TRS ActiveCare Suffering Financial Woes – Unprecedented Midyear Premium Hikes?


“Financial woes afflicting the TRS-ActiveCare health insurance plan for school employees could lead to TRS staff recommending that the system’s board adopt unprecedented midyear premium hikes.”

As ActiveCare Program Suffers Financial Hits
TRS Staff Warns of Possibility
Of Mid-Year ActiveCare Rate Hike

Additional resource:
View Executive Director Guthrie’s comments to the TRS board

Financial woes afflicting the TRS-ActiveCare health insurance plan for school employees could lead to TRS staff recommending that the system’s board adopt unprecedented midyear premium hikes.

That’s what TRS Executive Director Brian Guthrie told the board during the board’s Sept. 12-13 meeting.

Whether a midyear ActiveCare premium increase will be needed would be a likely topic for the board’s February 2014 workshop in Corpus Christi, where issues involving the ActiveCare program and the retiree health-care program (TRS-CARE) are expected to be major discussion topics, Guthrie said.

But Guthrie added that a number of cost saving measures (discussed throughout this article) could negate the need for midyear premium hikes.

Guthrie said staff was surprised in going over early ActiveCare enrollment data for the current plan year (which started on Sept. 1, 2013) to discover an apparent trend of school employees dropping ActiveCare coverage altogether.

Responding to board questioning, Guthrie said staff had not yet determined whether school employees are choosing to go “bare” (without any health insurance coverage) due to affordability issues (due to premium increases) or because employees are choosing to join their spouses’ health plans.

Guthrie added he’s fearful that a more thorough study of demographic data of employees who are dropping out of ActiveCare could reveal that those foregoing coverage are younger, healthy workers that don’t have as many health-care issues, leaving the older, less healthy employees in the program.

Guthrie noted that due to “affordability issues,” staff had expected a shift from the benefit-rich, most costly ActiveCare 3 plan to the lower-cost, less-benefits ActiveCare 2 and 1 plans, but that the trend of employees choosing to drop out of ActiveCare coverage altogether was a huge surprise.

Guthrie also told the board that twice last month, within a four-day period, TRS missed deadlines to reimburse Blue Cross and Blue Shield of Texas for medical claims paid out because TRS did not have sufficient ActiveCare funds available. (Blue Cross is the system’s preferred provider organization [PPO] for ActiveCare.)

Thankfully, TRS was able to make a deal with Blue Cross whereby the company would not charge the system penalties and interest for the late payments (which were made a few days after the due dates), Guthrie said.

Premium Payment Date Change

Guthrie added that new ActiveCare rules adopted during the summer move up the payment dates for TRS-ActiveCare premiums closer to the beginning of each month, beginning this month (September 2013), a move designed to help ensure the system has enough funds to pay its ActiveCare providers for claims in a timely manner.

Note: Another rule change, adopted during the summer, closes enrollment to new enrollees in the high-premium-cost, benefit rich ActiveCare 3 plan  as of the current plan year — a move designed to stop the “adverse selection trending” of the less-healthy, more costly to insure, school employees choosing this plan while other, more healthy employees choose cheaper plans.

Guthrie also noted that the board, at its December 2013 meeting, is scheduled to award new contracts for management of ActiveCare for the next plan year, which starts Sept. 1, 2014. This process in turn could present an opportunity to ask contract bidders to present their ideas for cost-saving and flexibility options that could be incorporated into the program.

Guthrie added that the “silver lining” amid the bad news of ActiveCare’s financial woes would likely be increased interest by the Legislature — which has largely ignored ActiveCare issues because the state’s costs for the program, even as premiums have increased, remain fixed.

Guthrie said he expects an interim legislative committee will be appointed to look into ActiveCare issues and to make recommendations to the 84th Legislature in 2015.

ActiveCare issues will also be added to an ongoing report of TRS-CARE being conducted by the TRS, Guthrie added. TRS-CARE is projected to have a $1 billion deficit when the Legislature convenes in 2015.