Wisconsin is known for its dairy farms and rolling hills. But some healthcare experts call it a trailblazer.
In the past few years, health systems have been launching or expanding their own health plans, seeing it as an opportunity to cut out the middleman and take on more financial risk while caring for patients.
In Wisconsin, providers have practiced that strategy for decades. And, according to Medicare and the National Committee for Quality Assurance, their plans are among the highest-rated in the country.
The Badger State could serve as a prototype for health systems that are trying to shift their focus from filling hospital beds to more risk-based care coordination.
“Insurers have put risk down to providers,” said Gunjan Khanna, a partner in the healthcare practice at McKinsey & Co. “At what point do providers start to have their own entity to manage the risk and have control?” Wisconsin has done that well, he said.
Nationwide, about 13% of health systems own a health plan. There are nine provider-owned plans in Wisconsin, second only to Texas, according to data from McKinsey.
Dean Health Plan, Security Health Plan, Unity Health Insurance and several others offer commercial, Medicare Advantage and Medicaid plans in the state. Those plans cover almost a third of Wisconsin's insured population, based on a recent analysis from consulting firm Deloitte. The only state with a higher penetration is Utah, where 36% of people are covered by provider plans.
There are a number of reasons provider-owned health plans are a staple in Wisconsin, which has about 5.8 million residents.
Commercial insurers historically have avoided insuring vulnerable, costly patients. That's allowed insurers such as Children's Community Health Plan, owned by Milwaukee-based Children's Hospital of Wisconsin, to cover nearly 137,000 Medicaid adults and children, said Bob Duncan, the hospital's executive vice president for community services.
Outside of the southeast and south central regions, where Milwaukee and Madison are located, Wisconsin's population thins out quickly. Rural areas typically have fewer insurance options, and that spurred hospitals and doctors to offer coverage to their patients.
“A lot of communities didn't have strong national or Blues penetration, and there had to be an answer to someone financing healthcare,” said Bill Copeland, a healthcare analyst at Deloitte. “The dominant market leaders—provider systems—started those plans a long time ago. In Wisconsin, I think that's especially true.”