Home Editor's Choice Survey: Employers facing pressure of rising health care costs

Survey: Employers facing pressure of rising health care costs

By

Katie Castellani

-

10/02/2025

foXgFB4C-UAXHTfS7-statehouseb-300x225 — RISING DRUG prices, hospital costs and high-cost claims are hampering affordability for employers, according to a recently published national survey. While Rhode Island is not an exception, observers say the Ocean State has several efforts underway to address these challenges. / PBN FILE PHOTO/WILLIAM HAMILTON

PROVIDENCE – Rising drug prices, hospital costs and high-cost claims are hampering affordability for employers, according to a recently published national survey. While Rhode Island is not an exception, observers say the Ocean State has several efforts underway to address these challenges. The survey of 324 employers throughout the U.S. was conducted by the National

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PROVIDENCE – Rising drug prices, hospital costs and high-cost claims are hampering affordability for employers, according to a recently published national survey. While Rhode Island is not an exception, observers say the Ocean State has several efforts underway to address these challenges. The survey of 324 employers throughout the U.S. was conducted by the National Alliance of Healthcare Purchaser Coalitions. Amanda Green, with the National Alliance, said she didn’t have an exact number of Rhode Island employers that participated in the survey but it was less than 10. This is an improvement from previous years when no Rhode Island employers participated, she said. Results showed that 53% of employers say health care costs limit their ability to compete, up from the 35% reported in 2022. Rising health care costs will result in more cost-shifting to employees, according to 92% of employers surveyed and 90% say rising health care costs affect their organization’s competitiveness. Similarly, 99% of employers say that attracting and retaining employees is a top priority and 96% say that health and wellbeing benefits are essential to those efforts. For the fifth year in a row, employers ranked drug and hospital prices as well as high-cost claims as the leading threats to affordability, according to the survey results. Green noted this year’s survey focused on employers’ access to data as that is key to improving affordability. Results showed that 67% of respondents had complete access to their health claims data. And employers that have more data tend to make different decisions and ask more questions that can lead to more affordable strategies, said Al Charbonneau, executive director of the R.I. Business Group on Health. “We’d all be a lot better off if we knew what was driving costs,” Charbonneau said. Indeed, employers are moving away from traditional pharmacy benefit managers, or PBMs, in favor of more transparent models and greater transparency is linked to lower premiums. The survey found that the share of employers using more transparent PBMs rose from 12% to 31% in the past year. Also, employers using the more transparent PBMs were about 1.6 times more likely to report lower premiums. Meanwhile, larger employers are adopting centers of excellence, site-of-care redirection and contracting with hospitals directly to help get better value. All of these line up with existing efforts in Rhode Island to lower hospital overhead and address rising commercial insurance premiums, according to the R.I. Business Group on Health. “Employer purchasers cannot remain on the sidelines. With costs rising faster than wages or economic growth, access to claims data and value-based strategies are essential if we are to achieve affordable, high-quality care for our workforce and families,” the group said in a statement. More specifically, Charbonneau said Rhode Island is participating in the Advancing All-Payer Health Equity Approaches and Development, or AHEAD, program. The program is run by the U.S. Centers for Medicare & Medicaid Services with the purpose of testing participating state’s accountability in controlling health expenditures and increasing investments in primary care. The program uses hospital global budgets, which are meant to reduce health care spending and is when a hospital receives a fixed annual budget calculated based on previous Medicare and Medicaid payments and adjusted for inflation and changes in patient population. “We got to do something different,” Charbonneau said. “This is something different.” Charbonneau cited a few other initiatives helping the state lower health care costs. One of these is the Rhode Island Cost Trends Steering Committee, which tracks and reports health care spending each year. Along with this, the R.I. Office of the Health Insurance Commissioner has also established regulations – known as affordability standards – to lower costs and boost health care quality. Similarly the R.I. Office of the Health Insurance Commissioner reviews and issues decisions on proposed health insurance premiums each year. Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.