Three questions to slash health benefit costs
In 2002, Texas created a health plan managed by the Teachers Retirement System of Texas (TRS). Known as TRS-ActiveCare, the plan was designed to be a more affordable option for school districts to offer active teachers and faculty. Since its inception, nearly 90% of Texas school districts have opted into the state health plan.
But over the past several years, complaints about the plan’s lack of cost savings and poor quality control have grown. Larger districts have lobbied to leave, which state law doesn’t currently allow. For those 10-percenters — the districts that have held off participating in TRS-ActiveCare — observing the growing outcry, there are three complaints that must be considered:
Since the health plan’s inception in 2002, the state’s $75 per employee per month (PEPM) contribution for each teacher has remained unchanged, as has the requirement for districts to contribute a minimum $150 PEPM. That puts the entire burden of covering escalating premiums and out-of-pocket costs on schools and teachers, neither of which have the resources to adequately make up the difference.
School district employees and lawmakers put pressure on the state to increase contribution amounts and/or allow participants to withdraw from TRS-ActiveCare to no avail. While the debate has sparked the creation of several bills, none have succeeded. Meanwhile, healthcare spend has risen to nearly 18% of the nation’s GDP. Teachers are suffering financially crippling medical bills while shelling out on average $1,000 a month in premium costs with no relief in sight.
In 2002, the combined state and district contributions of $225 PEPM covered 70% of a teacher’s healthcare costs. Today, that number has reversed, and teachers are accountable for 70% of their monthly premiums. Those premiums have more than doubled since 2002 and will continue to rise. The TRS-ActiveCare premium increase for the 2019-20 plan year ranges from 3% to 9% depending on the coverage level selected. Because few can afford the most expensive coverage option, that plan has been destabilized and deemed unsustainable by the TRS.
Its dissolve will leave high-risk teachers — those with chronic conditions like diabetes — without access to care and susceptible to illness. This abandonment will saddle districts’ with the burden of filling positions held by these teachers (often forced to leave the profession for an employer that covers these conditions) — a burden that will rapidly increase in difficulty and urgency.
The frustration of being held captive by TRS-ActiveCare is due in part to districts discovering more affordable, higher quality options. Urgency has made school administrators acutely aware of what is needed to sustainably lower healthcare costs. Once nearly void of competition, the Texas market is alive with innovative healthcare options: High-performance networks, Accountable Care Organizations (ACOs), and plans based on value-based care (VBC) models abound.
Districts should be given the same opportunities employers in the private sector have, many of whom have begun selecting health plans that incentivize healthcare providers based on quality outcomes and practice efficiencies. These modern health plans are structured to lower immediate cost and provide sustainable cost savings over time, but also ensure quality care — especially for those high-risk populations that will soon be left behind by TRS-ActiveCare. Currently, TRS-captive districts must sit on the sidelines as other industries and their employees benefit.
The TRS-ActiveCare health plan requires teachers and school faculty to sacrifice quality care for few cost savings and dwindling coverage. Those who haven’t opted in should take the increasingly public complaints about the state program seriously and carefully evaluate all health plan options.