It’s hard for commercial carriers to compete against the Texas government health plan for Texas school districts when rates are lower due to government subsidies and a legislative mandate that requires annual rate caps of no more than 10%.
Article Referred By Jeff Evans
In split vote, Killeen school board approves new employee health plan
By Jana Lynn Kilcrease | Herald Staff Writer – July 27, 2023
In an unusual split vote this week, the Killeen school board approved a new employee health care provider for next year.
After the 5-2 vote Tuesday, the action will change Killeen ISD’s current health plan beginning Jan. 1 from United Health Care to the Texas Retirement System (TRS) plan for the next five years, pending approval from TRS.
Board members Marvin Rainwater and Jo Ann Purser voted against the change. The other board members followed the recommendation of BKCW, the benefit consulting firm retained by the district to compare and recommend health care options.
Purser has said on numerous occasions that “TRS doesn’t work.” She said the rates charged to employer groups is lower because TRS receive state subsidies and are required by the process to cap rate increases to 10% year-over-year.
“They are artificially keeping the numbers exactly where they need to be because they can be the cheapest plan for every school district,” Purser said at last week’s workshop meeting.
Following Tuesday’s meeting, Purser said she is concerned about the continued support by legislators that will eventually fall apart.
“It just doesn’t make sense to prop up this program” if funding from the state doesn’t continue in the future, Purser said.
Rainwater voiced similar objections to the plan.
“My no vote was based on many things,” Rainwater said. “Simply put, I do not trust the State Legislature, as a group.”
His argument against the plan stems from the theory that although the state injected the TRS system with $588.8 million, his concern is the length of the commitment by the Legislature.
“Does that mean for one budget year, two budget years?” Rainwater said. “KISD is now captive for five years to TRS.”
According to Rainwater, lower premiums mean higher costs down the line,
“What will premiums be in five years after the cap is released? What will premiums be if the state does not inject another $588.5 million into the program?” Rainwater asked.
The cap Rainwater described is part of state’s requirements included with the TRS funding.
The state plan may not increase premiums more than 10% for any subsequent year of coverage. And, the Legislature did not increase the state’s contribution, which is $75, into teacher’s health care costs.
KISD started a partially self-funded insurance plan two years ago. It was expensive, but provided the only way employee health care costs could be lowered.
“My opinion is this decision is another loss for teachers,” Rainwater said.
In a comparison chart provided to trustees before the vote, BKCW provided a financial picture for the next five years.
The cost to the district from 2024 to 2028 increases substantially less with TRS than with UHC.
With a standard contribution by the district of $17 million each year, and the employee’s contribution of $400 per employee per month, as it is currently, for a total of $7.69 million, the additional funding required to meet UHC’s rates would be $8.62 million for 2024. In 2025, that cost increases to $11.08 million in 2026, $13.72 million; in 2027, $16.56 million; and in 2028 to $19.61 million.
With the same standard contributions from the district and employees, the additional funding required to meet TRS’s rates would be $2.4 million for 2024. In 2025, there would be a cost savings of $355,696, and in 2026 the additional funding needed would be $2.08 million; in 2027, $4.76 million; and in 2028, $7.7 million.
Based on these figures, which were calculated with no change to the employee contribution portion, the recommendation for reduced costs over the next five years was the plan board members approved.
In a statement from KISD Superintendent Jo Ann Fey, who has worked with both self-funded and the state plans, she stated her position clearly.
“I recommend that we move forward with TRS,” Fey said. “I believe this is an opportunity to do right by our employees, with the expectation to not to save money but to avoid future costs of the self-funded plan.”