‘Innovation’ status threatens TRS healthcare as districts mull pulling out of the system

Original authors of the District of Innovation (DOI) legislation argued that the status would give districts the “flexibility” they need–by waiving certain requirements of the Education Code. But some districts are trying to use the DOI process to abandon the Teacher Retirement System of Texas healthcare program, a move that threatens the quality and affordability of healthcare for all school employees.

TRS ActiveCare provides healthcare coverage for 440,000 people and is self-funded, with premiums paid for by public school employees, districts, and the state. 

There are over 1,200 public school districts and charter schools in Texas. TRS-ActiveCare provides healthcare coverage to just under 1,100 of these entities. Some 915 districts have gone through the process to be DOIs, with most dropping requirements for the state-mandated school start date, and many nixing the requirement to notify parents when class sizes in grades K-4 go over 22 students to one teacher. However, dDistricts using DOI in order to exempt themselves from participating in TRS ActiveCare pose serious problems for the TRS system and all school employees. 

First, while DOIs might save money by choosing a competing healthcare plan for their employees instead of paying into TRS ActiveCare, the competing healthcare plan is almost guaranteed to provide lower quality coverage. This leads to school employees in exempt districts being covered by plans that don’t cover specialty drugs, have higher participant burdens, or have a limited number of physicians who are in network for the plan. 

Second, districts with exemptions from paying into TRS ActiveCare also jeopardize the stability of the system overall. Public insurance plans like TRS ActiveCare work best when the system is populated by a high number of participants. When DOIs exempt themselves, they are shrinking the pool of participants in the system. The remaining participants are likely to be higher risk patients who require more specialized healthcare services.

In order to protect TRS ActiveCare, the Committee on Pensions, Investments, & Financial Services recommended in their interim charges that the 87th Texas Legislature take action to “explicitly prohibit independent school districts from using District of Innovation status (as) a method for opting out of TRS-ActiveCare.” 

Note that Texas AFT originally fought the DOI legislation because of the possibility of districts opting out of many quality safeguards in the Education Code–such as the 22:1 class size law, provisions of teacher contracts, duty-free lunch, planning and preparation time minimums, and other provisions that work for our students and teachers. We’ve managed to beat back many of these harmful waivers district-by-district, and we’ll be watching legislation on the TRS issue closely.