Rhode Island employers should brace for another year of steep health insurance premium increases. Based on recent patterns, the Office of the Health Insurance Commissioner (OHIC) is likely to approve 18% or more increases in large and small group commercial health insurance rates for 2026.

This is not a one-time problem. For three years running, OHIC has approved roughly 80% of the rate hikes requested by insurers. With requests again well above 20%, employers and employees alike are staring at double-digit increases that will far outpace inflation and wage growth.

Lowest in New England, But Average Nationally

Yes, Rhode Island’s family premiums are the lowest in New England. But that is cold comfort when our premiums, deductibles, and out-of-pocket maximums have hovered around the national average for over a decade. And the “national average” itself is not a healthy benchmark — it reflects a patchwork of states that have done little to address affordability. In short, average is failure.

Making matters worse, Rhode Island employers pay a larger share of family premiums than the national average. If we want to retain and recruit businesses, our goal must be to drive employer costs below the national average, giving Rhode Island a true competitive edge instead of a liability.

Hospitals at the Center of the Cost Problem

The biggest driver of premium growth is not insurance company overhead or pharmacy costs. It is hospital spending, which accounts for nearly half of total premiums. Outpatient hospital costs alone have grown faster and to higher totals than prescription drugs over the last decade.

And these cost increases aren’t just market forces at work — they are actively shaped by hospital lobbying. In 2023, one hospital system pushed legislation that would have added $500 million to employer health costs. Last year, the Hospital Association advanced proposals that together would have cost several hundred million more — without offering a single measure to improve efficiency or outcomes. They even sought to weaken OHIC’s Affordability Standards, which currently cap hospital revenue growth at CPI plus 1%. That cap is arguably the single most effective safeguard preventing premiums from rising even higher.

Misalignment in State Policy

Adding to the problem, state policy often works at cross purposes. Consider provider taxes: hospitals pay roughly $240 million a year in these assessments, which Medicaid uses to draw down additional federal funds. But those costs are passed directly into premiums for fully and self-insured employers. The irony is stark. OHIC is charged with making premiums affordable, while another arm of state government simultaneously inflates hospital expenses.

At the federal level, cuts to Medicare and Medicaid enacted during the Trump administration’s “Big Beautiful Bill” compound the pressure. When public programs underpay, hospitals turn to commercial insurers to make up the difference. Employers are treated as the payer of last resort.

A Path Forward

With family premiums in Rhode Island consuming 28% of median household income, the system is unsustainable. The assumption that commercial health insurance can indefinitely subsidize shortfalls is no longer viable.

What is needed is an alignment of effort among hospitals, insurers, and state government to confront the cost problem directly. Rhode Island’s participation in the federal AHEAD global budget model is one promising step. By stabilizing hospital finances and rewarding efficiency rather than volume, AHEAD can begin to realign incentives. But no payment model can succeed without accountability — and without employers pressing for change.

Conclusion

Without reform, Rhode Islanders can expect more of the same: premiums that rise faster than inflation, squeeze household budgets, and weaken our state’s ability to attract and keep businesses. Employers should prepare for 18% or more increases in 2026, but also recognize that the deeper fight is about cost.

It is time to insist that hospitals, insurers, and policymakers share responsibility for making health insurance affordable. Rhode Island cannot afford to be “average” any longer.