TRS ActiveCare Requires Intensive Care – Prognosis is Guarded
We are in a different world now than the one we were in twenty years ago.
By Bill Rusteberg
TRS ActiveCare is a government health plan established for Texas school districts over twenty years ago. More than 90% of Texas school districts participate in the program representing almost 500,000 members.
The program was established because smaller districts in the state were have difficulty in obtaining affordable health insurance for their employees.
Some districts could not find any insurance company willing to assume their risk, leaving some districts without any health insurance at all. (Side Note: what they didn’t know at the time was they were eligible for group coverage under the Texas small group statutes but apparently no one told them about that option except us)
Those were also the days when the term pre-existing condition meant “it ain’t covered.”
Initially TRS ActiveCare fulfilled the needs of participating member districts. However, over time costs increased and benefits reduced offering members less choices. State funding has remained static for over twenty years and district funding has not kept pace with rapid medical inflation. Underpaid school employees are stressed to pick up the difference.
As a result, Texas educators whose average mean annual salary is $55,000 per year can face out-of-pocket expenses totaling +$40,000 for family coverage if they are unfortunate enough to have large medical expenses during the year. The math just doesn’t add up.
Other factors include status quo risk management strategies which those in our industry have come to understand are proven failures including reliance on outdated managed care contracts that provide no value of any kind towards reducing health care costs. Adverse selection is another factor leading to erosion of benefits and higher costs. An experienced risk manager would recommend immediate intensive care.
We are in a different world now than the one we were in twenty years ago.
No longer are the pre-existing conditions limitation an issue to contend with because with the passage of the Affordable Care Act (ACA) pre-existing conditions must be covered immediately.
In Texas, carriers are required to offer coverage to any small group that applies. Prior to passage of TRS ActiveCare the definition of small group coverage included Texas public school districts no matter their size so going bare back in the day wasn’t necessary. If that had been widely known during the time small districts were clamoring for legislative assistance, TRS ActiveCare may have never happened.
Whereas twenty years ago the individual health insurance market denied coverage for those with pre-existing conditions, Texas school employees are now guaranteed individual health insurance with pre-existing conditions covered immediately, often at lower costs (with federal subsidies) than what they can get through their district’s health plan.
In the past 18 months 145 Texas school districts have offered their employees competitive commercial health plan options with better benefits and lower rates than the TRS ActiveCare. Most of these districts are small, ranging from 200 to 500 employee lives, proving size doesn’t matter.
TRS ActiveCare officials certainly don’t think their plan is irrelevant. A proposed bill this legislative session, if passed, will prohibit member TRS ActiveCare districts from seeking and obtaining competitive commercial insurance and will require those that have to terminate their commercial plan options September 2021.
TRS ActiveCare may linger on life support longer than the prognosis indicates. Only time will tell.
