Report: High Hospital Prices are Driving Overall Health Care Cost Increases
MADISON – Wisconsin has some of the highest hospital costs in the country according to a new report from RAND, a nonprofit and nonpartisan research organization. The new data, which was released on Monday, explains that hospitals in the Badger State charge 318 percent of Medicare rates – a typical baseline for measuring health care prices. The national average is 254 percent.
Notably, Wisconsin also has the highest hospital costs in the Midwest.
| State | Relative Cost Compared to Medicare |
| Wisconsin | 318% |
| Indiana | 297% |
| Illinois | 247% |
| Minnesota | 238% |
| Michigan | 192% |
| Iowa | 185% |
According to the report, hospitals account for 38 percent of health care spending by the privately insured population, making it a key contributor to rising health care costs.
“Rising health care costs are making it more and more difficult for employers to provide quality and affordable benefits to their employees,” said WMC Associate Vice President of Government Relations Rachel Ver Velde. “Unfortunately, a lack of competition and transparency is hurting patients and making health care increasingly unaffordable.”
Wisconsin hospitals argue that costs are higher in Wisconsin because of the quality of services and the need to subsidize uncompensated care due to patients on Medicare, Medicaid and those that are uninsured.
However, the RAND report explains that higher-priced providers often do not have higher quality than lower-priced providers. Additionally, there was no statistically significant relationship found between overall cost and the composition of patients – meaning both arguments lack the data to back them up.
“The truth is that health care is essentially the only thing you pay for that you do not know the price until after receiving the service,” added Ver Velde. “This report should serve as a catalyst for policymakers to enact meaningful hospital price transparency legislation, which would empower employers, health plans, and ultimately, patients to make informed decisions and lower overall costs.”
As the report details, “federal policies have sought to improve the transparency of prices in this market but have had little success.” While hospitals are required to post prices, hospitals are still widely noncompliant, and enforcement is lacking.
Another key point from RAND is that “a substantial evidence base attributes increases in hospital prices to hospital mergers and market consolidation.” That data can be plainly seen when comparing Advocate Health’s relative cost to Medicare over the last three years. The hospital’s relative cost increased from 409 percent in 2020 to 530 percent in 2022 – the same year Advocate Aurora and Atrium Health announced they would merge to form the multi-state hospital system.
“Competition will drive down prices, and transparency will create more competition,” concluded Ver Velde. “Wisconsin is one of only seven states where costs are three-times that of Medicare or more. Employers and patients cannot afford for this to continue.”
Click here to read the full RAND study.
Click here to read the supplemental material from the report.
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