Home Economy Economic Activity When health care system breaks, everything else follows

When health care system breaks, everything else follows

By

Karl Wadensten

-

01/21/2026

QSfLyvol-Trending_2 — Karl Wadensten

Fellow Rhode Island manufacturers, health care costs are no longer a background issue. They are now a front-line threat to our ability to compete, invest and take care of our people. Recent national and regional data show employer health benefit costs rising at the fastest pace in more than 15 years. According to Mercer’s National Survey of Employer-Sponsored Health Plans, total

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Fellow Rhode Island manufacturers, health care costs are no longer a background issue. They are now a front-line threat to our ability to compete, invest and take care of our people. Recent national and regional data show employer health benefit costs rising at the fastest pace in more than 15 years. According to Mercer’s National Survey of Employer-Sponsored Health Plans, total health benefit cost per employee rose 6.0% in 2025 and is projected to increase another 6.7% in 2026, the highest growth rate in more than 15 years. Many of us feel these numbers understate the reality. Costs are being “managed” not by fixing the system, but by shifting more burden to employees, narrowing access, increasing deductibles and copays and delaying care. That path is not sustainable. For manufacturers, health care is now one of the largest and least predictable costs we carry. Every dollar absorbed by unchecked health care inflation is a dollar not invested in wages, training, automation, safety or growth. Our employees feel the impact directly through higher out-of-pocket costs, uncertainty about care for themselves and their families and growing stress that follows them to work every day. At VIBCO Inc., our strategy has been to provide the best health care options we can, not because it is easy or inexpensive, but because healthy people show up differently. When employees are not worried about their own health or a family member’s care, they are more present, more engaged and more capable of contributing at a high level. When you take unnecessary worry off someone’s mind, you don’t just improve morale - you improve the system. Lean manufacturing teaches us to look at the whole system. The five Ms man, machine, material, method and management all matter. But “man” is increasingly in short supply, and it is the foundation for everything else. A stressed, distracted workforce is less safe, less creative and less able to improve processes. Squeezing people through health care cost shifting may look expedient in the short term, but it quietly erodes culture, performance and retention over time. This is not a partisan issue, nor is it the fault of any single administration, insurer, hospital or employer. The outcomes we are dealing with are decades in the making. We are all operating inside a payment system that rewards volume and complexity instead of affordability, prevention and long-term value. The good news is that Rhode Island has a rare opportunity to try something different. Through the federal AHEAD model, the state has been given the chance to move away from fee-for-service toward a new payment approach intended to stabilize hospitals, strengthen primary care and begin addressing cost at its source. Only a small number of states have been offered this opportunity. I want to be clear: I am not an expert on AHEAD. Like many of you, I am actively learning, asking questions and gathering data. In the weeks ahead, I expect to have a better understanding of its potential impacts, differences from our current system, and possible shortcomings and I intend to share that learning openly. What I do know is this: staying on our current path is not working. Any new approach deserves thoughtful scrutiny, healthy skepticism, and honest debate. However, it also deserves engagement. Partial participation will not deliver results. Silence will not deliver results. Our call to action is simple:

Engage in understanding what is truly driving health care costs, beyond premiums alone

Be open to exploring payment reform that lowers the underlying cost of care instead of shifting costs to employees

Ask hard questions about AHEAD its potential benefits, risks and tradeoffs

Use our collective voice to demand predictability, transparency and long-term affordability

This is not an “us versus them” problem, it’s a we problem. Employers, employees, providers, insurers and policymakers are all inside the same system. If we want a strong manufacturing workforce and competitive businesses in Rhode Island, health care must support people not distract them. We can't cut our way to affordability, we can't shift costs indefinitely and we cannot afford to stay silent. I welcome input, critique, and dialogue on everything laid out here. If these words remain abstract, they are useless. The goal is to open minds, test assumptions, and decide together whether we are willing to change the process rather than accept the trajectory. Karl Wadensten is a member of the R.I. Commerce Corp. board and president of VIBCO Inc., a manufacturing company based in Richmond. He has spent more than 25 years helping build and retain jobs in Rhode Island’s small and mid-sized business sector.