As the Dec. 31 end to federal subsidies for federal health care nears, pressure is mounting on insurers, providers, and the nearly 40,000 Rhode Islanders who rely on tax credits to afford coverage.
Perhaps no one feels the pressure more than Cory King, who, as the state health insurance commissioner, is charged with deciding how to balance rising costs for consumers and insurers. The latter have asked for the highest rate increases in more than a decade, anticipating major financial losses after federal tax credits expire.
“It’s always a very complicated balancing act,” King said in an interview on Tuesday. “If premiums are too low, insurers risk substantial losses, which could undermine their financial condition and force them to cut reimbursements to providers, or limit care. Neither of those are good for consumers.”
Indeed, Blue Cross Blue Shield of Rhode Island and Neighborhood Health Plan of Rhode Island used this logic to ask King to approve their requests for double-digit rate increases for the more than 50,000 people combined who buy insurance through HealthSource RI.
Rhode Island Attorney General Peter Neronha says the exact opposite: letting insurance companies raise insurance prices for consumers will undermine, and potentially cripple, the already fragile health care system.
“For a long time, this process has focused too heavily on making sure our insurers have everything they need,” Neronha said in an interview. “Insurers just keep on winning.”
For a long time, this process has focused too heavily on making sure our insurers have everything they need. Insurers just keep on winning.
If granted, Blue Cross’ proposed 28.9% increase would increase individual, annual premiums by $2,500, with a $7,000 average hike per household, according to analysis by Neronha’s office. Neronha asked for a 21.2% increase, which translates to a $1,000 average annual increase in individual premiums and nearly $4,000 more per household, as calculated by Neronha’s office.
“It cannot be the sole obligation of individual health care consumers to pay more every year into a system that is failing,” Neronha wrote in the July 30 briefings, urging King to reject Blue Cross and Neighborhood’s proposed hikes for individual insurance coverage. “Granting the proposed rate increase would exacerbate the current, dire situation of health care in Rhode Island and ripple through the system.”
Ahead of an early September decision on requested rate hikes, King said he could not comment on Neronha’s objections.
A delicate dance
It’s hardly the first time King has contended with dueling narratives between insurers and Neronha’s office. Every year, insurers ask for permission to increase annual premiums on the 170,000 Rhode Islanders covered through insurance-funded plans. (Self-funded insurance, in which employers assume the financial risk for the medical costs, is not subject to state review on rate hikes.) And each of the last four years, Neronha urged King to deny the requested increases entirely.
The approved rates usually fall somewhere between the opposing sides: granting some increase, but less than what insurers wanted.
Neronha expects the same result again this year.
“There’s no doubt in my mind that the commissioner will not give them a 30% increase,” he said in an interview. “The insurance companies will silently cheer because even if they don’t get 30%, they will get 20% or something like that.”
The state health insurance commissioner is required by law to guard the solvency of insurance companies. But they also cannot legally approve a requested rate hike not proven to be “consistent with the interests of the public.”
At least twice in King’s 11-year tenure as health insurance commissioner, he has approved lower rates than the prior year. More often, he trims from the portion related to non-medical expenses; for the last two years, for example, fully-funded insurers were forced to limit growth in administrative costs to match the rate of inflation.
When OHIC unveiled the proposed 2026 rate hikes in June, Neronha’s office initially declined to weigh in, opting to forgo its usual independent, actuarial analysis of the financials.
Instead, the AG hired a health economist, with the hope that the contextual expertise might break through the cacophony of competing numbers.
“Actuarial analysis is a very numbers-driven, data-driven, narrow view of the world,” Neronha said. “It doesn’t make sense in the broader context of how we view health care. An economist can tell us what’s affordable, and what isn’t.”
Yet numbers are, ultimately, the only concrete source for the health insurance commissioner to determine what’s the right balance between insurance companies’ solvency and consumer costs, said Robert Hackey, a health sciences professor at Providence College.
“You can’t make public policy based on what you wish the world looked like,” Hackey said. “You have to make policy based on what the conditions are on the ground.”
And all sides agree, the conditions are expensive.
