SE Wisconsin health care costs continue to approach Midwest and national averages

The Greater Milwaukee Business Foundation on Health, Inc. (GMBFH), known for its research on the cost, efficiency and quality of health care in southeast Wisconsin, this month released a follow-up study to ones done periodically since 2003. It compared southeast Wisconsin commercial health care premium costs to Midwest and national averages. The study, conducted by consulting firms Mercer and Milliman, looked at 2011 employer and employee health care premium costs of commercial health plan members under the age of 65. Results for 2011 showed the difference between southeast Wisconsin average health care premium costs and Midwest average premium costs dropped slightly to seven percent above the Midwest average compared with eight percent above in 2010. These results show a pattern of substantial progress since the first study was conducted using 2000 claims data (see table below).

Calendar Year

Southeast Wisconsin cost in Relation to Midwest Average

2000

55% higher

2003

39% higher

2007

9% higher

2009

8% higher

2010

8% higher

2011

7% higher

In addition, southeast Wisconsin premium costs continued to improve compared to the national average. Southeast Wisconsin costs were six percent higher than the national average in 2011, down from seven percent higher in 2010.

Several factors were listed in the study as contributing to the continuation of higher than average costs for southeast Wisconsin compared to the Midwest include:

  • While the utilization and services mix in the area was below the Midwest average, southeast Wisconsin physician payment levels were estimated to be 20 percent to 25 percent higher than Midwest averages in 2011.
  • Southeast Wisconsin had a slightly higher average age of participants (44 vs. 43)
  • Employers in southeast Wisconsin offered slightly richer plan designs than comparative plans in the other states

While richer benefit plans and an older employee demographic contributed somewhat to southeast Wisconsin costs being seven percent above the Midwest average overall, the driving factor that keeps southeast Wisconsin health care costs higher than the Midwest average, is the significantly higher physician reimbursement rates in the area. It does appear that hospitals have brought their costs in line with the Midwest average.

In 2013 the BHCG plans to update studies it has commissioned in the past, analyzing how BHCG employer members costs compare to the southeast Wisconsin region as a whole.

To review the entire report and a companion report analyzing several key factors influencing southeast Wisconsin commercial payer hospital payment levels, go to the GMBFH Web Site.


Return to The Catalyst