Last month, the Teacher Retirement System of Texas (TRS) board agreed to raise monthly premiums for most teacher health insurance plans, called TRS-ActiveCare plans. More than 280,000 public school employees-roughly 75 percent of Texas teachers, principals, and administrators-receive health insurance through TRS and will face rising costs starting this fall.
Among other rate hikes, premiums for employee, spouse, and family coverage will increase by about 7 or 8 percent, depending on the plan. The most benefit-rich coverage offered by TRS has been eliminated completely as the required premium increases would make the plan unaffordable for most employees.
Why are costs going up? Simply put, ActiveCare provides benefit-rich plans that cover treatments and services not typically included in most private group insurance plans, such as vision, dental, specialty drugs, and various maternity-related procedures. Coverage of these services cause monthly premiums to rise over time even if a large portion of consumers rarely take full advantage of them.
The chart below compares a TRS ActiveCare plan and a basic Blue Cross Blue Shield plan, which many private employers in Texas offer to their employees.
[[{“type”:”media”,”view_mode”:”media_original”,”fid”:”13657″,”attributes”:{“alt”:””,”class”:”media-image”,”height”:”450″,”style”:”display: block; margin-left: auto; margin-right: auto;”,”typeof”:”foaf:Image”,”width”:”752″}}]]Of course, premium hikes are nothing new. Costs for health insurance have been steadily rising for years and have only worsened under the Affordable Care Act. The problems now plaguing TRS ActiveCare are systematic, affecting our entire health care system-problems that primarily stem from steadily increasing government regulation.
Over the years, state lawmakers have consistently passed legislation requiring that health insurance plans cover a variety of mandated benefits. While there are also federal mandates that all states must comply with, individual state governments have a tendency to establish their own insurance mandates, of which Texas currently has 64. This has led to coverage plans far more extensive than what many individuals might want or need. For example, the Texas Heart Attack Prevention Bill mandates that Texas insurance companies pay for CT scans and ultrasounds that can detect heart disease. Though this service will be used by a limited number of consumers, forcing insurance companies to offer it to everyone necessarily drives up the cost of premiums.
Setting coverage requirements for insurance plans only inflates prices and charges consumers for services that may never be used. This is one of the primary flaws of ObamaCare, which mandates coverage of ten essential health benefits (EHBs) on all health plans sold on the individual and small group markets. Such federal mandates, along with a host of other health insurance regulations, have been expediting the rise in premium rates since the law’s enactment in 2010.
If teachers and local school districts want to stem the tide of rising premiums for those covered under TRS ActiveCare, state lawmakers should strip away unnecessary mandates and allow ActiveCare enrollees to purchase whatever kind of health coverage they choose, including a high deductible plan with a health savings account (HSA). Those who still prefer a benefit-rich plan can certainly still choose that, but they will have to pay higher monthly premiums for it.
This fundamental shift in how we approach health care, coupled with the promotion of innovative, savings-based health care alternatives like self-insurance, will give greater control to the consumer and in time will lower premiums for Texans across the state.
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