Beneficiary drug co-payments would climb for a decade
By TOM PHILPOTT | | Published: April 18, 2013
Rahm Emanuel, while serving as President Obama’s first chief of staff, once advised not to let a “crisis go to waste” because that’s when politicians will do things they otherwise wouldn’t.
Defense officials seem to have taken that advice to heart amid the current debt crisis with their plan to boost co-payments on military family members and retirees who use Tricare retail and mail order pharmacies.
For starters, the current $17 co-pay collected at retail outlets for 30-day prescriptions of brand name drugs found on the military formulary would double to $26 on Oct. 1, start of the new fiscal year. The retail co-pay then would be increased by $2 every October through 2017 and possibly for five years longer because budget document refers to a 10-year phase-in plan.
Also on Oct. 1, if Congress allows, brand name drugs not on the military-approved formulary would become unavailable using Tricare at neighborhood drug outlets except on a very limited basis.
Since last year beneficiaries have faced a co-pay of $44 to get a non-formulary drug at retail. Under the administration’s new plan, non-formulary drugs would have to be obtained by mail order. And that co-pay, for a three-month supply of pills, would be raised from $43 to $51 this fall and would see annual increases thereafter to reach $66 by fall 2017.
Meanwhile, the co-pay for formulary brand drugs via mail order would double from $13 to $26 this October and increase by $2 to $4 annually to reach $34 by fall 2017. Again, budget documents suggest five more years of phased-in increases beyond 2017 though specific co-pays aren’t shown.
Beneficiaries could continue to have prescriptions filled for free at base pharmacies, and generic drugs would be filled at no charge by mail until 2017 when co-pays would begin at $9 per 90-day supply. The current $5 co-pay for generic drugs at retail outlets would be increased by $1 a year starting in October 2014.
Last year’s defense authorization bill had allowed some increases in drug co-pays at retail and mail order. Congress also authorized the department to begin a pilot program that will require Tricare for Life beneficiaries -- retirees and family members 65 or older -- to obtain all of their maintenance drugs by mail order for at least one year starting this fall.
The new plan would shelve the pilot and require all retirees and family members, regardless of age, to use mail order or base pharmacies for drugs to control chronic conditions like high blood pressure and cholesterol.
Congress can block these proposals, support them all or reach a compromise. They are part of a larger Tricare reform package that, as described here last week, also calls for higher out-of-pocket costs to beneficiaries using Tricare Prime, Extra, Standard or Tricare for Life.
Defense Secretary Chuck Hagel and Army Gen. Martin Dempsey, chairman of the joint chiefs, defended the Tricare increases during hearings over the past week on the fiscal 2014 defense budget request held by the House and Senate armed services and appropriations committees.
Hagel noted that survivors of service members who die on active duty and medically retired members would be spared any Tricare increases. Also, if Congress adopts these changes, said Hagel, a former enlisted combat veteran of the Vietnam War, Tricare “will still remain a very substantial benefit. These adjustments to pay and benefits were among the most carefully considered and most difficult choices in the budget.”
Hagel noted that raising Tricare fees has the “strong support” of the joint chiefs and senior enlisted leaders because they know that “to sustain these benefits over the long term, without dramatically reducing the size or readiness of the force, these rising costs need to be brought under control.”
Earlier efforts to hike beneficiary health costs or take other controversial cost-saving actions “met fierce political resistance and were not implemented,” Hagel said. “We are now in a completely different fiscal environment, dealing with new realities that will force us to more fully confront these tough and painful choices, and to make the reforms we need to put this department on the path to sustain…military strength for the 21st Century.”
Rep. Joe Wilson (R-S.C.), chairman of the House armed services subcommittee on military personnel, has been part of the fierce resistance. Last week, with Hagel and Dempsey, he sounded like he would be again.
Wilson challenged their arguments that the $49 billion-a-year military health care account is unsustainable, pointing to a $500 million surplus reported in 2011 and $709 million last year. And Defense health costs grew by less than one percent in fiscal 2013, Wilson said.
“My concern is that we know this is a great program. Tricare people are very satisfied. Military families appreciate this benefit. Commitments have been made to our veterans and to military families,” Wilson said. “Why would we be increasing fees when, in fact, the program is working well?”
Hagel responded that despite recent surpluses, the health care benefit over the long term is unaffordable unless beneficiaries pay more.
Robert Hale, the Defense Department comptroller, warned Wilson that if Congress again rejects higher Tricare fees and co-pays, the projected savings of $1 billion in fiscal 2014 would have to come “out of readiness or modernization” accounts. Hagel, Dempsey and the service chiefs, Hale said, “feel strongly [that] the right thing to do is a balanced approach to meeting our defense needs with some modest increases in [Tricare] fees.”
Dempsey added later that he speaks often to service members and families who ask why pay raises have to slow or tuition assistance might be cut or Tricare fees need to be raised in this tight budget environment.
“The answer is unless we look across the board at all the levers we have to pull, whether its infrastructure, healthcare, pay and compensation, tuition assistance, we’ll have an extraordinarily well-compensated force that will be sitting at Fort Hood, Texas, or at Camp Lejeune, [N.C.] unable to train” for lack of funds. “And therefore we will be putting them at risk.”
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