Why High Health Care Costs in Milwaukee?

Posted by Linda Gorman in Health Care, Wisconsin on May 14th, 2008 | no responses

The Wisconsin Policy Research Institute has issued a report on high health care costs in Milwaukee. I was the author. The basic conclusion is that prices would be lower if hordes of expert American shoppers were set loose on its highly integrated health care providers.

It includes an overview of the literature on hospital pricing behavior in integrated health care systems. People who want to extend government control over health care generally laud integrated health care systems as a way to lower costs and generally save the world. As was the case when the same group of people said HMOs and capitated care would save the world, the truth is probably more complicated.

The report tries to promote a beginning understanding of the behavioral drawbacks inherent in promoting integrated systems as the cure du jour. Understanding those drawbacks is essential to making cogent arguments against those who think more government is the cure for what ails us. The opening sections include some discussion of the more common claims about why health care costs are so high.

The paper also contains an extended discussion of the savings that can accrue to purchasers of health insurance when they combine a health savings account (HSA) with a qualified high deductible health insurance policy (QHDP). Even under fairly severe assumptions about illness, there are still small lifetime savings from an HSA/QHDP. The calculations use real prices and make assumptions that would favor traditional low deductible insurance policies. Graphs are included.

In addition, you might find the paper useful for its references.