The TRS ActiveCare Board of Trustees voted last week to change administrators beginning with the 2014-2015 plan year. Blue Cross, the current administrator, will be replaced by Aetna. With the state employee health plan terminating their Blue Cross contract last year and going with United HealthCare, this is a second huge hit to the Blues in less than a year.
Are Blue Cross provider contracts inferior to United HealthCare or Aetna’s? Since 90% of costs are directly related to provider reimbursement levels, and since both the State of Texas employee benefit program and the TRS ActiveCare program employ independent actuaries to review plan finances with projections, one could surmise that it must be true Blue Cross’s provider contracts pay providers more than either of their competitors.
Or was Blue Cross terminated as a sacrificial lamb due to increasing medical costs?
We suspect Blue Cross will appeal the TRS Board of Trustee’s decision. It’s not over “til” it’s over.
“The Board took action at the end of the day to choose the entities that will administer the health insurance services for ActiveCare. The Board voted to switch from Blue Cross Blue Shield to Aetna for the health insurance plan, and from Express Scripts to CVS/Caremark for pharmacy benefits, beginning with the 2014-15 plan year.”
Day one of the TRS Board of Trustees’ three-day retreat in Corpus Christi focused solely on health insurance issues. The Board and staff hosted a town hall meeting on the afternoon of Feb. 12, 2014, and responded to questions from TRS members in the audience and watching online.
TCTA testified to provide information about the disparities in ActiveCare employer/employee cost sharing compared to most public and private sector insurance plans, and to ask TRS to help us educate legislators. TCTA cited data from a 2013 study by the Kaiser Foundation that showed that the average employee in the US with employer-provided health insurance pays 18 percent of his employee-only premium and 28 percent of the premium for a family plan. By contrast, employees in TRS ActiveCare 2 pay 51 percent of their employee-only premium and 80 percent of a family plan (assuming the required $75 contribution from the state and $150 from the school district; some districts pay more).
Trustees were very responsive to this information and to the personal stories relayed by educators who attended the meeting. TRS may also consider plan/benefit changes, but our efforts will be to convince legislators that funding, not plan design, is the problem.
The future of TRS health insurance
We expect health insurance to be a prominent issue in the 2015 legislative session. TRS-Care has operated in near-crisis mode for years, and if legislators fail to take action in 2015, the plan will have a deficit of more than $1 billion. If the burden were placed solely on retirees to make up that cost, their TRS-Care premiums would have to triple.
ActiveCare employees have borne the burden of increasing health care costs since the program’s inception more than a decade ago. Because the ActiveCare funding structure differs from that of TRS-Care, the plan is not in danger of a funding shortfall, but without additional help from the state and local districts, premiums are becoming unaffordable. As TCTA pointed out to the TRS Board, this is a burden not only on employees but on the entire plan. Employees who decide to waive coverage because of increasing premium costs tend to be the employees who are most needed to help sustain the system: the younger, healthier participants.
TCTA also testified in support of efforts to resolve problems with TRS-Care to avoid the funding crises that have become routine in recent years. TRS is working on studies of both the active and retiree insurance plans to inform and provide options to legislators during the 2015 legislative session as they consider how to stabilize the plans.
Plan administrator to change from BCBS to Aetna in 2014-15
The Board took action at the end of the day to choose the entities that will administer the health insurance services for ActiveCare. The Board voted to switch from Blue Cross Blue Shield to Aetna for the health insurance plan, and from Express Scripts to CVS/Caremark for pharmacy benefits, beginning with the 2014-15 plan year. We will provide more information as we learn more about how this will affect ActiveCare participants.
See the recordings of the:
Editor’s Note: Will the Aetna contract with TRS include a provision to earn fees based on differentials between billed charges and allow amounts? http://blog.riskmanagers.us/?p=6040.