Planning Ahead

The Classroom Teacher, winter 2013-14

Most Texas school districts participate in TRS-ActiveCare, a state health insurance program currently administered through the Teacher Retirement System by Blue Cross Blue Shield. However, some larger districts have chosen to stick with local plans, and employees in several areas of Texas have opted to enroll in HMO plans. But no matter the type of coverage they have, Texas school employees are like most Americans in that they’ve watched their insurance premiums increase from year to year.

The growing burden

School employees have borne the burden of the premium increases, in part because salaries have not kept pace with rising costs.

Another reason is that the state has not increased its share of the contribution toward school employee premiums from $75 per month since the implementation of the current health insurance program in 2002. The state-required district contribution of $150 per month also has remained static (though some districts increase their contribution as premiums rise).

Possible premium increases

In February 2014, the TRS Board of Trustees will consider, as it does every February, ActiveCare premium rates and plan changes for the following school year. Because ActiveCare operates on a very tight budget, there’s virtually no cushion to help absorb cost increases, and many factors will play into the consideration of premium rates.

TRS staff have asserted that projections for increases based on the Affordable Care Act have been factored in, so the main cost drivers will be the overall costs of health care and any trends in costs for the Active-Care population. (For example, in 2012, the plan saw a large and unanticipated number of catastrophic claims, which increased the plan’s overall costs and was partially responsible for the increases that took effect this school year.)

Possible elimination of ActiveCare 3

The Board also will consider whether to continue ActiveCare 3. This highest level of coverage has become increasingly unaffordable. Even this year’s 25 percent rate hike for ActiveCare 3 was not enough to cover the plan’s actual cost increases. In fact, TRS staff recommended in summer 2013 that it be discontinued for the current school year.

Because of the short notice, TCTA lobbied the Board to continue it at least through 2013-14, and to take some time this year to investigate whether changes could be made to make the plan more affordable to avoid its elimination.

Possible change in plan administrator

TRS has put out for bid the position of ActiveCare plan administrator. Blue Cross Blue Shield has administered the plan since its inception, and a major change is not anticipated unless it would provide a significant advantage to the plan and/or members.

Administration of the state employee plan was recently moved from Blue Cross Blue Shield to United Healthcare, so TCTA will monitor this process to see if a similar change could be in the works for ActiveCare. The key difference, if a new administrator were selected, would most likely be a variation in provider networks. The TRS Board is expected to make a decision at its December 2013 meeting.

A study, and possible legislative changes

TRS has initiated a study of Active-Care, similar to studies of TRS-Care (retiree health insurance) and the TRS pension plan that were completed prior to the 2013 legislative session. The new study will examine the sustainability of ActiveCare and provide recommendations for change.

Legislators are expected to address school employee health insurance issues in the 2015 session, and the results of this study will be an important factor in the kinds of solutions that will be considered. TCTA will provide input to TRS staff and legislators — including a recommendation for increased state funding — to advocate for high quality, more affordable health coverage.

*Affordable Care Act
Predictions about the effect of the Affordable Care Act (ACA) on TRSActiveCare vary. TRS staff believe they have accounted for the impact of related taxes and fees in determining current premium rates. Some experts predict slower growth in rate increases due to the influx of younger, healthier participants to the health insurance markets, while others maintain that the high costs of administering the system will be passed on to all health
care consumers.

School districts are already seeing some unanticipated consequences. Some teachers are losing favored “long-term substitutes” because their districts have restricted substitutes to less than 30 hours per week. These districts are doing this to avoid having to consider any substitutes as full-time employees for whom they must provide health care coverage. Look for more ACA-related information in upcoming TCTA publications.