On Thursday, July 10, the House Committees on Pensions and Appropriations held a joint hearing to discuss retiree and active employee health insurance.
TRS-ActiveCare is the program that covers approximately half of all public education employees. The remaining half is covered by local district-sponsored plans. Regardless of whether employees are covered by local plans or ActiveCare, however, the trend in health care costs has long been outpacing that of general inflation, as well as increases in personal income. The increases in costs have caused there to be problems with both active and retiree health care programs, largely because state funding for both programs is insufficient.For the upcoming school year, premium increases for ActiveCare will be less than prior years, but still high enough to impose a burden on those enrolled in the program. For retirees, TRS-Care will have no premium increase.
ATPE was invited to testify before the joint hearing and warned committee members of the dangers of not properly funding public education employee and retiree health care plans. ActiveCare members already pay more of the cost of care than does the average American employee. Outside of ActiveCare, employers contribute more to the cost of health insurance than the contributions made by the state and school districts toward premiums. Yearly increases in premiums are often shouldered entirely by the employee, which is inconsistent with general employer practices. ATPE testified that because of the cost of participating in ActiveCare, the program is becoming unsustainable and is no longer an asset in attracting and retaining employees. The state’s contributions to employee health insurance have been static since 2001, and it is our belief that to make the plan an incentive to employees, the state must increase its contributions to employee insurance.
TRS-Care’s trust fund is projected to run out of money in 2016, and in order to keep the plan alive for another two years without plan design changes, the state would be required to increase funding by approximately $875 million in the upcoming legislative session. If the state does not increase funding for TRS-Care, retiree premiums could increase by as much as double to cover the cost of the funding shortfall. The average monthly pension benefit for retirees is approximately $1,900, and retirees already cover nearly 37 percent of the total cost of their health care expenses. ATPE has voiced our concerns to legislators and Teacher Retirement System (TRS) board members that making dramatic increases to retiree premiums is untenable. We have and will be asking lawmakers to find a long-term, stable funding source for the program that will not place a larger financial burden on retirees on fixed incomes.
Funding for ActiveCare and TRS-Care will be a key issue during the next legislative session, which begins in January 2015. It is crucial that all lawmakers understand the importance these two benefit programs have on our schools’ ability to attract and retain quality employees, especially when demands on students and educators are constantly increasing. Stay tuned to TeachtheVote.org for updates.