. "A functioning market should bring more efficiency and higher quality services at lower costs, but it's actually the other way around right now in health care."

The study was modeled off a similar one conducted nationally by the federal Government Accountability Office, which looked at health care costs for federal employees in different regions of the country.

The study just released in Wisconsin examined 22 different private insurance plans in the state. These companies competitively bid for the state contracts to insure state employees.

The northwest region of the state was found to have the highest rates, while the south central region had the lowest. Kraig pointed to hospital competition for better services — not lower prices — as one reason for higher costs in some areas.

"Right now a lot of the hospital decisions are based on 'we want to compete with the other hospital chain across town and we want to have the same high-tech heart surgery center they have, even if we have enough capacity in the city,' so the result is high costs," Kraig said. "In a system that is better thought out or is more competitive, you don't build an extra high-tech unit in a hospital unless there's a need."

Since insurance companies negotiate rates of services with hospitals and clinics, these companies can determine how much customers have to pay, Kraig said. In areas where one hospital chain is dominant, they can set high prices. Customers must pay more for services because they have no other hospital to go to.

Wisconsin Commissioner of Insurance Sean Dilweg said the Madison area differs from many others in the state.

"It is important to note that the Dane County region is a very unique market, with providers owning all of the health insurers in that region and state employees making up a very large mix of the consumers," Dilweg said in an e-mail to The Badger Herald.

Dilweg said he does not agree with some of the conclusions made by the study.

"The study reflects increasing health care costs that may not be attributable to insurers," Dilweg said. "The study's differences may reflect the growing consolidation of the providers that we have seen prevalent in southeastern Wisconsin, or increasing costs of physician salaries and medical equipment," Dilweg said in the e-mail.

Even if these are the reasons for high health care costs, Kraig still thinks something should be done.

"We've had almost a doubling of health insurance costs in the decade alone, and it's going to double again in the next 10 years unless we have fundamental reform," Kraig said. "We hope these disparities show how out of whack the health care market is and how much we need the state Legislature and Congress to enact real health care reform."

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Anonymous (December 6, 2007 @ 12:50pm):

Madison doctors should be force marched northwest!

Either that or the so-called "Law of Supply and Demand" should be repealed.

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