Health care is starting to feel less like a benefit and more like a pay cut for a lot of Wisconsin workers, according to a new University of Wisconsin–Madison analysis that finds medical costs are sprinting ahead of wages. Families and employers across the state are getting squeezed by higher premiums, bigger deductibles and steep hospital prices, leaving some workers weighing a brutal choice: pay for coverage or pay cash and hope for the best.
As reported by Wisconsin Public Radio, the Center for Research on the Wisconsin Economy released the study in early April and argues the long-term trends amount to “a pay cut for workers and a tax on employers,” in the words of center director Ananth Seshadri. Using federal price data, the paper notes that consumer prices for medical care services in the Midwest rose about 140 percent between 2000 and 2025, while median household income in Wisconsin climbed roughly 83 percent over the same period.
Hospital prices driving much of the increase
The UW team pins much of the problem on how hospitals set prices. Citing a national RAND analysis, the report notes that private insurers often pay several times what Medicare pays for the same services. In employer-reported data highlighted by the UW authors, Wisconsin hospitals on average were paid about 321 percent of Medicare rates.
RAND’s broader work shows wide variation by state and health system, and the Wisconsin researchers caution that employer-reported numbers can make apples-to-apples comparisons tricky. For those who want to dive into the weeds on methods and data, the full UW paper is available from the Center for Research on the Wisconsin Economy.
Why workers are dropping coverage
On the ground, those abstract percentages turn into very real tradeoffs. Alexandria Binanti of Lake Geneva told reporters she dropped her Marketplace coverage after discovering it was cheaper to pay cash for her diabetes care, because the combination of premiums and medication costs had become unaffordable. As Urban Milwaukee reports, the expiration of enhanced federal premium tax credits at the end of 2025 has only tightened the vise. The Kaiser Family Foundation estimated that the lapse could more than double average Marketplace premium payments for many enrollees.
Advocates press for pooled buying and transparency
Consumer advocates and some employer groups argue that Wisconsin buyers need to band together if they want a fairer deal. Pooling purchasing power and leaning on price transparency tools could help counter hospital leverage, ABC for Health attorney Bobby Peterson told reporters, suggesting that better information alone can shift negotiations.
Hospitals are not exactly nodding along. Wisconsin Hospital Association CEO Kyle O’Brien blasted the UW analysis as “flawed” in a statement, arguing that it understates the dollars flowing through insurers rather than hospitals, a point WHA repeated in comments to Wisconsin Public Radio.
Policy options and what is next
In a report released April 6, the UW authors sketch out several policy levers they say could help slow price growth and free up room for wage gains. Their ideas include stronger price transparency rules, state-level purchasing coalitions and ways for employers to tap into Medicare-like rates.
The analysis is likely to feed a growing debate in Madison and in boardrooms around the state as lawmakers and companies decide whether to push for tighter rules, more open pricing data and new purchasing strategies to bring down what workers pay. For readers looking to see exactly what the researchers are proposing, the full analysis is posted at the Center for Research on the Wisconsin Economy.
