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The Defense Department’s top health official believes that “within the next year or two” Tricare fees, co-pays and deductibles will “begin to gradually go up” for military retirees.

But Dr. S. Ward Casscells, assistant secretary of defense for health affairs, also says he “has a lot of sympathy with” the argument of older retirees that they served during times when military pay was low and lifetime health care was promised if they served at least 20 years.

Dr. Gail Wilensky, co-chair of the Task Force on the Future of Military Health Care, which has endorsed higher Tricare fees for retirees, believes Congress will be receptive if fee increases are part a broader effort to make military health care more efficient.

“But how much they choose to do next year, in an election year when we’re in a war period, and how much they might do the year after, is a more difficult question,” Wilensky said after a day briefing key lawmakers and Capitol Hill staff on task force recommendations.

Political winds, it seems, continue to guard the wallets of millions of military beneficiaries. The task force proposes that retirees under 65 and their families face a four-year phase in of higher fees and co-payments under Tricare Prime, the managed care option. It calls for higher deductibles under Tricare Standard, the fee-for-service option.

Retirees age 65 use Tricare for Life, wrap-around insurance to Medicare. They would pay an annual enrollment fee of $120 under the task-force plan. Most fees would be adjusted annually based on the rise in the cost of civilian-purchased care for Tricare users. Drug co-pays would be raised to encourage use of mail order rather than base pharmacies and the Tricare retail network.

Casscells told a small group of reporters the task force “just made so much sense.” He said it argues that 12 years of frozen fees can have an “adverse” impact on the the benefit. When beneficiary cost shares stagnate, the benefit becomes overused and under-appreciated. A third concern, he said, is the steady migration of working-age military retirees away from employer-provided health plans and on to Tricare rolls, driving up system costs.

Casscells said more health care dollars need to be shifted into maintaining and staffing base hospitals and clinics.

“Even take a flagship like National Naval Medical Center at Bethesda (Md.),” he said. “They are not as full [of patients] as they need to be to maintain excellence. Patients have choice now and they tend too often to go into the private sector.”

Unless the pattern is reversed, he said, “we won’t have the numbers of patients needed to justify a neurosurgical trauma specialist or a radiologist or a pediatric endocrinologist.”

The task force’s call for higher fees are “being discussed now” inside the Pentagon and with the Office of Management and Budget. In some form they likely will be endorsed in the president’s fiscal 2009 Defense budget to be delivered to Congress by early February, he said.

Casscells noted that Congress continues to block fee increases for retirees. He blamed that, in part, on the design of earlier proposals calling for steep and quick increases.

“The staff in my office said, ‘Well, the civilian sector, they’re doing this, too. Co-pays are going up. Deductibles are going up.’ The veterans said, ‘Well, that’s not my problem. We had a deal with you. And furthermore, when I signed up, the pay was really lousy so we didn’t get well taken care of on the front end. And now we want to hold you to your original bargain.’”

Casscells said he understands that argument.

“So I do think we need to be as generous as we can afford to be — without taking away from the health care we offer to serve in theater.”

After briefing lawmakers, task force co-chair Wilensky said Congress takes seriously recommendations to slow health cost growth. But lawmakers want higher fees considered only as part of a broader effort to make the health system more efficient.

The task force, for example, does call for a realignment of contract incentives so military direct care and civilian purchased care operate more flexibly; reforms to health care procurement; an audit of Tricare enrollees to ensure that only eligible beneficiaries gain access; and a greater emphasize on wellness and disease prevention.

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