The fight to derail senators' military compensation squeeze
The Congressional Budget Office, in estimating the impact of key provisions in House and Senate defense authorization bills for fiscal 2018, also spotlights the higher out-of-pocket costs that military folks would face if various Senate-devised personnel initiatives survive negotiations with the House to shape a final bill.
On health care, for example, Senators propose that Tricare beneficiaries face higher co-pays for drug prescriptions not filled on base. Also, with removal of simple “grandfathering” language, current retirees and currently-serving members who eventually retire would see higher Tricare fees and deductibles.
Even though the Senate bill would expand other Tricare options, the net effect of health benefit changes would be to lower government costs and raise costs for beneficiaries by $6.7 billion over just five years, 2018 through 2022, CBO says.
A plan to curb housing allowances for dual service couples with children would save $221 million through 2022. And the Senate bill’s embrace of a Trump administration’s plan to cap next January’s basic pay raise at 2.1 percent, versus 2.4 percent to match private sector wage growth as the House voted, would save the department another $1.4 billion through 2022.
These cost-saving ideas are included in S. 1519, the Senate Armed Services Committee’s version of the defense bill, which awaits full Senate consideration, with floor debate and amendments, when Congress returns from its August recess.
Some of the money Senators hope to save on compensation would be used to fund other programs to benefit segments of the military. Higher pharmacy co-pays at Tricare retail outlets and mail order, for example, would support making permanent, and protecting from inflation, the Special Survivor Indemnity Allowance (SSIA), which is set to expire next May for 69,000 survivors of service members who died on active duty or from service-connected health conditions in retirement.
The Senate bill also would open Tricare Reserve Select (TRS) health insurance to drilling Reserve and Guard members who are fulltime federal employees. These members now are barred from TRS because they are eligible for the federal civilian health insurance program, which can charge higher premiums.
The Military Coalition, a league of 32 associations and veteran groups, criticizes the practice of funding new benefits through budget offsets created by lowering values of existing benefits. In the case of the Senate bill, the coalition argues the trophies don’t match the drags planned for compensation packages.
Its member groups are lining up against the Senate bill, pressing to educate its own members on details and trying to pressure the full Senate or, if need be, House-Senate conferees tasked with shaping a final defense bill, to reject the most impactful changes for housing allowances, Tricare plans and the next pay raise.
Retired Air Force Col. Dan Merry, vice president of government relations for Military Officers Association of America and co-chair of the coalition, said one worry this year is that Congress has so many pressing issues to tackle when it returns, including raising the national debt ceiling and advancing tax reform legislation, that a rush job on finalizing the defense bill might be inevitable.
Sen. John McCain (R-Ariz.), chairman of the Senate committee, hoped to see the full Senate debate and amend his committee’s bill before its summer recess so he could floor manage before beginning treatment for brain cancer. That didn’t happen. If the Senate’s fall schedule gets too tight, Merry said, the defense bill might not be debated on the floor but referred directly to a conference committee. That has happened before, he said, with the conferees, all of them members of the armed services committees, ironing out more compromises behind closed doors.
Merry noted too that both the House and Senate bills exceed arbitrary budget ceilings established by the 2011 Budget Control Act. That will keep the threat of sequestration alive unless Congress also votes to suspend the law’s effect. That could leave personnel accounts still more vulnerable with higher priority given to protecting short-term readiness by fully funding training and war supplies and perhaps adding force structure without disrupting major procurement contracts.
As deadline pressures build, upsetting legislative routines, the coalition fears its lobbying efforts could be blunted, raising the prospect that some compensation curbs in the Senate bill will survive late-hour horse trading with House conferees.
To dampen that possibility, the coalition is preparing a letter for conferees, listing key personnel provisions it supports in authorization bills and warning against others that break faith with the current force or retiree populations.
Overall the Senate committee’s bill would authorize $692.6 billion for the Department of Defense in the fiscal year that begins Oct. 1. That’s $3.6 billion more than the House-passed bill, HR 2810, would authorize. But the Senate would spend $2.9 billion more than the House on weapon system procurement.
Here’s are two of the most worrisome personnel provisions that Merry highlighted, with fresh cost estimates supplied by the CBO:
• DUAL COUPLE ALLOWANCES – Senators would cut housing allowances to members married to other members with children. Currently they get two housing allowances with the higher ranked member receiving stateside Basic Allowance for Housing at the with-dependents rate, the other BAH at without-dependents rate.
Senators want both to receive the lower “without” rate when assigned to the same locale. Service couples with children but assigned together outside the U.S. also would see their maximum overseas housing allowances pinched. Of 16,500 dual service couples on active duty with dependents, 11,000 are assigned to the same area and would see combined housing allowances fall an average of $400.
• RETIREE HEALTH COSTS – Last year Congress voted to raise Tricare co-pays and enrollment fees for retirees but applied them only to retirees who first join the military in 2018, delaying most savings from higher cost-shares until 2038. The Senate bill would remove that grandfathering protection so that hikes in enrollment fees and copayments apply to new and existing retirees beginning in 2019. Members retired due to disability and certain survivors would not be impacted.
The change would affect 600,000 retiree households enrolled in Tricare Prime, raising out of pocket costs for retirees who use Prime only for themselves from $530 a year to $670 and for those with family coverage from $1270 to $1615.
Out of pocket costs for the 450,000 retirees using Tricare Select plans also would climb, from an average of $580 a year for single coverage to $1105, and from an average of $1685 for family coverage to $2655, CBO estimates.
If the Senate committee plan takes effect, CBO estimates that by 2021 about 30,000 retiree households would stop using Tricare, opting instead for health insurance from civilian employers or through their spouses’ employment.