The TRS Board of Trustees made some painful decisions Thursday night, voting to significantly increase premiums for all levels of TRS-ActiveCare: 9 percent for employee-only coverage for Level 1 (High Deductible) with higher increases for employee/child and employee/family coverage, 15 percent for all categories of Level 2, and 25 percent for all categories of Level 3. See the new rates in this TRS presentation PDF.
Background on the premium increase
TRS is required by law to offer active employees in participating districts both catastrophic coverage and a plan comparable to that offered to state employees (a fairly high-benefit health insurance plan). TRS has chosen to also offer a mid-level plan, Level 2, which has the highest enrollment of the plans. The catastrophic coverage, Level 1, has two versions – the original plan and a high-deductible plan (Level 1 HD).
Aside from the national trend of continually increasing health care costs, two factors are contributing to additional costs in the TRS plans:
- Having choices between plans results in “adverse selection,” in which healthier people generally choose lower levels of coverage and don’t help subsidize the costs of the people in the richer benefit plans who have costlier claims. So over time, Level 3 insurance has become more and more expensive. Those increasing expenses in turn drive “sicker” people down into the lower levels of coverage, increasing the costs of both the plans they enter and the plan they left.
- The premium increases for the current year were not sufficient to cover an unprecedented increase in catastrophic claims (more than $100,000). There was no apparent reason for or pattern to the increase, which was significantly higher than previous years.
In addition to the rate increases, the Board approved the following:
- Eliminated the non-high-deductible version of Level 1. Members currently enrolled in this version will be automatically enrolled in Level 1HD next year, but will have the option to choose Level 2 or 3 instead.
- Increased the family deductible for Level 1HD, as well as the individual out-of-pocket maximum cost. The family out-of-pocket max will decrease.
- Increased deductibles and out-of-pocket maximums for Level 2. In addition, there will be a $5 increase in prescription drug co-pays (see TRS presentation for details).
- No plan changes in Level 3, due to the requirement that it be comparable to state employee health insurance.
TRS Executive Director Brian Guthrie noted that there may be a legislative proposal this session to eliminate the requirement that TRS provide a level of insurance comparable to state employee coverage. He also suggested that legislators could look into considering the state’s contribution toward premiums as part of the school finance reforms in a likely special session.
The TRS presentation includes both current-year and 2013-14 premium rates. Note that the amount paid by employees is less, due to the $75 contributed by the state and $150 (or more, depending on local policies) by school districts. The Board also approved new premium rates for HMOs, and we will post a link to that information when available. In general, increases in HMO premiums were very small.