The Teacher Retirement System of Texas (TRS) Board of Trustees continued its meeting in Richardson today, focusing much of their conversation and reporting on the TRS-Care retiree health insurance program.
TRS Chief Health Care Officer Katrina Daniel made a presentation about internal efforts to provide efficient administration of the TRS-Care plan, as well as financial oversight and cost-containing measures.
Some of those cost-containment measures include continued negotiations with the Medicare Advantage and Medicare Part D vendors to receive favorable terms. This helped save the program $44 million in FY 2015. TRS also reviewed the costs and potentially wasteful or fraudulent activities that may be associated with certain compound drugs.
For 2016, the department’s major objectives include having a successful working relationship with the joint interim legislative committee established by Senate Bill 1940 in 2015, strengthening the agency’s data analytics, contact oversight and governance, use data to improve data-driven decision making in health care, enhance consumerism by improving communications with the TRS membership, and developing an internal strategic plan to help the department maintain its focus on priorities.
Ms. Daniel reported on some of the continuing challenges facing TRS-Care that drive up the cost of the program.
Medical and pharmacy costs continue to rise, and there are even dramatic increases in prices for generic drugs now. TRS-Care continues to have more participants and more usage. As the TRS-Care population continues to age, utilization also increases. As we have heard in the past, the greater costs to the program stem from non-Medicare eligible participants, as TRS-Care is the first payer until participants are 65 and Medicare becomes first payer.
TRS-Care continues to try and balance program accessibility with cost. More access creates more cost, but limiting the system is not good for the participants.
Ms. Daniel reiterated a statement made in yesterday’s meeting by TRS Executive Director Brian Guthrie, stating that “funding streams for TRS-Care are in no way related to the increasing costs of health care.” As our members may know, funding for the program is based on a percentage of active educator payroll, which has tended to decline in recent years. As contributions to the program are not based on health care industry trends, this funding mechanism continues to be a problem. Right now, the state contribution to TRS-Care is 1 percent of active teacher payroll.
As TRS internally looks at ways to contain costs, such as creating integrated health care across disciplines to achieve an expected high value outcomes and looking at alternatives such as telemedicine, the funding mechanism for TRS-Care will still have to be a primary focus of consideration for the joint interim legislative committee. A wide array of options will be needed to wrangle the cost of health care for Texas’ public education retirees.
Legislative Interim Charges Will Impact TRS-Care, Pension Fund
Ray Spivey, Director of Governmental Relations and Merita Zoga, Assistant Director of Governmental Relations reviewed legislative interim charges for various committees and how they will impact TRS and its members.
As we mentioned yesterday, the joint interim committee consists of the following legislative members: Senators Joan Huffman (R-Houston) – Co-Chair, Jane Nelson (R-Flower Mound), and Craig Estes (R-Wichita Falls); and Representatives Dan Flynn (R-Canton) – Co-Chair, Trent Ashby (R-Lufkin), and Justin Rodriguez (D-San Antonio).
The findings from this committee are due to the Texas Legislature on January 15, 2017. The first meeting of the joint committee is planned for 2:30 p.m. on Wednesday, March 30, 2016 in Room E1.028 (Hearing Room) of the Texas Capitol. TRTA will report additional details as they become available.
The focus of the committee is to examine and assess: the financial soundness of the TRS-Care and TRS-ActiveCare plans; the cost and affordability of plan coverage; and the sufficiency of access to physicians and health care providers under the plan.
Spivey and Zoga reviewed interim charges for various other legislative committees, including many that TRTA reviewed at the end of 2015 in this Inside Line article.
Of particular interest to our members is House Appropriations Committee charge 6, which will “examine issues and costs associated with granting cost-of-living adjustments or ‘13th Checks’ to retired state employees and teachers.”
In 2007, TRS annuitants received a one-time 13th check. While an attempt was made to provide TRS retirees with another 13th check in 2009, ultimately, the payment was not approved.
While the status of the pension fund’s solvency cannot be predicted at this time, this discussion opens the door for conversations with legislators about the possibility of a supplemental check for retirees in 2017.
In regards to TRS-Care, House Appropriations Committee charge 7 will “monitor the implementation of HB 2 (84R) as it pertains to the short-term funding provided to TRS-Care, evaluate additional methods to address the health care needs of retired teachers in light of the current health insurance market, including the feasibility and costs associated with retired teachers not eligible for Medicare remaining on a school district’s health care plan until Medicare eligible.”
The Pensions Committee has several charges pertaining to monitoring the financial markets and investment performance of the TRS pension fund that you may read more about here.
Of note for our members is the charge to the Senate State Affairs Committee to “examine the practice of using public funds and employees for the payment processing of union dues.” This is in reference to Senate Bill 1968, which did not pass during the 84th Legislative Session. Senators will review whether or not active and retired public employees can pay dues voluntarily to state associations or organizations from their monthly paychecks.
TRS Continues Meeting Friday, TRTA Members Encouraged to Attend
The TRS Board of Trustees will continue to meet this Thursday and Friday in Richardson at the Region 10 Educational Service Center, 1st Floor, Collin, Dallas, and Ellis Rooms, 400 East Spring Valley Road, Richardson, TX 75081.
TRTA encourages members to attend this meeting in person if they live in the area. You may read the board’s agenda items here.
If you are unable to attend in person, you may view the meetings online via live webcast. Please note that the links below will not be live until the meetings begin for the day. For meeting start times, please view the agenda linked above.
Here is the link to Friday’s video stream.
Protecting your retirement benefits is one of TRTA’s top priorities, and your participation makes all of difference! Be sure to stay tuned to our other digital mediums to stay informed on all the latest news and updates. Like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.