For years, Texas lawmakers have been trying to stem the bleeding of the state's health care plan for retired teachers. The plan has been at risk of going unfunded for nearly two decades because of demographic and economic changes, including more retirees and rising health care costs. During this year's legislative session, lawmakers took steps to make up for the plan's $1 billion shortfall.
But Tim Lee, executive director of the Texas Retired Teachers Association (TRTA) says the fixes aren't enough, and the situation remains calamitous for hundreds of retired teachers and school workers.
"The legislature started with a $1 billion shortfall and in the end, they decided that retirees are going to pick up $520 million of that shortfall," Lee says.
Lee says most retired teachers can't afford the additional costs. For example, the average premium for a high-deductible health plan for a retired teacher under 65 with no beneficiaries could rise from $1,300 to $9,550 in 2018, under the legislature's fix.
"Retired teachers on average make about $2,000 a month," Lee says. "Ninety-five percent of our school districts do not pay into the Social Security system."
Lee says monthly premiums start at a reasonable $200 per month, but that the average deductible has risen to $3,000. Retirees with higher care expenditures must eventually pay 20 percent of their health costs until their out-of-pocket expenses reach $7,500.
Problems with the teachers' retirement health plan stems from the way the legislature appropriates money for the system, and how its benefits are calculated, Lee says. The state employee health care system, by contrast, isn't facing a shortfall.
"We believe that our state employee colleagues deserve to have reasonable health insurance benefits," Lee says. "The fact is the legislature appropriates twice as much money for half as many people to fund their health insurance program. [Funding for] our health insurance program, TRS-Care, is based on how much teachers get paid. It uses a percentage of the aggregate, active teacher payroll in the state of Texas to fund health insurance. And it is in no way connected to the rising cost of health care inflation."
TRTA advises changing the system's funding formula to address actual trends in health costs.