By Bill Rusteberg
TRS ActiveCare is a Texas government health plan for public school districts established over 20 years ago. Participating districts include over 90% of all Texas public schools comprising almost 500,000 members.
You would think a government health plan for a group of this size would provide economies of scale resulting in better benefits and lower costs than what individual school districts could achieve on their own.
Unfortunately, from my perspective, that’s not the case. Here’s some reasons why:
- Managed Care Contracts include annual escalator clause guaranteeing increasing costs year after year. (TRS ActiveCare Touts Unamazing Provider Discounts). These contracts of adhesion also include stop loss provisions which essentially eliminates touted discounts back to dollar one when turbocharged billed charges hit the stop loss threshold. Other revenue enhancement provisions do additional harm to consumers who are paying for all of this. This is why providers and their insurance partners have kept managed care contracts under lock and key all these years. They don’t want anyone to know what’s in them. It’s been my experience that when you are prohibited from seeing a contract or auditing claims you are probably paying more than you should.
- Cost Shifting – cost increases are passed on to members in the form of higher out-of-pocket exposure. Managed care contracts necessarily take this into account when renegotiated, raising reimbursement rates to cover accounts receivable issues (18-22% for hospitals). Everyone Is Paying For Mary’s Deductible Because Mary Isn’t
- Adverse selection – Most districts don’t contribute enough to cover 100% of all employees. With the help of government subsidies, young employees can obtain individual coverage for as low as $10 per month (Silver Plan For $10 Per Month? Sign Me Up Scotty!)and have all pre-existing conditions covered. Older, sicker employees tend to stay on TRS ActiveCare.
- Insurer of Last Resort– Community leaders know they can hire anyone in the community and have their pre-existing medical conditions covered immediately when they need it the most.
- Little or No Risk Management – Most school districts don’t have a risk management department to oversee the district’s health plan. They feel there is no need to have a risk manager since “Austin is handling all of this for us.” (Why Most Public School Districts Get An “F” In Health Care Management)
- No Local Control – All health care is local and unique. When it comes to health care insurance, one size does not fit all.
- Community Rating – Members in higher health cost areas of Texas have the same rates as members in lower cost areas.
- You Can’t Fix What You Don’t See– TRS ActiveCare member districts have no idea what’s driving health care costs. Neither do TRS ActiveCare trustees who are dependent upon what staff and outside actuaries tell them. As Paul Harvey used to say, they haven’t heard “The Rest of the Story.” A few districts see what to fix. The Bennett School District is one example.
Meanwhile in deep South Texas there are three small school districts that have solved health care. They know Health Care Costs Have Remained Static But Health Insurance Costs Haven’t. They know how to tie insurance costs to the cost of care while improving benefits at the same time.
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