Senior Department of Defense officials have renewed their call to raise Tricare enrollment fees and co-payments for under-65 military retirees and their dependents.
Officials are warning anew that unless the cost of military health care is “re-balanced,” so the beneficiary pays more and the government less, the prized lifetime benefit, arguably the best in the country, “cannot be sustained” over time.
Defense officials said they briefed key lawmakers on the planned fee increases in 2005 and most seemed to agree they were needed. But in early 2006, an election year, lawmakers bolted like cats from a sprinkler after the Pentagon’s “Sustain the Benefit” plan officially was unveiled.
This year, defense officials hope that, at a minimum, their call for higher Tricare fees will win the endorsement of a new study group, the Task Force on the Future of Military Healthcare. The 14-member panel was created by Congress, but its members were appointed by the same officials pressing for fee increases.
Half of the task force already works for the DOD, being senior military officers or civilian executives. Congress gave them a broad range of issues to examine. But at its first public hearing Jan. 16, David Chu, undersecretary of defense for personnel and readiness, told the task force that the “elephant in the room” it needs to address “is the structure of benefits.”
DOD wants the task force to endorse higher Tricare fees for 3.1 million beneficiaries in an interim report to Congress due in May, presumably early enough for legislative action this year when no lawmaker stands for re-election.
“Odd-numbered years are probably better than even-numbered years,” quipped Chu when a task force member asked for timing guidance on getting recommendations to Capitol Hill.
Defense officials briefed the task force on the military health system’s skyrocketing costs. The total this year will be $38 billion, up 131 percent since 2000. Health care spending now is 8 percent of the defense budget but will climb to $64 billion, or 12 percent, by 2015, unless fees are increased, officials said.
Most of the growth is tied to new benefits enacted since 2001, including Tricare for Life for 1.9 million Medicare-eligible beneficiaries. Two other key factors are medical inflation and a shift by retirees into Tricare and away from more expensive health plans earned in second careers or by working spouses.
Last year’s Tricare fee plan is expected to be endorsed again in the president’s 2008 budget request to Congress in early February. It would raise enrollment fees and deductibles for under-65 retirees using a triple-tiered fee schedule tied to rank. After two years of stepped increases, fees would rise annually by the percentage change in premiums for federal civilian health care.
Defense officials conceded to the task force that their plan’s projected cost savings — $11.2 billion over five years — did not survive a review by the Congressional Budget Office. CBO said $6.5 billion to $7 billion savings is more likely. The Tricare increases planned just aren’t big enough to spark the behavior DOD projects: that 150,000 beneficiaries will leave Tricare and another 350,000 will decide to stay under employer-provided plans rather than switch to Tricare.
Retiree advocates had challenged the savings estimate as too high and evidence of a rush by the department to make changes. The Government Accountability Office also is auditing projected savings. Its report is due in June.
Dr. William Winkenwerder, assistant secretary of defense for health affairs, said “unfair criticism” has been leveled at the plan — including a charge that higher fees will be a great financial burden. Not so, he said.
An E-6 retiree in Tricare Prime, the managed care option, has been paying roughly $38 a month since 1996. That would increase to $50 over two years. That $12 increase, said Winkenwerder, “is like five cups of coffee.” Over the same period, E-6 retired pay has climbed an average of $300 a month to keep pace with inflation, said Winkenwerder.
Defense officials overall are striking a harder tone than was heard last year. Winkenwerder, for example, advised the task force that if it wants to consider more sweeping cost-control measures, to include higher fees for retirees 65 and older too, it should do so. He also said he learned too late that, by law, the department has authority to raise the $22 co-payment for nonformulary prescription drugs to $30. He suggested that should have been part of the plan.
Several task force members, including retired Air Force Gen. Richard Myers, former chairman of the Joint Chief, are on record as supporting the fee increases. But newer faces on task force also seem to consider higher fees as reasonable. Dr. Robert Galvin, director of global health care for General Electric, said the DOD plan “sounded like it was well-researched, rigorously thought through.”
But why, Galvin asked, did Congress not enact it?
Part of the problem, Chu said, is that “Congress only votes one budget year at a time and, in the immediate year, it’s not a crisis. So it is easier to listen to the concerns of various constituencies and to think about the fact that you would have to stand for re-election in the face of this unpopular and difficult decision.”
The lone task force member appointed to represent the views of military associations and veterans’ service organizations even seemed to side with raising fees. Retired Army Reserve Maj. Gen. Robert W. Smith III, former president of the Reserve Officers Association, urged defense officials to work harder to explain that military health care is not an “entitlement,” as some retiree groups contend, but a “benefit” that, he implied, an employer can adjust from time to time.
When perceived as an entitlement, Smith said, health care is a more emotional issue. Service associations have been making that kind of argument.
Veteran groups and The Military Coalition, he said, “went to the congressmen and the senators and created a lot of this (resistance to fee increases). And when we start educating them I think you’ll see that we can move forward.”
“We agree with that,” said Winkenwerder.
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