Understanding Wisconsin’s Health Care Costs

Introduction

Wisconsin’s health care costs, like the rest of the country, have been rapidly rising. It reflects the broader affordability crisis plaguing millions of Americans right now.

Although national health care policy, specifically the Affordable Care Act, has greatly contributed to the rise in state insurance premiums, Wisconsin's statewide condition and policies have also been very influential. Wisconsin’s mix of interventionist and free-market policy ideals resulted in a middle-of-the-pack outcome when compared to the rest of the states in the country.

The Numbers:

In Wisconsin, the average monthly insurance premium on the individual market surged by 151% from 2013 to 2019, far outpacing the national average of 129%. Moreover, the average insurance premium increase for the benchmark plan has risen 34% from just 2023 to 2026.

The 2026 average premium for the silver benchmark plan in Wisconsin is $611, putting it roughly in the middle of all states. When compared to other Midwestern states, Wisconsin is slightly on the higher side. Minnesota, North Dakota, Iowa, Michigan, and Indiana all have lower premiums than Wisconsin. Only Illinois, Nebraska, and South Dakota top Wisconsin’s prices.

Perhaps most dismaying, Wisconsin has some of the highest out-of-pocket health care costs in the country, with the median totaling $3,700 per person in 2023. Meanwhile, the national median is only $1,900, according to the State Health Access Data Assistance Center.

National Policy—The Affordable Care Act and Its Effects:

While the Affordable Care Act intended to bring down health care costs, it ended up becoming a massive contributor to the spike in health insurance premiums. In just the first few years following the implementation of the ACA in 2013, premiums in Wisconsin grew 93%. This was slightly lower than the national average of 105%.

The nearly doubling of insurance premiums stemmed from new regulations, including minimum coverage requirements, modified community rating, and introduction of standardized medical loss ratio requirements. These provisions reduced efficiency in the health care market, pushed insurers out of the market, and drove consolidation.

The Government Accountability Office reported that the market massively consolidated for the individual insurance market post Affordable Care Act, peaking in 2019. According to GAO, a consolidated market is one where three or fewer issuers make up at least 80% of the total market.

Most notably, the median number of issuers per state in the individual health insurance market decreased from 30 issuers in 2011 to 10 in 2022. The drop in the small-group health insurance market went from 13 issuers to only 5 during the same time frame.

What is Not Working in Wisconsin:

Beyond insurance consolidation, Wisconsin has also experienced several large consolidations among hospital system corporations. Major corporations such as Ascension Health, Advocate Health, and AdventHealth operate in a highly consolidated network across the state.

In total, Wisconsin has experienced one merger and 13 acquisitions in the hospital sector since 2019.

Mergers and acquisitions can increase efficiency and quality of care. However, the effect on affordability is not so clear when these are spurred on by an increasingly burdensome regulatory environment. An article published in the Wall Street Journal estimated that the 53 hospital mergers that occurred between 2010 and 2015 led to an average increase of 5% and raised overall health care spending on privately insured individuals.

Moreover, hospital mergers and acquisitions tend to have more adverse effects in rural and impoverished areas, as these regions typically have much less competition in the health care industry to begin with.

Another issue driving Wisconsin's high health care costs is physician shortages. Primary doctor shortages drive up health care prices by decreasing access to health care, and increasing the development of severe conditions and reliance on emergency services.

Approximately 33.5% of Wisconsin's need for primary care providers is not being met. While this is lower than the national average of 52.77%, there is still much room for improvement.

Policies that aim to increase the number of primary care doctors in the state could help put downward pressure on health care prices and later, insurance premiums.

What is Working in Wisconsin:

Nationwide, the health insurance market has massively consolidated under the ACA and similar anti-free-market provisions. However, compared to the rest of the country, Wisconsin has actually maintained a fair amount of health care competition.

Wisconsin is one of 6 states that never became a consolidated market, under GAO’s definition, after the implementation of the ACA.

Due to how influential market consolidation has been in driving up health care costs, this could be a key reason why Wisconsin does not rank at the top of health care insurance premiums.

Another free-market win for Wisconsin has been its use of State Innovation Waivers, which allow states to waive certain regulations under section 1332 of the ACA. Particularly, Wisconsin’s Innovation Waiver seeks to waive section 1312(c)(1) of the ACA, which requires insurers to consider all enrollees in a market to be part of a single risk pool (adjusted community-based rating).

Wisconsin projected that this waiver would decrease statewide average premiums by 10.8% in the individual market in 2024.

The State of Wisconsin’s Report on Rising Health Care Costs:

The state of Wisconsin does its own report to determine what the cost drivers are behind the Group Health Insurance Plan. The report found that the two greatest contributors to rising health care costs were rising prescription drug costs and an increase in usage of emergency services.

The increase in emergency services can be attributed to several factors including: an aging population, shortages of primary care doctors, and the rising number of Americans with chronic conditions.

A substitution of primary care visits for emergency services shifts total health care spending up, resulting in higher out-of-pocket costs and higher insurance premiums.

Rising prescription drug costs are also driving up health care costs. The United States has the highest prescription drug prices of any country. According to KFF, in 2019, the United States spent $1,126 per person on prescription drugs compared to the global average of $552.

In fact, in 2023 there was a 14.2% increase in claim expenditures in the Group Health Insurance Program for prescription drugs in the State of Wisconsin. The average annual increase in claim expenditures for the GHIP across all categories was only 2.8% in that same year.

The report also notes that this large increase in prescription drug expenditures is coming from a specific type of drug––specialty drugs. A consequence of the reduced access to primary care physicians who are normally able to detect and treat diseases before they reach advanced stages.

Conclusion:

Wisconsin’s health care costs are not the worst in the country. However, there is significant room for improvement to make Wisconsin more affordable.

While federal regulations and nationwide consolidation continue to raise costs, Wisconsin has shown that competition, targeted waivers, and market-based reforms can meaningfully slow these trends.

By utilizing free market strategies, Wisconsin can avoid the worst outcomes of rapidly rising health care costs and become a model for efficient, affordable health care.