Why are my Health Plans Premium Increasing?

The GBP is the group insurance plan that includes health and other coverage for employees and retirees. The Employees Retirement System of Texas (ERS) oversees GBP plans and contracts with companies that specialize in insurance to administer the plans. 

Rising health care costs are the main reason for higher premiums. Health cost increases are part of a national trend. For the last several years, health costs nationwide have risen at higher rates than overall inflation. Premiums are going up not only for GBP health plans, but also for health plans around the country.

Costs in GBP health plans were projected to go up by about 9% in Fiscal Year 2016 and are expected to go up by about the same amount in Fiscal Year 2017. This means premiums in the health plans have had to increase, too. 

Over the last few years, premiums for GBP health insurance plans have risen about 7% each year. But it’s important to keep in mind that out-of-pocket costs like copays, coinsurance and deductibles in the GBP plans have not increased in six years.

Nationwide, premiums for employee plans rose an average of 4% in 2015. Generally, these smaller premium increases occurred only after employers raised participants’ out-of-pocket costs. Many employer-sponsored plans, especially in the private sector, now have deductibles of thousands of dollars every year.

Costs are rising because people are using more health care services, including expensive procedures and high-cost specialty drugs. Chronic conditions like type 2 diabetes also add to higher costs.   

The Texas Legislature increased health plan funding by 7% for Fiscal Years 2016 and 2017 to cover most of the higher costs. The additional amount needed to cover the expected costs will come from ERS reserves and the increase in dependent premiums.

The Texas Legislature and ERS understand that dependent premiums can be expensive. They work together to ensure health insurance continues to be a valuable benefit for state employees and retirees. 

No. The only state employees and retirees affected by the premium increases are those who:

• cover dependents, 
• don’t work full-time or didn’t retire as full-time employees, and/or
• aren’t eligible for the 100% state premium contribution.

The State of Texas pays 100% of the monthly premiums for eligible full-time employees and retirees. So, most full-time employees and retirees who don’t cover dependents won’t be affected by the increases. 
 

The State of Texas shares health costs with plan participants. The state pays a much larger share.

• In FY15, the state and agency/institution employers paid about $2.4 billion in healthcare for participants.
• Participants’ costs — including premium contributions, copays and coinsurance — totaled about $935 million. 

ERS works to keep health plan costs reasonable, while offering flexibility, choice and high-quality service.
Without ERS’ cost management efforts, premium costs for GBP health plans would more than triple

• HealthSelectSM of Texas, the GBP’s main health plan, spends only three cents of every dollar on administration — with 97 cents going directly to health costs.
• By comparison, administration costs for large, private health plans nationwide can be as much as 12 cents per dollar

Also, ERS works with the Texas Legislature to ensure changes occur on a predictable basis, to allow participants time to plan for cost and coverage changes.

Participants’ health and lifestyle choices can have an impact on costs for the participants themselves and for the whole group. All GBP health plans offer wellness programs to help participants improve or maintain their health

Participants also can keep costs down by:

• selecting doctor-approved generic prescription drugs, 
• using network providers, 
• talking with doctors about the need for high-cost imaging versus x-rays, and
• examining providers’ invoices carefully for incorrect charges.