Heading off Tricare fee increases may force cuts elsewhere in military, defense officials warn

If Congress blocks Defense Department plans to raise Tricare fees for military retirees and beneficiary co-pays on drug prescriptions filled off base, the services will make even deeper cuts in force strength than now planned, the military’s top health official told lawmakers Tuesday.

“Given the constraints of the Budget Control Act, if no adjustments are made in Tricare fees and we don’t achieve $12 billion-plus in savings over the (five-year defense plan), additional force structure cuts will need to be made,” Dr. Jonathan Woodson, assistant secretary of defense for health affairs, told the House subcommittee on military personnel. That’s the reality “everyone needs to understand in these very difficult times,” he said.

Woodson and his boss, Jo Ann Rooney, acting under secretary of defense for personnel and readiness, defended the proposed 2013 personnel budget, including Tricare fee increases, during a surprisingly brief hearing that included bursts of criticism from Republicans on the subcommittee.

Rep. Joe Wilson, R-S.C., subcommittee chairman, challenged the mantra of military leaders in recent weeks, including Defense Secretary Leon Panetta and Army Gen. Martin Dempsey, chairman of the Joint Chiefs, that the 2013 budget “keeps faith” with service members and their families.

Wilson warned that a proposed cut in active duty strength of more than 100,000 personnel over five years will “exact a human cost on our military families. The loss of the skills and experience … will directly diminish our combat capability when it is very likely we will continue to be engaged in conflict (with) enemies who dream of a long war.”

But, Wilson said, “the most disturbing budget proposals are the increases in health care premiums. And the increases are up to 340 percent” for some, he said, a reference to phased increases over five years targeting retirees who draw more than $45,178 a year in retired pay.

Rep. Austin Scott, R-Ga., a freshman House member, called the fee increases eyed for Tricare Prime, the managed care option, “draconian.” And then he struck a theme being adopted by several Republicans, that federal civilian employees, too, should shoulder higher health fees.

The administration, Scott said, holds “a general belief … that health care should be free for everybody other than the people in the military.”

In fact, federal civilians pay substantial monthly premiums for health insurance, and the premiums increase yearly with health care costs. In answering Scott, however, Rooney simply noted that most Tricare fees have been frozen since at least 1996. Last October, Prime enrollment fees for working-age retirees were raised by $60 a year and also indexed to inflation.

Rooney explained, too, that military leaders were involved in shaping the proposed fee increases and strongly support the planned increases.

In a Jan. 25 letter to the armed services committees, every member of the Joint Chiefs as well as seven senior enlisted advisers endorsed the compensation “reforms” in the 2013 budget request. The letter called the proposed Tricare fees and deductibles “comparatively moderate” and the higher pharmacy co-pays as trending “toward market rates.” And beneficiary costs will “remain substantially less than those in the private sector.”

Wilson said he respected their views but isn’t persuaded by them.

“We have a military that certainly follows the executive branch,” he told me. “I wouldn’t second guess that at all. They are good soldiers.”

In explaining the need for Tricare fee increases, Rooney and Woodson echoed Panetta and other senior officials who point critics to the deal reached last year between Democrats and Republicans to cut defense spending by $487 billion over 10 years, and more than half of that in just five years. That deal became law in the Budget Control Act.

Robert Hale, Defense Department comptroller, said steps to control personnel costs, including a plan to trim active duty raises for three years starting January 2015, must be judged “in the context of a congressional requirement that we take $259 billion out” of defense by 2017.

Without “that requirement, we probably wouldn’t be making this recommendation,” Hale said. “In that context, if we choose to entirely exempt personnel, military pay and benefits, we’re going to have to make much larger cuts in force structure, and we don’t want to do that.”

Wilson doesn’t want to cut force structure at all, as he made clear in opening remarks at the hearing. He promised another hearing in March, solely on health care, and with testimony from beneficiary advocates.

The panel chairman told me he wants to hear from “people who are impacted and also people who have expertise on the issues … I fully believe we’re going to find out that there has been a commitment made to retirees and we need to stand by that commitment.”

To sideline fee increases, Wilson needs to find other ways to save billions of defense dollars. A source said that’s why he’s been pressing defense officials for results of two recent studies, one on military health care governance, by an internal task force, and another by John Baldacci, former governor of Maine. Baldacci was hired a year ago by the Pentagon’s manpower chief to study military health care and propose efficiencies.

Last week, for internal media, Woodson outlined a new health care governance scheme but cancelled plans to do so for military trade press and armed services committee staffers. The plan involves establishing a new Defense Health Agency that would streamline supply purchases and other common support functions across the Army, Navy and Air Force medical commands. But those commands would continue to operate separately.

Language in last year’s defense bill places a hold on any major reorganization of military health care until the plan is presented to the U.S. comptroller general and its projected cost savings verified.

To comment, email milupdate@aol.com, write to Military Update, P.O. Box 231111, Centreville, VA, 20120-1111 or go to www.militaryupdate.com.

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