Dueling testimony on TRICARE fees

Wednesday - 3/16/2011, 3:50pm EDT

Jared Serbu, Reporter, Federal News Radio

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By Jared Serbu
Federal News Radio

Defense Department officials defended their proposed medical insurance fee hike before House lawmakers Tuesday. Pentagon officials say the military must bend the health care cost curve as part of the department's overall effort to operate more efficiently.

DoD's testimony came one day ahead of military retiree groups' appearance before the same panel, the House Armed Services Subcommittee on Personnel. They said the Pentagon's proposed increases to insurance premiums failed to recognize the sacrifices their members had made to the country.

As they examine those differing views, subcommittee members must decide whether or not to support the fee increase as proposed in the Obama administration's fiscal 2012 budget request. Congress has consistently prohibited the Pentagon from increasing fees since 2007, when such proposals were first made.

At issue is a Defense Secretary Robert Gates' proposal to increase fees paid by working-age retirees for TRICARE Prime, the military's managed care program, by $2.50 to $5 per month. The proposed hike would boost the annual premium for family health coverage from $460 to $520. TRICARE fees have not been increased since the program was created in 1995.

In testimony Wednesday, Air Force Col. Steve Strobridge (Ret.), the government affairs director for the Military Officers Association of America, said the proposal was less concerning that what he said were "draconian" fee increases proposed by Gates in previous years, but retirees objected to the notion that future year's increases would be tied to Medicare inflation.

"MOAA has not taken the position that TRICARE fees should never rise," he said. "If retired pay doubles or triples due to cost-of-living adjustments over a lifetime, we believe it would be unrealistic to expect that fees would not rise by even one dollar. However, we assert that the statute should provide reasonable guidelines for setting and adjusting TRICARE fees. The government puts no cap on the sacrifices it demands of servicemembers and their families. In contrast, current law leaves their crucial career health care package subject to dramatic swings with year-to-year leadership and/or budget changes."

Strobridge said military retirees had "pre-paid" their health care premiums through their service in the armed forces. He said his organization recommended that Congress limit any future TRICARE fee increases to the rate at which military pay rises, rather than tying them to medical inflation.

Testifying before the subcommittee the previous day, Jonathan Woodson, Assistant Secretary of Defense for Health Affairs, said DoD viewed the proposed TRICARE fees as modest, and that the military's health care costs had risen 11.8 percent per year, on average, from 2001 to 2008.

Woodson said the department's proposal was crafted to minimize the impact on retirees.

"Our proposals have been carefully considered," he said. "We have incorporated numerous safeguards - grandfathering in all current enrollees to unique programs; phasing-in new reimbursement methodologies for providers, and exempting certain beneficiaries such as survivors and medically retired servicemembers from enrollment fee changes in order to protect our most vulnerable beneficiaries and providers. None of these proposals affect the free health care we deliver to our active duty service members."

He said the department was taking other steps, besides the fee increases, to reduce its health care costs, such as encouraging mail-order prescriptions, standardizing medical supplies and equipment, enforcing contract price ceilings and emphasizing urgent care and nurse advice by telephone.

"We've endeavored to streamline our practices and produce efficiencies," he said. "We're using the patient-centered medical home as a method for particularly managing chronic disease, which reduces costs but also increases quality of care. We centralized procurement of medical devices, and we've also reduced service contracts. We continue to look at that as a source of efficiencies. We're undergoing an efficiency evaluation to reduce 780 [full-time equivalent positions] from Health Affairs and the TRICARE Management Activity."

No member of the subcommittee explicitly voiced support for DoD's proposed fee increase, though Rep. Niki Tsongas (D-Mass.) said Congress would have to examine the TRICARE fee structure in light of the military's rapidly growing costs. She said, however, that future increases should take into account the disparity in pension income earned by various retirees. She said some retired generals can earn more than $200,000 in retirement pay, while retired enlisted members make as little as $17,000 from their pensions.

She asked department officials whether they had considered indexing fee increases to the size of a retiree's pension.

Woodson said DoD had not explored the idea, because in order to carry out such a proposal fairly, it would need to consider all sources of a retiree's income.