Despite cost savings, retired teachers health care program still underwater

After Texas dramatically changed the health care program for retired teachers last year, unexpectedly sending deductibles and out-of-pocket costs sky-high, thousands of retired teachers jumped ship.

Their doctors and hospitals were refusing to take their new insurance plans. Individual insurance agents aggressively pursued them and promised better options — and retirees were unable to get anyone from the Texas Teacher Retirement System on the phone to discuss it.

That's the chaotic scene that Tim Lee, executive director of the Texas Retired Teachers Association, described for the House Appropriations subcommittee Wednesday, during a discussion about how to provide long-term funding for TRS-CARE, the beleaguered health care program for retired teachers.

"That transition created tremendous anxiety and a lot of questions," Lee said. "The agency responded and I think they did a great job, but the response was overwhelmed in this process."

TRS Executive Director Brian Guthrie said the agency needs $12 billion in order to keep the health care program from going under over the next 10 years.

"We did do quite a bit of work on this program last session and the resulting changes have been implemented," he said. "However, when we finished last session, we knew we would be facing another shortfall this session and that's what's happening."

There is some good news from TRS: The shortfall for the 2020-2021 biennium is just $410 million instead of an expected $500 million, due to some cost-saving measures.

And TRS officials likely won't raise premiums for retired teachers this month as previously expected, after receiving a letter from Lt. Gov. Dan Patrick urging them to instead rely on lawmakers to fill the gaping funding hole.

The Teacher Retirement System asked for about $2 billion more in 2020 and 2021 to cover health and pension costs, according to a recent appropriations request.

Last spring, lawmakers increased TRS-CARE's funding by $483 million over the following two years. But they also changed the structure of the program to dial back benefits in order to keep the system from collapsing.

Lawmakers patched that problem with an additional $212 million increase for TRS-Care. But that wasn't enough for many retirees, who were then left paying more for medications and doctors visits.

The health care program is consistently underwater, and TRS heads back to the Legislature every two years to ask for an influx of cash. The problem is that TRS-CARE is funded through a percentage of active teachers' salaries, which are increasing at a much slower rate than the cost of health care.

"That payroll is not growing at the same rate that health are, costs are growing, so we're always fighting a losing battle in terms of that funding," Guthrie said.

Lawmakers and advocates pointed out Wednesday that making the insurance plans more expensive limits the access retired teachers of all ages have to quality health care.

"Just because you have access to health care, if you don't have enough money to pay for it, that's akin to having no health care," said John Grey, government relations specialist at the Texas State Teachers Association.

Lawmakers agreed the burden of keeping the program afloat should not continue to fall on retirees and they vowed to look at creative funding options.

"We need to find some sustainable revenue streams and not continue looking at, 'How do we alter our eligibility and befits packages to ... the detriment of our retired teachers?'" said Rep. Donna Howard, an Austin Democrat.

Teo Armus contributed reporting.