Military Update: Plan to raise Tricare fees gets committee leaders’ hackles up
Stars and Stripes March 23, 2006
Influential lawmakers are moving to block for at least a year the Defense Department’s plan to raise Tricare fees, co-payments and deductibles for military retirees under age 65 and their family members.
Rep. John McHugh, R-N.Y., chairman of the House armed services subcommittee on military personnel, and his Senate counterpart, Sen. Lindsey Graham, R-S.C., both want an impartial group of analysts to review the numbers behind the Bush administration’s rationale for raising Tricare fees dramatically for 3 million beneficiaries.
The subcommittee chairmen, in separate interviews, said they doubted that the independent review, likely to be conducted by the General Accountability Office, will be completed in time for Congress to feel comfortable allowing any Tricare fee increases this year.
The Department of Defense already has authority to impose some of the increases. To stop them, Congress could step in with legislation to suspend that authority until lawmakers are confident the increases are justified. “That’s certainly on the table,” McHugh said.
Indeed, two colleagues, Reps. Walter Jones, R-N.C., and Chet Edwards, D-Texas, introduced such a bill March 15 and began attracting co-sponsors.
Leaders of the House Armed Services Committee, said McHugh, are most concerned about the size of the planned increases, which he described as “huge.” They also are troubled by the lack of confidence among defense officials in their own cost-saving projections.
In the Senate, Graham said someone figured that the average fee increases for under-65 retirees would be 115 percent.
“There is no way we’re going to have 115 percent fee increases over the next few years. Period.”
Defense officials had hoped to begin to phase in the higher rates as early as October. Enrollment fees for Tricare Prime, the military’s managed care program, would triple for retired officers, double for senior enlisted and rise by 41 percent for retired enlisted in grades E-6 and below.
Deductibles for Tricare Standard, the traditional fee-for-service option, also would rise sharply for under-65 retirees and, for the first time, Standard users also would pay an annual enrollment fee. Tricare retail pharmacy co-payments too would increase under the plan.
Events on Capitol Hill in mid-March, however, turned sharply in favor of military associations and tens of thousands of retirees who have been fighting the fee increases (with e-mails, letters and phone calls to Congress) since they were unveiled in early February as part of the administration’s fiscal 2007 defense budget request.
The first turn, McHugh confirmed in an interview, was a letter from the House Armed Services Committee chairman and ranking Democrat to the budget committee in early March advising that Tricare fee increases would not be part of the committee’s 2007 defense budget bill. Therefore, the budget committee should add $735 million to the defense budget ceiling. It was money left out by defense officials, who had projected that amount in first-year savings from the fees increases.
On March 13, Graham and Sen. Ben Nelson of Nebraska, ranking Democrat on the Senate military personnel subcommittee, held a brief hearing on the planned fee increases. They took testimony from four service association representatives but, because of floor votes, delayed hearing from senior defense and military officials who favor the fee increases.
Both Graham and Nelson signaled that fees will have to be raised sometime, but they won’t be as large or as sudden as DOD has planned.
“Erosion of benefits is coming,” said Graham. “The question is will they come in a way that people afford, and will have a soft landing, or will we have a hard landing.”
Higher fees also won’t be imposed until the department has taken more aggressive steps to curb medical costs without impacting beneficiaries, the two senators said. Graham referred to recommendations for savings from by service groups including 16 offered by the Vice Adm. Norbert Ryan, president of the Military Officers Association of America.
“I want to wring that dry,” said Graham, “and then we move over to the idea of the increases, if they’re necessary at all.”
Association officials who testified said they couldn’t verify numbers Graham used from DOD talking points, for example that retirees had been paying 27 percent of health costs in 1995 and now pay only 12 percent, or that retired pay has climbed by 32 percent since 1995 while Tricare fees have been stagnant.
Graham finally did agreed that these numbers, along with department estimates of rising health care costs and projected savings from the planned fee increases, must be verified independently before Congress proceeds.
MOAA and the Fleet Reserve Association, represented by National President Edgar M. Zerr, oppose any fee increases so far. But opposition wasn’t universal among the service groups who testified.
Tanna Schmidli, chief executive officer of the National Military Family Association, called the planned increases “exorbitant” and said NMFA strongly opposes a first-time enrollment fee for Tricare Standard. But it does support raising Tricare Prime enrollment fees, by the cumulative percentage increase of retiree cost-of-living adjustments since 1995.
Retired Marine Lt. Gen. Dennis M. McCarthy, executive director of the Reserve Officers Association, said ROA understands the need for balanced spending to preserve both a first-class health system and a ready military.
Therefore ROA, he said, as an organization chartered to promote national security, supports the chairman of the Joint Chiefs and his fellow service chiefs in favoring the fee increases. But ROA wants independent verification of health costs and more than a two-year phase in, which McCarthy said would be “too abrupt.”