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The current health insurance plan for retired teachers and eligible dependents, surviving spouses, and surviving dependent children is severely underfunded and faces collapse unless reforms are made to shore up the system. Known as TRS-Care, the system currently offers a range of plans which are (like most government benefit programs) overgenerous and underfunded. It is projected that in the next biennium the shortfall will exceed $1 Billion and increase by multiple billions of dollars in subsequent years.
SB 788 is an attempt to shore up a public health insurance benefit program that is spiraling toward collapse. The reforms in this legislation reduce the number of benefit plans available to two; a high deductible plan and a Medicare Advantage plan. Program participants who are eligible for Medicare Advantage would be required to utilize that plan while those not eligible for Medicare Advantage would use the high deductible benefits plan.
Additionally, people insured under this program would see an increase in premiums while the state would also increase its contribution to be equal to 1.25% of the salary of each active employee who is part of the retirement system. This is up from the current 1% contribution rate.
TRS-Care is a system in crisis which is quickly spiraling out of control. The current path of continuing to underfund the program is unsustainable - on this trajectory the program will collapse under its own weight in the not-too-distant future. To fully fund the program in its current form would be a far too costly burden to place on the taxpayers of this state. The only path forward to save the system then is to enact reform. This bill is an attempt at that needed reform.
While some provisions of this bill would be an improvement over the status quo, we are unable to determine whether this legislation would fix the program in the long term or simply delay the inevitable. For this reason we remain neutral.
On an additional note, we encourage the legislature to pursue reforms that transform public employee retirement systems to defined contribution plans for newer workers while keeping promises made to existing retirees, ensure full transparency, and prioritize local control.