Defense budget will likely include some increased premiums

Published 7:23 pm Friday, August 13, 2010

Defense Secretary Robert Gates has signaled that the department’s fiscal 2012 budget request to Congress early next year will include recommendations to raise health care premiums for some Tricare beneficiaries.

If past proposals are a reliable guide, the target of higher fees is likely to be military retirees rather than active duty families. The Bush administration had tried for three straight years to raise fees for working age retirees. Congress blocked those efforts.

Defense officials hope lawmakers, facing with mounting federal debt and tightening defense budgets, will be more receptive to the argument that the fees haven’t been raised since they were set in 1995.

During a Pentagon press conference where he unveiled a host of initiatives to cut overhead in defense budgets, including shutting down the Joint Forces Command in Norfolk, Va., Gates said proposals to control burgeoning health care costs will be unveiled in the months ahead.

The issue arose when Gates was asked by a reporter when it would be time to control rising health care costs, either through premium increases or reducing coverage. “Yesterday,” Gates responded.

“Health-care reform is on my agenda,” he added. It will be part of a new track of cost-cutting reforms identified by the Quadrennial Defense Review and endorsed by other reports for curbing defense spending.

“There are no sacred cows, and health care cannot be excepted” from cost-control plans, Gates said, noting it’s not to lower overall defense budgets but to free up funds for more pressing defense needs.

“Everybody knows that we’re being eaten alive by health care,” he said.

Dr. Jonathan Woodson, nominated to take charge of health care policy as the new assistant secretary of defense for health affairs, stayed mum on the hot-button issue of higher Tricare fees during his Aug. 3 confirmation hearing before the Senate Armed Services Committee.

Asked by Committee Chairman Carl Levin, D-Mich., how he would address rising health costs, Woodson said, “What we need to do is work with a number of constituents and try and stem the rise of that cost.” He referred to more cost-efficient therapies and addressing waste in the way health care is delivered.

Sen. John McCain, ranking committee Republican, said Woodson’s major challenge will be getting costs under control. McCain questioned whether he can do it, given the steady rise of national health costs.

Woodson, an Army Reserve brigadier general and vascular surgeon who has deployed in most every recent conflict, is Army assistant surgeon general for force management, mobilization, readiness and reserve affairs.

In his written responses for the committee, Woodson said retirees and their families are 53 percent of all Tricare beneficiaries and account for 57 percent of the Defense Department’s health care budget.

Disability, retirement pay for veterans

In his defense budget request last February, President Obama called on Congress again to phase in payment of both military retirement pay and disability compensation for 103,000 “Chapter 61” veterans who were forced by a service-connected disability to retire short of the 20 years needed to retire.

But the administration disappointed advocates for this change, including Rep. Ike Skelton, D-Mo., chairman of the House Armed Services Committee, by not identifying cuts in other entitlement accounts to pay for it. The estimated cost is $5.4 billion over the first 10 years. As a result, neither the House nor Senate version of the defense bill authorizes Obama’s initiative, at least so far.

House Democrats did try to slip it into the American Jobs and Closing Tax Loopholes Act (HR 4213). But in final negotiations with the Senate over this bill, only an extension of federal unemployment benefits survived.

Uncomfortably for some, the president still took credit for his unfunded effort in a speech before the Disabled American Veterans convention Aug. 2.

“We’ve kept our promise on (disability/retirement pay) by proposing legislation that would allow severely disabled retirees to receive their military retired pay and their VA disability benefits,” Obama said. “It’s the right thing to do.”

Advocates for veterans agree, but note that it hasn’t been done yet.

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