Health care cost sirens are sounding

Published 9:00 pm Friday, October 28, 2005

Congress will deepen a near crisis of runaway military health care costs if it enacts a Senate-backed provision to open the new Tricare Reserve Select program to all drilling reserve and National Guard members, the Defense Department’s top health official has warned.

In testimony before a House subcommittee, Dr. William Winkenwerder said military health costs have doubled in the last four years alone, from $18 billion a year to more than $36 billion, largely because of enhancements in benefits for retirees and their families.

Winkenwerder also blamed a decade-long freeze on Tricare enrollment fees and co-payments, which he suggested the Defense Department will try to raise after consulting with military leaders and Congress.

As assistant secretary of defense for health affairs, Winkenwerder is Defense Secretary Donald Rumsfeld’s top policy adviser on medical readiness and managing health care delivery for 9 million beneficiaries.

By spring, the Defense Advisory Committee on Military Compensation, established by Rumsfeld, is expected to arm defense leaders with recommendations to slow military health spending, at least in part by having beneficiaries pick up a larger share of their medical costs.

Ideas being weighed include higher enrollment fees and co-payments for Tricare Prime, the managed care option; higher deductibles for users of Tricare Standard, the fee-for-service option; a first-time annual enrollment fee for Tricare Standard; incentives for military retirees working in second careers to use employer-provided health benefits; and offering tax-deferred health savings accounts to military beneficiaries.

At a briefing for the advisory committee in July, Sue Hosek, a benefits analyst, noted that the Tricare Prime enrollment fee for family coverage remains at $460 a year, the level set in 1996. As of 2004, she said, the typical civilian employer health plan cost workers about $2,700 a year.

But Hosek warned that a Tricare premium increase big enough to make a real difference in total program costs would “represent a significant benefits cut,” so it should be “considered along with a package of changes.”

If U.S. forces, as expected, are still at war when the committee recommendations surface, Congress might be reluctant to raise individual health costs, at least for active duty members, reservists and their families.

The House Armed Services Committee’s subcommittee on military personnel invited Winkenwerder Oct. 22 to discuss a range of health-related issues. He chose to focus his opening remarks on rising military health costs, a matter he said is “of vital importance to the future of the whole country.”

If costs aren’t brought under control, he warned, the sustainability of the military’s world-class health benefit will be threatened. The current $36 billion budget will climb to $50 billion in four or five years, Winkenwerder said. Even the Joint Chiefs of Staff, he added, are worried that health spending is affecting programs of higher priority for the nation’s defense.

Military pharmacy budgets have increased by 500 percent since 2001, he said, to more than $5 billion a year.

Congress should do nothing more on reserve health benefits, Winkenwerder said, until Tricare Reserve Select has had time to establish itself. He criticized as costly and unneeded a Senate-approved plan to open the plan to all drilling reservists.

House Republican leaders removed similar language from the House 2006 defense authorization bill, saying the $3.8 billion cost over five years was not offset with cuts elsewhere, thus violating House budget rules.

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