House Proposal on Retiree Health Care is an Improvement, But More is Needed

Texas AFT testified Monday on a newly unveiled House proposal to address the funding shortfall for TRS-Care, the state program affording health coverage to retired school employees. HB 3976 by Rep. Trent Ashby (R-Lufkin) is a considerable improvement over the Senate plan in SB 788 by Sen. Joan Huffman (R-Houston). Under HB 3976 the deductible for pre-Medicare retirees would be $3,000, versus $4,000 in the Senate bill, and premiums would be $50 less per month. And on reaching age 65 the non-Medicare retirees could move into the Medicare Advantage plan for Medicare-eligible retirees, offering a much more favorable package of benefits and costs. The House bill achieves these improvements thanks to a commitment of double the amount of funding provided under the Senate version. The House funding of $633 million would include $133 million from school districts, which along with active employees already contribute to retiree health care. But retirees, especially pre-Medicare retirees, would still bear a large share of rising health-care costs.

Texas AFT will continue working for a better deal for retired school employees. As part of that effort, Texas AFT legislative spokesman Ted Melina Raab testified on HB 3976 as follows:

Texas AFT has been clear for many years that repairing the structural problems in TRS-Care requires, more than anything else, a very large increase in ongoing state funding for the retiree health-care program. We continue to favor pre-funding health-care benefits with a trust fund similar to our pension fund. While it may seem expensive in the very near term, such a solution keeps costs lower and predictable in the long term and provides sustainable funding matched to needs.

Today, however, we focus on the more confined framework presented by the committee substitute for House Bill 3976 and related funding in the House version of the 2018-2019 budget. As outlined in companion Senate Bill 788 and that chamber’s budget, the bill overhauls TRS-Care with separate programs for Medicare-eligible retirees—continuing comprehensive coverage but only through Medicare Advantage—and for those not yet eligible for Medicare—offering a high-deductible plan with high premiums. Compared to the latest Senate plan, the House proposal is certainly preferable. CSHB 3976 and CSSB 1 as passed by the House would offer substantially lower deductibles for retirees not yet eligible for Medicare and lower premiums for them as well.

Keeping the focus on this bill and the current budget proposal, we recommend working to make three changes. First, make further increases in state funding to reduce deductibles and premiums, particularly for retirees not yet eligible for Medicare. Second, extend the assistance provided to disability retirees to cover current and future disabled employees. As workers are pressured by health-care and pension benefit changes to work longer, we must particularly keep in mind low-paid support employees in physically demanding jobs. Most of these folks won’t have been able to build individual savings to supplement a lower retirement annuity. If they are forced into retirement by disability, they’re likely to need more medical care than average. Third, require that TRS bring its plan for TRS-Care premiums and benefits back to the legislature by requiring a Legislative Budget Board hearing and LBB approval before implementation.

Those three changes would make this a better plan, but it would still be one that leaves us with a health-care program funded based on public school employees’ payroll, not on health-care cost. That scheme—with costs inevitably rising faster than revenue—is what brought us to the point where we are now. What retired public school employees really need is a much larger increase in ongoing state funding for their health-care program—enough to keep costs and benefits predictable and affordable for all.