The cost of care
The end-of-year expiration to federal tax credits under the Affordable Care Act will cut off nearly $40 million in subsidies for Rhode Island, increasing the average monthly premium for covered residents by 85%, or $104, according to analysis by HealthSource RI.
As premiums rise, HealthSource estimates 13,000 people will be unable to afford coverage, or opt to forgo it — the latter mostly younger, healthier ones who feel more comfortable taking the risk. That increases the concentration of older, sicker — and more medically expensive — people left for insurers to cover.
“The principal cause of rising costs isn’t price gauging or greedy insurers,” Hackey said. “It’s the fact that insurance costs continue to rise.”
Nearly one-third of Blue Cross’ requested rate hike and 25% of Neighborhood’s proposal stem from losing participants after federal tax credits expire, according to analysis from King’s office.
At the same time, medical treatments — from routine visits to prescription drugs and the increasing prevalence of specialty treatments like GLP-1 drugs most commonly used for weight loss and diabetes — have soared. More than 10% of Blue Cross’ proposed rate increase — the largest chunk — comes from increasing health care costs. A new state requirement calling for a 30% boost to commercial reimbursement rates to primary care providers starting in January accounted for another fifth of Blue Cross’ requested increase.
“The requested rates reflect the true cost of healthcare and are critical to protect BCBSRI members’ access to high-quality, affordable care,” Rich Salit, a spokesperson for the insurance company, said in an emailed statement.
Elizabeth McClaine, vice president of commercial and Medicaid products for Neighborhood, also defended the company’s proposed 2026 rates in a statement.
Insurance companies nationwide are facing similar challenges. On average, Affordable Care Act marketplace insurers have proposed raising premiums by 26% next year, according to an analysis by KFF of 312 insurers across 50 states and D.C. The proposed rate hikes range widely, from over 50% by five separate insurance companies in Arkansas, to a 10% drop by one Pennsylvania marketplace insurer.
In Massachusetts, proposed rates by marketplace participants ranged from 7-12%, while Connecticut insurers requested increases of 4.7% to 28.6% for marketplace plans.
“We look good compared with a lot of states,” Hackey said.
Approaching the brink
Yet Rhode Island’s health care system is more precarious than some, with lower provider reimbursement rates relative to neighboring states sapping its workforce and flooding the remaining providers, including hospitals, with sick patients.
Commercial insurance premiums influence how much providers get reimbursed; cut too much off of insurers’ rates, and providers will suffer, Hackey warned. That, or they will walk away — either from specific providers, or the state altogether.
Just look to UnitedHealthcare and Brown University Health, which were unable to reach agreement on reimbursement rates for Rhode Island Medicare Advantage patients. The contract ended on June 30, prompting confusion and chaos for thousands of seniors and disabled residents no longer covered for non-emergency visits at four major hospitals.
Two other safety net hospitals, Roger Williams Medical Center and Our Lady of Fatima Hospital, remain at risk of closing if the prospective new owners can’t sell the bonds needed to finalize the deal, or subsequently shore up the lopsided balance sheets.
Reconciling the competing interests and preserving critical care is not a simple, or easy task. But Hackey was confident King was up to the challenge
Neronha, not so much.
“Part of me thinks this whole thing is ridiculous and illegitimate that we shouldn’t be doing a review at all,” he said.
Neronha pointed to Blue Cross’ balance sheet, with more than $1 billion in assets, in juxtaposition to working families facing health care costs that could swallow one-third of their annual income if proposed rate hikes are approved, according to his office’s analysis.
The state health insurance commissioner will also issue a decision in September on requested increases for employer-sponsored coverage through small and large group plans. In the small group market, Blue Cross requested a 22.2% increase, Neighborhood asked for 20.3% premium increase and UnitedHealthcare submitted a range of 20.3% to 21.2%. For plans purchased by businesses with more than 100 employees, rate hikes range from 13.5% to 26.4% across five insurers: Blue Cross, UnitedHealthcare, Harvard Pilgrim, Aetna and Cigna.
The AG’s office has not weighed in on small and large group rate requests.
This story was originally published by the Rhode Island Current.
