A bill to eliminate TRS healthcare plans: Crazy genius or just plain crazy?
Retirement | TRS | Social Security Texas Legislature
Date Posted: 11/17/2020 | Author: Monty Exter
On Tuesday, November 10, Representative Ken King (R - Hemphill) pre-filed House Bill (HB) 430, a bill that aims to eliminate the healthcare plans currently administered by the Teacher Retirement System (TRS) for active and retired educators in Texas. Three days later, King released a letter addressed to "all school personnel both active and retired" that seeks to explain his vision related to HB 430.
"As a legislator I cannot in good faith continue to put a cash band aid on a broken system," writes King in his letter. The representative describes the TRS healthcare programs as losing members who are opting for better coverage, which results in a smaller risk pool. King contends that this fairly small change in the size of the TRS risk pool results in higher premiums for the remaining participants. However, past information provided by TRS suggests that such fluctuations in the very large TRS risk pool are unlikely to have a dramatic impact on cost.
In his letter to the education community, Rep. King lays out the following four goals, or "broad strokes" as he puts it, that make up his plan to address active and retired teachers' health insurance needs in the future as TRS-Care and TRS-ActiveCare are phased out:
- The Legislature would provide a cost-of-living adjustment (COLA) that is "large enough" to allow retired educators who are age 65 or older to afford Medicare Part A and Part B.
- The Legislature would "create a runway for our 55-65 year-old participants to get to Medicare age."
- The Legislature would allow active teachers to join the Employee Retirement System (ERS), which King says would increase the risk pool and lower premiums "dramatically."
- The resulting lowered premiums would be considered "a teacher pay raise that is truly sustainable," according to King.
Also in his letter, Rep. King asks stakeholders to "understand that HB 430 cannot, on its own, accomplish the plan above." Taking a closer look at HB 430 as filed, that is certainly true. In fact, as it presently stands, HB 430 addresses none of the author's stated goals.
First, HB 430 would close TRS-Care and TRS-ActiveCare to new participants. The bill would move Care participants off the plan as they reach age 65, which would result in most retirees being off the plan within five to seven years. Next, HB 430 would close Care and ActiveCare to any remaining participants after 10 years, and it would disperse the excess funds. In short, HB 430 would shut down both the active and retiree healthcare plans that currently exist through TRS, and at least for now, that is all the bill would do. In other words, the bill repeals, but does not replace anything.
What about Rep King's four goals? He writes in his letter that he intends to file additional legislation that would work in concert with HB 430 to achieve those goals and his vision for reforming educator healthcare. As of our writing this post, these additional bills have not yet been filed.
As the 2021 legislative session approaches, ATPE will be monitoring and engaging in discussions about this bill and any other related legislation that is filed. We will be watching, in particular, to see if such legislation attempts to address the following challenges related to healthcare for Texas educators:
- First, the Legislature needs to create a mechanism for providing automatic and ongoing COLAs as opposed to merely a one-time increase in retirees' benefits.
- A comprehensive plan must recognize that the need to provide healthcare for retirees who have not yet reached age 65 will persist indefinitely into the future — not merely over the course of the next decade.
- Any plan to allow active educators to access the ERS health insurance plan would need to provide many more details, for example on its cost and viability.
- Perhaps most importantly, an overhaul of the state's system for providing healthcare to educators must include a plan for sustainable, long-term, formula-based funding. The funding plan should be written into statute, at a minimum, and preferably would trigger a constitutional amendment. Simply funding such a program through a budget rider would make it too susceptible to cuts from session to session.
Until his follow-up legislation is filed, the jury will remain out on whether Rep. King's proposal to reform the state's system of providing health insurance for over one million active and retired educators is crazy genius or just plain crazy. Stay tuned to Teach the Vote for additional information on this and other bills that may be considered in the upcoming legislative session.
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