[HEALTH.MIL] Pentagon Struggles With High Cost Of Health Care

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  • Date: Tue, 9 Apr 2013 13:47:17 -0500


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Pentagon Struggles With High Cost Of Health Care


The Associated Press

Published: April 8, 2013


WASHINGTON -- The loud, insistent calls in Washington to rein in the rising
costs of Social Security and Medicare ignore a major and expensive entitlement
program - the military's health care system.


Despite dire warnings from three defense secretaries about the uncontrollable
cost, Congress has repeatedly rebuffed Pentagon efforts to establish higher
out-of-pocket fees and enrollment costs for military family and retiree health
care as an initial step in addressing a harsh fiscal reality. The cost of
military health care has almost tripled since 2001, from $19 billion to $53
billion in 2012, and stands at 10 percent of the entire defense budget.


Even more daunting, the Congressional Budget Office estimates that military
health care costs could reach $65 billion by 2017 and $95 billion by 2030.


On Wednesday, when President Barack Obama submits his fiscal 2014 budget, the
Pentagon blueprint is expected to include several congressionally unpopular
proposals - requests for two rounds of domestic base closings in 2015 and 2017,
a pay raise of only 1 percent for military personnel and a revival of last
year's plan to increase health care fees and implement new ones, according to
several defense analysts.


Defense Secretary Chuck Hagel insisted this past week that the military has no
choice as it faces a $487 billion reduction in projected spending over the next
decade and possibly tens of billions more as tea partyers and other fiscal
conservatives embrace automatic spending cuts as the best means to reduce the
government's trillion-dollar deficit.


The greatest fiscal threat to the military is not declining budgets, Hagel
warned, but rather "the growing imbalance in where that money is being spent
internally." In other words, money dedicated to health care or benefits is money
that's not spent on preparing troops for battle or pilots for missions.


Hagel echoed his predecessors, Leon Panetta, who said personnel costs had put
the Pentagon on an "unsustainable course," and former Pentagon chief Robert
Gates, who bluntly said in 2009 that "health care is eating the department


In his speech last past week, Hagel quoted retired Adm. Gary Roughead, the
former Navy chief, who offered a devastating assessment of the future Pentagon.


Without changes, Roughead said, the department could be transformed from "an
agency protecting the nation to an agency administering benefit programs,
capable of buying only limited quantities of irrelevant and overpriced


The military's health care program, known as TRICARE, provides health coverage
to nearly 10 million active duty personnel, retirees, reservists and their
families. Currently, retirees and their dependents outnumber active duty members
and their families - 5.5 million to 3.3 million.


Powerful veterans groups, retired military officer associations and other
opponents of shifting more costs to beneficiaries argue that members of the
armed forces make extraordinary sacrifices and endure hardships unique to the
services, ones even more pronounced after a decade-plus of wars in Iraq and


Members of the military have faced repeated deployments, had to uproot their
families for constant moves and deal with limits on buying a home or a spouse
establishing a career because of their transient life. Retirement pay and low
health care costs are vital to attracting members of the all-volunteer military.


"If you don't take care of people, they're not going to enlist, they're not
going to re-enlist," said Joe Davis, a spokesman for the Veterans of Foreign


Resistance in Congress to health care changes was evident in the recently passed
spending bill to keep the government running through Sept. 30. Tucked into the
sweeping bill was a single provision stating emphatically that "none of the
funds made available by this act may be used by the secretary of defense to
implement an enrollment fee for the TRICARE for Life program."


The program provides no-fee supplemental insurance to retirees 65 and older who
are eligible for Medicare. The Pentagon repeatedly has pushed for establishment
of a fee, only to face congressional opposition.


The provision in the spending bill blocking an enrollment fee had widespread
support among Republicans and Democrats, according to congressional aides. The
Pentagon, nonetheless, is expected to ask again in the 2014 budget for an
enrollment fee.


The department also is likely to seek increases in fees and deductibles for
working-age retirees and try again to peg increases in them to rising costs as
measured by the national health care expenditure index produced by the Centers
for Medicare and Medicaid Services. That index rose 4.2 percent in 2012 and is
projected rise by 3.8 percent this year.


In recent years, Congress has agreed to tie any future increases to the
typically smaller percentage increase in military retirees' cost-of-living
adjustment, which this year is 1.7 percent.


Either way, a military retiree under age 65 and their family members pay a far
smaller annual enrollment fee than the average federal worker or civilian - $230
a year for an individual, $460 for a family. There is no deductible.


Lawmakers' other response was to establish the Military Compensation and
Retirement Modernization Commission to study the issue of benefits and offer
recommendations on how the Pentagon can address the problem. The commission was
created in this year's defense authorization bill.


"Nobody wants to touch it because people are confused about who it impacts,"
said Lawrence Korb, a former assistant defense secretary and now a senior fellow
at the liberal-leaning Center for American Progress. "It's not going to impact
people on active duty. It's not going to impact veterans because they're taken
care of by the VA. Basically (it's) working-age retirees."


Korb said he wished Hagel has been more explicit in his warning about the impact
of benefit costs.


"He did lay it out that we're going to have to do something or we're going to
end up like General Motors and spending everything on people not working for us


Gordon Adams, a professor at American University who was a senior official at
the Office of Management and Budget, said limited savings in the short term from
changes in retirement rules or other benefits present a challenge in making the
case for change.


"The savings are downstream, but you only get downstream if you get in the boat
now," Adams said. "Otherwise you never get downstream, you're just waiting at
the dock all the time because you don't think it'll save you money up front."




SOURCE:  Stars and Stripes article at



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