Health Care Costs in Milwaukee 55% Higher Than Rest of Midwest

Total medical, prescription drug and administrative health care costs are 55% higher in the greater Milwaukee area than in other Midwestern metropolitan areas, according to a new study commissioned by the Healthcare Network of Wisconsin, the Milwaukee Journal Sentinel reports. HCN, a preferred provider organization with 144,000 beneficiaries, asked the consulting firm William M. Mercer Inc. to examine $470 million in claims from area companies with a total of 103,000 employees. The Journal Sentinel reports that health care costs in Milwaukee may be higher because area health insurance plans tend to be "more generous" and cover more dependents, while residents of Milwaukee are a "bit sicker and use more health care." However, the study found that the "biggest factor" in higher health costs was that providers in the area charge more. According to James Wrocklage, CEO of HCN Wisconsin, the study indicated that "more than half" of the higher costs were derived from "factors that doctors and hospitals control," including fees and "the types of services provided." According to Wrocklage, a "major conclusion" of the study was that "patients must become smarter buyers." To that end, he said, patients need information on cost and quality, which can only be developed with cooperation from health care providers. In addition, Wrocklage said that in other Midwest cities, such as Chicago, Detroit or St. Louis, employers have "more aggressively sought to lower costs."

Medicare and Medicaid
The Journal Sentinel reports that some hospital executives and physicians "took issue" with the study, instead insisting that "shortfalls" in Medicare and Medicaid reimbursements "were a key factor -- if not the key factor -- driving up costs." According to the Journal Sentinel, Medicare "underfunding" in Wisconsin is estimated to cost doctors and hospitals $1 billion per year. Paul Uomo, president and CEO of Covenant Healthcare System, said, "When the government pays only a fraction of what treatment costs, providers must make up the difference by charging more to patients covered by private insurance." Catherine Varma, a pediatrician and past president of the Milwaukee County Medical Society, said that Wisconsin doctors receive "just 50 cents on the dollar for treating Medicaid patients." According to Varma, the study's claim that physicians' charges are too high puts Wisconsin doctors "in a bad light, making us look like we are gouging." The Journal Sentinel reports that Sen. Russ Feingold (D-Wis.) plans to introduce a "Medicare fairness" bill to address regional differences in reimbursement. But Wrocklage said the study considered Medicare and Medicaid reimbursement rates and concluded that they do not "contribute significantly to Milwaukee's variation from the other Midwestern cities" (Manning/Romell, Milwaukee Journal Sentinel, 2/10).

Solution Calls for National Effort
While there are several things "that can help to ease" Milwaukee's higher health costs, only a national effort will completely solve the problem, says an accompanying Milwaukee Journal Sentinel editorial. The editorial states that Feingold "deserves applause" for crafting legislation to "correc[t]" the "perennial problem of the state not getting its fair share of federal dollars," although getting the bill passed will be a "dogfight," because "equity and fairness alone don't count for much in Washington." In addition, a few state lawmakers from both parties are discussing legislation to reinstate state regulation of hospital rates and capital spending. The editorial says this idea is "worth serious consideration, especially at a time when many hospitals are engaged in questionable construction" that increases health care costs. According to the editorial, legislative efforts are a "good start," but because local consumers "tend to dislike" health insurance plans that "restrict access to certain doctors and hospitals," they must also "shoulder some of the blame," and local community members should work to determine why health care costs are so "outsized." Regardless of any local efforts, however, the editorial concludes that "the ultimate answer will come only through a broader, more comprehensive effort, one that is national in scope. Until that happens, we're afraid this will be an exercise in putting out brush fires" (Milwaukee Journal Sentinel, 2/10).