A variety of reports suggest that Wisconsin’s hospital costs have risen faster than average over the last two decades. In 1998, the Statistical Bulletin from the Metropolitan Life Insurance Company reported that Wisconsin hospital charges for colon cancer treatment were 27 percent below average. Five years later, Wisconsin costs were nowhere near the bottom half of the cost distribution.

What is different in Wisconsin, and in other high cost states like Massachusetts, Maine, Vermont, and Rhode Island, is that those state governments have followed expert advice on health care reform. The result? These states have thoroughly attenuated the normal market pressures to control costs.

Wisconsin state government began following expert advice in 1972 with a voluntary rate-review program. This was replaced in 1983 by the Hospital Rate-Setting Commission. It set rates for all Wisconsin hospitals until 1987. 1983 also saw the start of Wisconsin’s Capital Expenditure Review Program, which required pre-approval for the construction of nursing homes and hospitals. It was dissolved in 1987 as well.

Unable to keep its hands off health care, in 1991 Wisconsin required that new capital expenditures and the construction of ambulatory surgery centers submit project analyses and hold public hearings. By 1993, another requirement was added, to include project approval by the Cost Containment Commission. The act creating this requirement also limited the number of hospital beds. In 1995, the Commission was eliminated. Even though this restriction on the market was lifted, Wisconsin officials continue to fight new hospital construction, frequently using zoning rules to protecting existing hospitals.

One result of the decades-long regulatory efforts has been the narrowing of providers down to two unusually concentrated, well-integrated, health networks. These networks control all levels of care, from physician office visits to specialized inpatient treatment, within their areas. An unusually large number of family physicians in Wisconsin are employed by large health care networks; one estimate suggests that about 90 percent of the primary-care doctors in southeastern Wisconsin are owned by the hospitals there.

When physicians work for a network rather than their patients, their contracts usually constrain them to refer patients within the network that they work for. In northwest Wisconsin, nearly all residents obtain their care from the Marshfield Clinic, one of the largest physician groups in the United States.

In the Milwaukee area, Aurora Health Care’s self-proclaimed goal is to develop a network that provides care within 15 minutes of every resident of southeast Wisconsin. It has multiple hospitals, over 70 feeder clinics, and 2,300 affiliated physicians. Aurora routinely announces that it will allow its doctors to admit patients to whichever hospital they consider the best for their patients. But after Aurora opened a new hospital to compete with Holy Family Memorial Hospital in 2005, physicians on its payroll announced that they would "no longer see patients at Holy Family Memorial Hospital."

Covered by some of the richest health plans in the United States, Wisconsin residents have had little incentive to search for less expensive health care and have had no reason to contest the growth in the costs of monopoly health network. Manitowoc County, however, is hoping to change this. Its budget severely stressed by employee health insurance costs, it is experimenting with higher deductible health plans. Initial estimates suggested that by contributing $1,500 to a health savings account for each person who elects to be covered by its new high deductible health plan, it could save $825 per employee. Other employers in the state are also seeking answers. Some are offering plans that reward employees for avoiding the monopoly networks.

If Wisconsin residents think health care is expensive now, they should wait until it is free--free to patients, that is, with costs loaded on taxpayers, who must depend on government officials to monitor expenditures. Recall that officials making the same kinds of promises managed, from 1972 to 1995, to created a set of regulatory barriers that fostered the growth of what may be some of the most expensive monopoly health care systems in the United States.

Wisconsin residents now have two choices. One is to promote deregulation and insurance arrangements that put consumers in control of health care spending. The other is to throw their lot in with Governor Doyle’s plan, a fix that would deliver all health care to government, the ultimate in high priced monopoly providers.