[HEALTH.MIL] TRICARE's High Price Tag Comes Under Scrutiny

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  • Date: Fri, 18 Jan 2013 14:42:23 -0600

TRICARE's High Price Tag Comes Under Scrutiny
By Kellie Lunney
12:00 AM ET

The military's massive health insurance program offers millions of service
members, retirees and their dependents quality care at relatively low cost.
That's what the government aimed for when it created the Civilian Health and
Medical Program of the Uniformed Services in 1966, now known as TRICARE. But the
price of that success has been high for Uncle Sam: The $53 billion program now
consumes 10 percent of the Pentagon's nonwar budget.
TRICARE premiums for beneficiaries have not kept up with inflation and the
overall increase in health care costs during the past two decades. Congress
agreed to raise TRICARE Prime annual enrollment fees for retirees in 2011 -- the
first time the fees have gone up since 1995. Active-duty service members and
their dependents do not pay for health care under TRICARE Prime.
Retired TRICARE Prime beneficiaries now pay between $39 and $79 more in annual
fees than they paid nearly two decades ago. At the end of 2012, Congress
rejected an Obama administration proposal to tie TRICARE fees to retired
recipients' income and impose higher co-payments for pharmacy drugs. Instead,
lawmakers capped pharmacy co-pays beginning in 2014, aligning them with the
annual retiree cost-of-living adjustment. Also nixed on Capitol Hill was a White
House proposal to charge an enrollment fee for TRICARE for Life, the health care
program Congress created in 2001 for military retirees age 65 and older.
Requiring TRICARE beneficiaries to pay more for their health care is a
politically sensitive topic. No one wants to be seen as breaking faith with
troops, their families or retirees, and military service organizations are a
powerful lobby in Washington. There are signs, however, that real reform is on
the horizon in 2013, driven largely by the government's need to seriously cut
spending -- everywhere. The 11th hour debate at the end of 2012 between Congress
and the administration over avoiding the fiscal cliff and sequestration also was
a reminder that TRICARE, unlike some other federal programs, is not exempt from
those automatic, across-the-board spending cuts, now delayed until March.
We're "looking at the proposal of a declining Defense budget perhaps for the
rest of the decade," says Todd Harrison, a senior fellow in defense budget
studies at the Center for Strategic and Budgetary Assessments. According to
Harrison, that means personnel costs have to shrink, which translates into
reducing the number of people in the military or decreasing per person expenses.
To avoid more painful cuts, Defense has to increase fees and pharmacy drug
co-payments, he says. It's something the department has been trying to do, but
it often runs into resistance from Congress. "It's going to keep coming back
up," he adds. "And eventually Congress will go along with some modest premium
increases for TRICARE."
A former Pentagon official says it makes sense to increase fees. "The cost to
the beneficiary is far below what most people pay," says the official, who
expects the Obama administration will continue to press in 2013 for more
contributions from TRICARE retirees.
Congress seems to be getting the memo, at least rhetorically. Sen. John McCain,
R-Ariz., along with his GOP colleague Tom Coburn from Oklahoma talked in early
December about the need for TRICARE beneficiaries to pay more. "I understand the
positions of the veterans groups in this country. I respect them. I love them,
and I appreciate them," McCain said during the Senate floor debate over the
fiscal 2013 Defense authorization bill. "But we are going to have to get serious
about entitlements for the military just as we are going to have to get serious
about entitlements for nonmilitary."
Some advocacy groups and many retirees have pushed back aggressively on
proposals to hike TRICARE costs, in part by invoking the notion that members of
the military were promised "free health care for life" when they joined the
service. Military recruiters have promised that benefit to sweeten the deal with
candidates. But Congress has never authorized free health care for life for
retired service members, and the courts have affirmed such claims have no legal
The myth persists partly because free health care for life essentially was the
practice after World War II and throughout the Cold War. Kathy Beasley, deputy
director for government relations at the Military Officers Association of
America, says it was the "pervasive understanding years ago" that the government
would provide free health care for military retirees. Beasley, who is a retired
Navy captain, has worked as a military recruiter. "We always put that on our
materials," she says.
But as military facilities closed because of downsizing and medical costs grew
during the past few decades, it became difficult for retired service members to
obtain quality health care at little or no cost. Congress responded by creating
TRICARE for Life, which supplements Medicare coverage for older retirees.
"People were promised health care in retirement, but not free health care,"
Harrison says. "The question is how much is a fair amount to pay?"
Because service members typically enter the military at a young age, they often
retire earlier than civilians do and find work outside government. Many retirees
covered by TRICARE Prime are still working and have access to other health
insurance, either through their jobs or spouses. But TRICARE remains a more
attractive option, primarily because it costs less than other health insurance.
"TRICARE has been so successful that more retirees are choosing to stay on,"
says Harrison.
Beasley notes that not all military retirees live in Washington, where salaries
are typically higher than places outside the Beltway. "They aren't all working,"
she says.
Those who favor asking TRICARE beneficiaries to pay more might have a more
receptive audience, especially among the under-65 crowd, than conventional
wisdom has dictated. According to a July study from CSBA, military personnel
"tend to undervalue retirement health care benefits, particularly early in their
career." That makes sense, given how young people traditionally view retirement
and health care. But even among midcareer personnel, "89 percent would prefer an
immediate $350 increase in annual pay in exchange for a $1,400 per year increase
in the TRICARE Prime fee they would pay once they retire," the study found.
McCain was more blunt in his assessment on the Senate floor in December: "I have
not yet met a single 18-year-old, including my own son . . . who said, 'Gee, I
want to join the Marine Corps because of TRICARE.' No, they joined the military
because they want to serve their country." It's up to Washington, though, to
figure out the right balance between rewarding that service and saving the
government more money.

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SOURCE:  Government Executive website 17 Jan 13 article at

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