TRS ActiveCare Trustees Concerned About Competing Coverage Options

Over 140 Texas school districts now offer a TRS ActiveCare commercial health plan alternative, effectively challenging the TRS ActiveCare mandate prohibiting member districts from doing so.

We expect TRS ActiveCare trustees will take action this legislative session to combat the insurgents.

One concern voiced at their February board meeting was the devastating potential effect of adverse selection. Healthy members leave for better rates leaving less healthy members on TRS ActiveCare creating a death spiral leading to eventual plan destruction.

Officials have learned some competing health plans exclude specialty drugs leaving high risk members on the TRS ActiveCare plan. They fear this could have a significant impact on TRS plan finances as more districts offer similar plans.

To fight adverse selection we suspect legislation will be introduced this session requiring uniform coverage requirements mandating TRS ActiveCare alternative health plan benefits must be similar and cover all ACA essential benefits including specialty drugs.

TRS officials discussed other defensive measures to fight back the insurgents including elimination of the District of Innovation loophole allowing these plans to exist and changing the current community rating basis to regional rating.

Renewals for Plan Year 2021-2022 will be of interest. What impact will the loss of over 140 districts have on TRS ActiveCare rates and benefits?

Of even more interest is the renewal process of those districts offering an alternative health plan. The vast majority of these plans will be going through a first year renewal cycle. Going from an immature year to a mature year is worth 18%. So the question is were these districts properly rated? Or were rates lowballed by contract design? Did districts know what they were buying?

Underwriters did not have the luxury of experience rating, leaving a far greater margin of error. Will they be proven to be right, wrong or lucky?

A review of the February presentation to the TRS board of trustees can be found here:

See PowerPoint starting page 244 –¬†TRS ActiveCare Presentation February 2021

Watch presentation here.