House panel declines to approve hike in DoD's health insurance fees

Friday - 4/27/2012, 5:14am EDT

Jared Serbu, reporter, Federal News Radio

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The House Armed Services Committee looks poised to turn down a DoD proposal to increase health care premiums for military retirees. The subcommittee on military personnel passed its portion of the DoD authorization bill Thursday, omitting a Pentagon request that would allow some premiums to almost quadruple their current rates.

The subcommittee also included a "sense of Congress" provision expressing the view that military retirees have already pre-paid for their retirement health care via military service of 20 years or more.

That symbolic language is the bill's only reference to TRICARE. DoD needs explicit authorization from Congress in order to implement additional health insurance fees. Last year's version of the defense authorization bill allowed premiums to rise for the first time since 1996, but limited future increases to match the increased pay retirees get in annual cost of living adjustments.

That provision remains in effect in perpetuity unless Congress changes it, and Rep. Buck McKeon (R-Calif.), the chairman of the full House Armed Services Committee suggested in a Wednesday evening speech that he expects his panel to also decline DoD's TRICARE increase request when it marks up the massive annual defense bill early next month.

Jonathan Woodson, assistant secretary of Defense for health affairs (DoD)

The Pentagon said its budget reductions, made in response to last year's Budget Control Act, trimmed all other areas of spending before looking to military personnel programs. Although personnel costs account for a third DoD's budget, 90 percent of the spending reductions came from other areas, said Dr. Jonathan Woodson, the assistant secretary of Defense for health affairs.

"We believe the TRICARE benefit has always been one of the most generous health care benefits in our country, and our proposals keep it that way," he told the military personnel subcommittee recently.

Woodson said DoD's share of retiree health costs has ballooned over the years, partly because fees were static between TRICARE's inception and last year, when Congress approved the first-ever increases in TRICARE fees. The cost to a retiree to cover an entire family was steady at $460 per year under the TRICARE Prime plan from 1996 until 2011, when it rose to $520.

"In 1996, military retirees were responsible for about 27 percent of overall TRICARE costs. In 2012, the percentage has dropped to a little over 10 percent," he said. "If our proposals are accepted, beneficiary out-of-pocket costs will rise to 14 percent of costs by 2017, about half of what beneficiaries experienced in 1996."

Numbers are misleading

Kathy Beasley, a retired Navy captain who now lobbies Congress on behalf of the Military Officers Association of America, said the numbers behind those 1996-2011 comparisons are accurate, but they're also misleading.

"There's been some major adjustments during that time frame," she said. "We've done 10 years of war, and the cost of readiness is built into that increase. The beneficiaries shouldn't bear that burden. And the benefit has changed. Congress has expanded the benefits, rightly so, to include reservists and all sorts of other contingencies, so the costs have gone up. So it's just not persuasive."

To shield lower-earning retirees from the fee increases, the DoD proposal would impose the new fees in three bands, depending on a former military member's retirement pay. By 2017, retirees at the top of the pension scale would be charged a little more than $2,000 per year in premiums for family coverage. Retirees in the bottom bracket would pay slightly less than $900.

But military retiree groups oppose that strategy as well. Beasley said it would create a perverse incentive system.

"It's almost as if the longer you serve and the more successful you are, the more you'll have to pay. We don't think that's right," she said. "Very few other health plans do any kind of means testing like that. The Federal Employees Health Benefits Program charges the same rates whether you're the President of the United States or you're the lowest level [General Schedule] employee. So why would you go tiering military health care fees when no one else in this country does anything like that?"

Dollars still need to come from somewhere

Whether the increases are tiered or not, DoD said it needs to achieve the cost savings it would get from the premium hikes. With the Congressional mandate to save $487 billion from previously-planned spending over the next 10 years, Woodson said those dollars would have to come from somewhere else if Congress doesn't let DoD find them in health care.

"We've already found most of our savings in other areas, like planes, ships and force reductions," he said. "If we don't go forward with these TRICARE fee adjustments, we'll have to look at planes, ships and people all over again. I don't want to fix a number on this, but we're talking about cutting anywhere between 30,000 and 50,000 more troops."

The Senate has yet to offer any formal legislation for military pay and benefits in response to DoD's 2013 budget proposal, but Sen. Lindsay Graham (R-S.C.), a member of the Senate Armed Services Committee who generally supports DoD's TRICARE fee proposal, told the military publication Stars and Stripes that he hoped the House version of the NDAA would not be final word.

"Between now and the end of the fiscal year, I hope we can convince the House to accept some adjustments in premiums for TRICARE, because it's just unsustainable right now," he told the newspaper. "I don't believe anybody was promised free lifetime medical care.That's a popular myth. I think we have an obligation to the retired force to be generous and to be compassionate to help recruiting and retention. But there was never any contract with anybody that, for the rest of your life, you will get free medical care. That's not part of the deal and was never part of the deal."

Other provisions in the military personnel panel's bill include:

  • A 1.7 percent pay increase for uniformed troops, the same as the DoD proposal.

  • A series of provisions designed to improve sexual assault prevention and response in the military.

  • Extended benefits for troops who are involuntarily separated.

  • Limitations on how quickly DoD can draw down the size of the Army and Marine Corps. The Army would be allowed to shrink by no more than 15,000 soldiers per year. The Marines would draw down by no more than 5,000 per year.

This story is part of Federal News Radio's daily DoD Report brought to you by United Health Military and Veterans Services. For more defense news, click here.

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