The Teacher Retirement System of Texas (TRS) announced a significant increase in TRS-ActiveCare health insurance premiums for the 2011–12 school year in mid-February.
In the midst of budget projections for the coming year that could not be any more challenging, districts will also have to consider the impact of a 9.5 percent hike in health insurance premiums for their employees. The TRS ActiveCare health insurance program is used in nearly 90 percent of eligible entities and covers more than 300,000 public school employees
The TRS board adopted new premiums and benefits for all of the TRS ActiveCare health plans. In addition to the 9.5 percent increase in premium rates, some benefits were also restructured. This includes increased deductibles and co-pays. For example, ActiveCare 2, the most commonly selected plan, will have now have an individual deductible of $750 and a family deductible of $2,250. That’s up from $500 and $1,500, respectively. In addition to larger deductibles, several co-pays are increasing. The ActiveCare 3 plan will have a deductible for the first time, along with higher premiums.
This puts districts in a quandary. Facing the possibility of significantly reduced funding, employees may have to shoulder the entire premium hike. Typically districts and employees would share the effect of the increase, with districts increasing their contributions and employees paying slightly higher premiums.
Although the increases seem excessive, they’re not out of line with cost increases in employer-provided health insurance seen in North America and globally. According to a Towers Watson survey of health insurance providers, insurance costs are expected to rise by 10.5 percent globally in 2011. In North America, costs are projected to grow even more—by 11.6 percent. That means that health insurance costs are trending up at more than twice, or even three times, the rate of inflation.
The TRS ActiveCare increase of 9.5 percent is in line with (or slightly lower than) these projections. Recall, however, that premiums were raised by 7 percent for the 2010–11 school year.
The Towers Watson survey also does not paint a pretty picture for the near future either. Seventy-two percent of survey respondents indicated that health insurance costs will continue to rise over the next five years.
—“Globally, Health Insurance Cost Expected to Rise More Than 10%,” by Stephen Miller, Society for Human Resource Management Web site, Jan. 25, 2011.