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Basic Allowance for Housing paid to servicemembers living off base in stateside areas will climb an average of 7.3 percent next month to keep pace with local rental costs.

A total of 1.2 million servicemembers will draw BAH in 2008, an increase of 250,000 over 2007, said Susan A. Brumbaugh, director of the BAH program for the Department of Defense.

Most of the jump, she said, is probably reservists called to active duty to support contingency operations, including wars in Iraq and Afghanistan. But part of the growth is the effect of housing privatization partnerships.

As the inventory of military housing falls, private contractors are building or refurbishing units with government help for rent exclusively to military members. The result is a dwindling population living in base housing and a rising population who qualify for BAH but see their allowance transferred monthly as rent to live in contractor-owned housing.

2008 BAH rates are online at: http://perdiem.hqda.pentagon .mil/perdiem/bah.html. They vary by pay grade and assignment area.

Also, servicemembers with dependents draw higher BAH than those without. The single-married disparity has been criticized as indefensible in modern compensation system, most recently by the Defense Advisory Committee on Military Compensation in 2006. The panel of outside pay experts said BAH at the “without dependents” should be raised to match the married rate. But the estimated cost was $550 million a year.

The 10th Quadrennial Review of Military Compensation, an internal Pentagon study group, will make a host of pay recommendations next year. One idea being studied is to raise BAH for single members gradually until the difference disappears in four or five years.

QRMC officials did recommend in recent months that a floor be set when calculating 2008 BAH rates so members without dependents receive no less than 75 percent of the BAH “with dependents” rate. Defense officials accepted the recommendation. As a result, members without dependents will be paid an additional $34 million in BAH during 2008.

Is the 75 percent floor a first step toward eliminating the BAH disparity, to be followed by an 80 percent rate floor in 2009 and so on? One official suggested it could be. But Virginia Penrod, director of military compensation in the Office of the Secretary of Defense, said it is too early to know if that scenario will play out. The QRMC, she said, won’t make its recommendation until early 2008, and Defense officials haven’t decided yet whether to support a phase out of the allowance disparity.

Adoption of 75 percent floor in setting 2008 BAH rates “definitely is good news for single members,” Penrod said. But it should be viewed simply as a move “to ensure that our single members have comfortable housing compared with civilian counterparts.”

Tricare for lifeThe final report of the Pentagon-appointed Task Force on the Future of Military Health will call for a new “modest” enrollment fee for 1.9 million elderly military beneficiaries who use their Tricare for Life medical benefits.

The task force, as expected, also will call for higher Tricare fees, deductibles and co-payments for 3 million younger retirees and their families. In an interim report last May, the task force said Congress should restore the relative cost share that retiree under age 65 paid when Tricare began more in the mid-1990s. Tricare fees, deductibles and co-pays have not changed since then. Defense officials have tried twice to raise fees on younger retirees but Congress blocked the plan this year and in 2006.

The idea of a new enrollment fee for TFL beneficiaries was not in the task force’s May report. It is expected to anger older generations of retirees who have argued for decades they were promised free health care for life.

Dr. Gail R. Wilensky, an economist who co-chairs the task force, outlined its 12 major recommendations during a public meeting of the Defense Health Board on TuesdayDec. 11 in Crystal City, Va.

Part of one recommendation is a small enrollment fee for TFL, she said. It is not intended to cut program costs but “to foster personal accountability and to be consistent with the task force philosophy that military retiree health care should be very generous but not free.”

Seven of 14 task force members are active or retired star-rank officers. Military Update asked Wilensky if the TFL enrollment fee won a consensus even among these officers. It sparked “a lot of discussion, as you can imagine,” she said, and there was “difficulty coming to complete consensus. But you’ll see how we handle that in the report” next week.

Tricare for Life is second payer insurance to Medicare. To be eligible, beneficiaries pay Medicare Part B premiums just like civilians. For 2008, the standard Part B premium will rise a few dollars to $96.40 a month.

Given that other Medigap plans are “quite expensive” and that TFL is an “important and extensive” benefit, said Dr. Gail R. Wilensky, an economist who co-chairs the task force, members felt it was time to establish a small enrollment fee.

It will “bind the retiree closer” to the health benefit, which could help Tricare in promoting healthy lifestyle initiatives, she said. Also, a fee “just makes the point that these extensive benefits are not literally ‘for free.’”

Dr. Gregory A. Poland, Defense Health Board president, praised the task force’s final report. He noted from its pages that military health costs doubled from $19 billion in fiscal 2001 to $40 billion in 2007. If changes aren’t made, he said, medical spending will hit $64 billion by 2015 and consume 12 percent of the defense budget versus 4.5 percent back in 1990.

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