born out of a March 12 executive order

After Congress failed to extend federal discounts for state health exchange enrollees this year, Rhode Island leaders want a more reliable source of funding based on math instead of Washington D.C.’s political will. 

An executive order signed by Gov. Dan McKee on March 12 aims to amplify federal tax credits for HealthSource RI participants by $12 million, saving 20,000 enrollees roughly $500 a year on average on their annual premiums in 2027. The directive comes two-and-a-half months after a separate set of pandemic-era federal subsidies for state insurance marketplaces lapsed, spiking premiums and sinking enrollment in state health insurance marketplaces nationwide.

10,000 Rhode Islanders opt out of state insurance exchange as premiums soar

In Rhode Island, 10,000 people enrolled in HealthSource RI dropped coverage during the 2026 open enrollment period due to rising costs. Those who remained saw their average premiums increase more than twofold: from $109 to $220 a month, according to HealthSource RI.

It’s too late to ease the pain expected to ripple across the state’s health care landscape this year, as sick and uninsured people flood emergency rooms and doctor’s offices, while insurers seek to offset their own rising cost and risks by charging more for commercial plans.

But state leaders have devised a partial solution in time for the 2027 open enrollment period on Nov. 1 by manipulating the federal formula that determines aid to state health insurance marketplaces. 

“This is the year to be taking out every tool in our toolbox,” Lindsay Lang, director of HealthSource RI, said. “Unfortunately, what everyone had been anticipating with federal tax credits happened. Now, it’s time to double down on strategies.” 

A key part of the strategy: make the federal formula work for Rhode Island by increasing the premium costs for health exchange insurance plans. It sounds counterintuitive — higher premiums typically mean more out-of-pocket costs for consumers. But in this case, it’s the federal government that would pick up the tab.

Going for silver 

The concept known as “silver loading” has been implemented across the country since 2017, after the federal government ended indirect payments to health exchange insurers to offset losses for covering lower-income enrollees. 

Insurers refused to be left holding the bag, but state leaders didn’t want their residents picking up the cost, either. Instead, states directed or allowed insurers to incorporate their payments into their total premiums for certain, mid-tier insurance plans. 

The premium associated with the second-lowest silver metal plan is used as a benchmark to determine total federal discounts for state health exchanges, so increasing the premium in turn triggers more federal funding which can then be applied to discount the net cost of both higher and lower-metal plans.

“It’s a pretty widespread practice,” said Robert Hackey, a health sciences professor at Providence College. “I think a lot of states have been doing that.” 

Rhode Island has informally employed limited amounts of silver loading since 2017, Lang said. McKee’s order turns practice into prescription, directing Lang and Rhode Island Health Insurance Commissioner Cory King to develop a legitimate method for maximizing federal tax credits through silver loading.

The details are still being finalized, said King, whose office sets instructions for commercial insurers to calculate and propose annual insurance rates, including in the state health exchange. But preliminary analysis suggests that mandated silver loading will bring relief in time for 2027.

“We think we can create a methodology to be able to offset premium reductions and generate higher tax credits,” King said. 

The extra $12 million in federal funds expected from inflated silver-level premiums next year would be restricted to HealthSource RI participants who earn 200% or less of the federal poverty level: $31,920 per year for a one-person household, or $66,000 for a family of four based on 2026 federal poverty guidelines. 

But even exchange enrollees who don’t meet the income limits would still benefit, because regular premiums for all metal plans except silver — including more expansive coverage through platinum or gold plans — would come down, Lang explained.

The end result: more affordable, better health insurance for more people, at no cost to anyone except the federal government. 

“My plan supports Rhode Islanders by keeping costs low, putting more money in their pockets, and sending a clear message that we will not gamble with their health and well-being,” McKee said in a statement.

Except, it doesn’t help those who already dropped insurance coverage because it was too expensive, Hackey pointed out. 

Lang acknowledged it would have been better to incorporate silver loading into 2026 premiums, potentially preventing what was a dramatic 20% drop in enrollment. But, by the time it became clear Congress would not extend the tax credits, it was too late, she said.

A 2027 comeback 

Preserving Rhode Island’s sixth-in-the nation, 98% health insurance coverage rate is not a lost cause. Lang thinks HealthSource RI can bring back at least half of the participants who dropped coverage next year under the formula adjustments and additional state funding. 

McKee has already proposed using $9.5 million in state dollars to replace some of the lost federal tax credits as part of his fiscal 2027 budget plan. Unlike the executive order, however, McKee’s plan for spending from state coffers still requires sign off by the Rhode Island General Assembly when it finalizes the budget in late June.

Companion bills introduced in January by Rep. June Speakman, a Warren Democrat, and Sen. Pam Lauria, a Barrington Democrat, would set up a state program to replace the entire $60 million in lost federal subsidies, ensuring discounts are available to all eligible state marketplace enrollees. 

In Hackey’s view, the more state money poured in to offset federal cuts, the better. He pointed to neighboring Massachusetts, where Gov. Maura Healey injected another $250 million from a state trust fund to subsidize insurance plans through the Commonwealth’s health exchange. 

“If we’re really concerned about access and affordability, the governor and the General Assembly need to be doing more on this front,” Hackey said. 

House Speaker K. Joseph Shekarchi and Senate President Valarie Lawson remained noncommittal.

“The reality is that people have lost health care coverage because they can no longer afford it without this federal assistance,” they said in a joint statement Wednesday. “Unfortunately, no state has the resources to fully replenish all of the harmful cuts in federal aid, which are impacting everything from health care to food insecurity.”

McKee’s executive order also addresses broader issues around health care price transparency, facility fees and insurance rates for commercial and Medicaid markets, calling for:

• A public health care price transparency dashboard that lets consumers search and compare prices for imaging, labs and outpatient procedures, available through OHIC no later than Oct. 31;
• A comprehensive review and recommendations on how to ban or limit facility fees for outpatient and off-campus health care services, due from OHIC and the Executive Office of Health and Human Services by Oct. 31; 
• A comprehensive review of how state insurance mandates affect premium costs and annual rate hikes, including ways to improve transparency and affordability, due from OHIC no later than Dec. 31. 

Blue Cross & Blue Shield of Rhode Island, one of two insurance companies that provides coverage through the state health exchange, expressed preliminary support for McKee’s executive order.

“Blue Cross & Blue Shield of Rhode Island is reviewing Gov. McKee’s executive order, and we share the governor’s concerns about the steep rise in the cost of healthcare,” Rich Salit, a company spokesperson, said in an emailed response. “We are committed to working with policymakers to help stabilize the individual market, protect access to coverage, and address the underlying drivers of healthcare costs that continue to make coverage less affordable for many Rhode Islanders.”

Neighborhood Health Plan of Rhode Island, the other insurer that supplies marketplace coverage, declined to comment.