The Texas legislature passed HB 3343 in 2001 establishing a special risk pool for Texas school districts called TRS ActiveCare . The pool was established in 2001 for the purpose of providing health insurance for employees of participating districts.
There are 1,257 Texas school districts that are eligible to join the program. Currently, approximately 87% have elected to join the TRS ActiveCare program, insuring over 398,000 Texans and their families.
Since the program originated, premium rates have remained stable, with minimal or no rate increases over the past 8 years. The economies of scale, and the bargaining power of large numbers, can be attributed to outstanding underwriting results.
The TRS ActiveCare program is a self-funded trust, with operating costs well below industry average. Gone are agent commissions (usually 5% or more), stop loss premiums (stop loss insurance not needed on such a large group), and other costs normally associated with a group medical plan like the current program at the Brownsville Independent School District.
Several years ago we were hired by the Robstown Independent School District to review, and make recommendations on their self-funded group medical plan. There were striking similarities between Robstown ISD and Brownsville ISD.
The Robstown Board of Trustees was split with neither side seeing eye to eye on issues before them. Politics had a paralyzing effect on the district. Their self-funded health plan was on a path to total destruction. Poor management and spiriling claims coupled with poor advice and guidance was leading the district to financial ruin.
We recommended that the district discontinue their self-funded program and join the TRS ActiveCare plan. We advised them that a move to the TRS ActiveCare “safe harbor” would benefit the district in more ways than one. Costs would become budgetable, benefits would be essentially the same or better, and politics would be removed completely. A move to TRS, we explained, would leave the district to do what they did best, educate the children without the distraction, politics and financial hazards associated with their self-funded health plan.
Robstown Independent School District joined the TRS ActiveCare Plan. That was an appropriate move for them.
It may be beneficial for the Brownsville Independent School District to consider the same move. Other districts of similar size have opted to do so, including Dallas ISD, Ft. Worth ISD, Lewisville ISD, Richardson ISD, Spring Branch ISD, Victoria ISD, El Paso ISD and many others.
A quick calculation of the TRS ActiveCare premiums, applied to current enrollment at the BISD, indicates an annual savings of over $17,000,000.00 (+$17 million). This is a significant savings in our opinion.
Gone would be agent commissions, PPO network disputes, potential costly lawsuits, expensive consulting fees, stop loss claim issues (lasering, etc), need to bid every year, insurance committee, political in-fighting among board members, administration, insurance committee, legal fees, Open Record Requests, and teacher uniions.
But the hurdles before the BISD Board of Trustees to make the move to TRS ActiveCare are enormous. Too many vested interests are in play. The $50,000,000 BISD self-funded honey pot would be jeopardized. Teacher unions would be against the move – they would lose influence over benefit decisions and provide less value to their members. Local medical providers may protest as well – they may have less bargaining power with a giant like Blue Cross which administers the TRS plan. Less bargaining power usually equates to less income. Insurance agents would protest too. And, insurance consultants would probably advise against such a move – after all, a client that moves to the TRS plan would have no further need for an insurance consultant.
So our question to the BISD is – has the district ever considered a move to the TRS ActiveCare plan? Has an evaluation of the potential merits of joining TRS ever been performed? If so, what were the results?
We think that it may be time for the Brownsville Independent School District to join the TRS ActiveCare plan.