The Dane Difference: Why Are Dane County’s Exchange Premiums Lower?

Abstract

During the next few years, states and the federal government will likely seek solutions to control costs and improve quality in the Affordable Care Act (ACA) health insurance marketplaces. State and federal policymakers should look carefully at the decades-long success of the Wisconsin State Employee Health Plan (WSEHP) in controlling the rapid rise of health insurance costs in Dane County—where Madison, Wisconsin’s state capital, and the University of Wisconsin, are located—as they seek to improve the effectiveness of the ACA’s marketplaces and health insurance costs in general. The WSEHP consistently obtains substantially lower health insurance premiums in Dane County than in Wisconsin’s 71 other counties. In 2013, an individual plan in the WSEHP was about $1,400 cheaper annually in Dane County, or 16 percent less than the average in the rest of the state; and a family plan was about $3,500 cheaper, also a 16 percent difference. This Dane difference has existed for at least a decade, with the gap slowly widening over that time. Why does WSEHP get much lower premiums in Dane County than in the state’s 71 other counties, and what lessons can policymakers learn from this difference?