For some, the solution is more money. There is an argument for dedicating more money to the health care system through public payers like Medicaid. There is an argument for committing more money to primary care from all payers, as OHIC has advocated. Still, all else equal, more money means more taxpayer dollars flowing to health care instead of education, transportation, social services, and other public goods. The tradeoffs state governments confront between different uses of the same dollar are experienced at a smaller scale by households.

When more of a working family’s paycheck is consumed by rising health care costs, they have less money to spend on housing, childcare, and other necessities. This happens when the money flowing into health care flows at a rate that outpaces the growth of the economy and incomes.

Based on OHIC’s annual analysis of health care spending, I can report that more money has gone to health care in Rhode Island in recent years. In 2021, total health care expenditures for Rhode Island residents totaled $8.6 billion, or $8,950 per capita. In 2024, expenditures totaled $10.25 billion, $10,901 per capita. We have the data.

 Others advocate redesigning the delivery system and reforming payment models. How we allocate our health care spending is just as important as how much we spend. I think there is a lot of merit to these approaches. The AHEAD program and some of the work the state will be undertaking through the Rural Health Transformation Program emphasize this. 

OHIC is focused on improving the health care system as a whole and making health care more affordable. That’s the agency’s mission. We’ve done so through promulgating regulations to increase commercial payer investment in primary care and reduce administrative burden. We’ve controlled premium increases through hospital price growth caps. And we’ve contributed to the state’s strategic investments in Medicaid through our biennial rate review. These are successes. As someone who attends national conferences, Rhode Island is viewed as a leader in health care reform despite our challenges. 

I think we can do more. We have included some proposals in Gov. McKee’s proposed FY 2027 budget to make the state’s cost growth target enforceable and to increase transparency into Pharmacy Benefit Managers (PBMs). Looking to the future it will be important that we preserve a robust Medicaid program as H.R. 1 is implemented.

“While such plans promise affordable alternatives to private insurance and potential administrative savings if they eventually replace much of the private market, early implementation would add another insurer to a fragmented system. Thus, near-term savings would mainly stem from regulated provider payments, though aggressive rate caps may deter provider participation and jeopardize network adequacy.” 

If the public option is going to provide comprehensive benefits without limiting the network, I can’t see a way for it to be offered at a materially lower premium without reducing hospital and physician reimbursements. We will see what they come up with.

What’s missing from the policy discussion around PBMs in the context of rising drug costs is the role of drug manufacturers. The manufacturers set the list prices of drugs and OHIC’s analyses of health care spending growth points to price as the major driver of drug costs over time. 

The report we are publishing on May 18 includes a deep dive into rising drug costs, and we found that spending growth over time has been driven by GLP-1s, immunological agents, and what we call top-PPU (payment per unit) drugs, or drugs with average unit payments about $10,000. 

Together, these three classes of drugs accounted for 52.3 percent of commercial market drug spending in 2024. When we remove these drugs from the analysis of drug spending growth over time, annual spending growth on the remaining classes of generic drugs and other-brand drugs averaged less than 1 percent since 2020. Compare this to overall drug spending growth, which averaged 9 percent annually during the same period, comprising 8.7 percent annual price growth and 0.1 percent annual utilization growth (there is some rounding here). 

Here’s the bottom line: a subset of drugs are driving overall prescription drug spending growth. While GLP-1s have seen a rapid increase in use, the story overall points to drug prices as the leading driver of spending growth over time. The drug manufacturers have a role to play.

Cory King is the commissioner of the RI Office of the Health Insurance Commissioner, or OHIC.