TRS Strategy To Control Health Care Costs Screws Plan Members

The following article reports that “TRS trustees noted the only tools available to them to address rising costs each year are to”:

  1. increase premiums
  2. lower benefits
  3. or a combination of both

Really?

Meanwhile, smart plan sponsors have solved the rising cost of health care in Texas and it ain’t by increasing premiums and lowering benefits. Rather, it’s by lowering costs and improving benefits at the same time……sounds crazy doesn’t it?

(The Texas legislature’s answer to addressing rising health care costs is House Bill 3987, that if passed, will authorize a committee to study the issue and report back in two years. But some Texas school districts are not waiting……..)

ActiveCare

The TRS Board of Trustees has approved the new premium rates for TRS ActiveCare for the 2019-20 plan year. The premium increases range from 3% (ActiveCare 1-HD and ActiveCare Select) to 9% (ActiveCare 2), with changes in maximum out-of-pocket limits and prescription drug costs. Most of the changes are designed to continue to incentivize participants to stay in-network, as some out-of-network costs will increase significantly.

Note: ActiveCare 2 will continue to be closed to new enrollment; only those who are currently enrolled in ActiveCare 2 will be able to access that plan next year.

Click here to see the changes in premium rates, and here to see the plan changes.

Highlights from the committee and board discussions:

  • TRS trustees noted their concerns over rising premiums, and emphasized that, since TRS has no control over the financing aspects of teacher health insurance, the only tools available to them to address rising costs each year are to increase premiums, lower benefits, or a combination of both. Without additional state contributions approved by the legislature, the burden of increasing premiums falls almost entirely on employees.
  • Staff noted that fewer dependents are being enrolled because of the high premium costs for dependent coverage. TRS intentionally structures the rates to encourage spouses to enroll in their own plan, if they have access to other coverage.
  • ActiveCare 2 is becoming unsustainable because of its high premium costs and the effects of adverse selection: as the plan becomes more expensive, only the participants who need better coverage the most (and who therefore generate more expensive claims) are enrolling in it, so the premium increases are high year after year. In fact, enrollees in the other levels of coverage are subsidizing some of the costs of ActiveCare 2 through their higher premium rates.
  • Premium rates for TRS-ActiveCare are not out of line with other plans, and ActiveCare premiums are generally lower than comparable plans offered by school districts that provide their own health insurance. However, those districts tend to contribute more toward premiums than the minimum required amount, so that their employees are often paying less for similar coverage.
  • TRS will begin collecting data on tobacco use among ActiveCare participants, potentially imposing a tobacco usage surcharge beginning with the 2020-21 plan year. ERS (the state employee insurance plan) currently imposes a $30 tobacco usage surcharge for enrollees who smoke or chew tobacco.

HMOs

Three HMOs will continue to be available in certain areas of the state: BCBSTX in far south Texas; FirstCare in central and west Texas, including the Panhandle; and Scott & White in central Texas.

Changes in premiums and plan design vary, with Scott & White actually reducing its premium rates while BCBSTX rates will increase around 2.5% and FirstCare rates approximately 5%. Click here for the new HMO rates and benefit changes.

Related Blog Postings:

Texas Teachers Giveth Raises – Health Insurance Taketh Away…………

Texas School District Seeks To Exit TRS ActiveCare

Texas Association of School Administrators Advocates Alternatives To TRS ActiveCare

Will Texas Consider Feasibility of Reference Based Pricing Strategies for Public Educators?

Adverse Selection Dooms TRS ActiveCare

School District Fails To Address Rising Health Care Costs?

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