TRS Board adopts new health insurance premiums
Date Posted: 6/10/2014
Last Thursday and Friday (June 5–6), the Teacher Retirement System (TRS) Board of Trustees met to discuss a variety of pension and healthcare issues. Most importantly, the board adopted premium rate increases for TRS-ActiveCare. TRS-ActiveCare Changes made by the board include the phasing out of TRS’ most comprehensive plan option, ActiveCare 3. Beginning Sept. 1, all ActiveCare 3 plan participants will be rolled into ActiveCare 2. ATPE doesn’t believe that this move is the best option;however, nothing can be done about the decision. ActiveCare 3 is by far the most expensive plan option and only covers a very small number of people. Premiums for fiscal year 2015 will increase as follows: TRS-ActiveCare 1-High Deductible (HD): Employee and spouse coverage will be increased by 7 percent, and family coverage will experience an 8 percent increase. There will be no premium increase for employee-only coverage or employee and children rates. TRS-ActiveCare 2: Employee-only premiums will increase 5 percent, employee and spouse premiums will increase 7 percent, and employee and children premiums will increase 4 percent. Employee and family premiums will not increase. ActiveCare Select: Employee-only premiums will be $450 per month, employee and spouse—$1,044, employee and children—$709, and employee and family—$1,238. ActiveCare Select is a newly created Exclusive Provider Organization (EPO) plan similar to a Health Maintenance Organization (HMO) plan. The EPO plan is designed to offer benefits and have premiums that fall in between those of ActiveCare 1-HD and ActiveCare 2. For the Select plan, a series of Accountable Care Organizations (ACOs) were created for Houston, Dallas, San Antonio and Austin. ACOs will provide managed care within a network of physicians. Alongside the ACOs, the EPO will offer statewide coverage outside of the four urban areas where the ACOs are offered. TRS-Care Retirees enrolled in TRS-Care will not experience a premium increase for the next fiscal year. During the last legislative session, the Legislature directed the TRS Board of Trustees not to increase retiree premiums. In the short term, this is clearly a good situation for retirees. However, by not increasing premiums to reflect increases in the cost of providing care, those increases in costs are paid out of the TRS-Care trust fund. This practice of paying for increased expenses out of the trust fund, coupled with relatively static state funding, is causing the TRS-Care trust fund to run out of money. If changes are not made during the 2015 legislative session, the fund will run out of money by 2016. ATPE testimony and further board discussion During the meeting, ATPE provided testimony to the board explaining why it is critically important that the State of Texas offer reasonable, affordable benefits to public education employees. We pointed out that, according to research, private sector employees largely pay less in premiums than do TRS-ActiveCare members, and the state has underfunded educator healthcare programs for too long. The board and its medical advisors also held a fascinating discussion on the bioethical dilemmas regarding whether healthcare plans can or should cover new and highly expensive specialty drugs. For instance, a new cutting-edge drug that treats and cures Hepatitis C has recently been approved by the FDA; however, the drug costs approximately $80,000 for an eight to twelve week dosage. The financial question is: Does it cost less to administer the drug than it does to treat the disease long-term until a transplant becomes a necessity? Of course, the ethical side of the equation must be addressed. If, ethically, it is decided that the drug should be made available to anyone afflicted with the disease, the financial aspect must be addressed either in the form of higher premiums for all plan participants, or through an increase in revenue from the employer. This is one of the extremely complex problems that TRS is facing in developing the plan designs for both TRS-ActiveCare and TRS-Care. Additionally, the TRS-Care and TRS-ActiveCare sustainability study that will be presented to the Legislature in January 2015 was laid out and discussed. Several options for altering both programs will be presented, and ATPE will offer commentary on these options in more detail soon. Questions? Contact the ATPE Governmental Relations Department at email@example.com or (800) 777-2873.
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