Gates: Compensation, benefits more than a third of DoD budget

Wednesday - 3/5/2014, 5:39pm EST

Robert Gates, former secretary of Defense

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In the newly released 2015 budget proposal, President Barack Obama is asking TRICARE participants to pay more out-of-pocket for their health care.

"The reality is that healthcare costs at the Department of Defense increased from about $12 billion in 2000 to almost $60 billion in 2011, the last year that I was secretary," former Secretary of Defense Robert Gates said.

He told In Depth with Francis Rose Wednesday that type of spending was unsupportable.

"Compensation and benefits now take between a third and a half of the Defense budget," he said. "If you say you can't change any of that, then what you end up doing is ending up with significantly less military capability."

Under the 2015 budget proposal, active duty service members would continue to receive free care, but their family members would be subject to new fees. They would pay between $10 and $50 per visit to a civilian healthcare provider within TRICARE's network and 20 percent of the total bill to non-network providers. Most services at military medical facilities would continue to be free of charge.

Military retirees below the Medicare eligibility age also would see their out-of- pocket costs increase. They would pay an enrollment fee of $572 per year, plus new co-pays at both military and civilian care facilities.

Older retirees entering the Medicare system for the first time also would begin paying a new annual fee to participate in DoD's "medigap" plan, TRICARE for Life. DoD has covered the entire cost of that program up until now; but under the proposal, retirees would pay 0.5 percent of their annual pension pay starting next year, escalating to 2 percent by 2019.

During his tenure as Secretary of Defense, Gates attempted to increase the healthcare premium for DoD's working-age retirees.

"This is about people from 42 to 62 who are paying $460 a year for family health care, and we had the radical proposal of increasing that $5 a month," he said. "So, $520 a year for family coverage."

Congress voted down the proposed increase three years in a row.

"Some of the benefits — housing allowances, healthcare costs for retirees and so on — those things were never intended to stay the way they are when Congress created the TRICARE in the 1990s and imposed a premium for the first time," Gates said. "That basically said, this is going to be a pay for a benefit."

Tuesday also saw the release of the 2014 Quadrennial Defense Review.

In his new book, "Duty: Memoirs of a Secretary at War," Gates discussed the last QDR in 2010.

"You lay out capabilities that you think you ought to have in order to carry out certain missions, and they tend not to be funded in the way that would be necessary to accomplish those strategies," he said. "I think that has been the case for a long time. The irony is that one of the criticisms of the 2010 QDR was that it wasn't aggressive enough in the forces that we would need."

The temptation on the part of Defense strategists is to devise the strategy to say, "here's what we need to be able to do," Gates said. Oftentimes, that type of thinking is at odds with the political reality on Capitol Hill of what funding Congress is likely to give DoD.

"In 2009, we were able to cut nearly three dozen major Defense programs that, had they been built out over time, would have cost the taxpayers about $330 billion, but it required a firm threat of a veto of the Defense Appropriations Bill by the President, and it required a lot of tough negotiating on the part of the Pentagon, but we made it happen," Gates said. "And so, it can be done, but if you allow members of Congress to keep telling you to do things that don't make any sense whatsoever, then our real military capabilities are clearly going to suffer."

The other piece in the cost-cutting puzzle for the Defense secretary is to reduce waste and chop away at the Pentagon's sizable overhead.

When Gates was at DoD, he proposed cutting the Joint Courses Command in Tidewater, Va., which had the potential to save about $1 billion annually. Even though the measure eventually passed, it faced staunch opposition from the Virginia delegation on Capitol Hill.

"One of the things that enabled us to get at a lot of the overhead was that I promised the services that if you cut overhead, I'll let you reinvest it in real military capabilities, in new aircraft, in new equipment and so on that we do need," Gates said. "It's very tough, but it can be done, but it requires the secretary to be on top of it every single day."

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