Back To The Future For TRICARE Fees

May 26, 2017

The FY 2018 budget was released this week, and it feels like Back to the Future. MOAA had hoped, as was the case in last year's National Defense Authorization Act (NDAA), that the budget would contain more actual health care reforms. That is not the case. The money collected through the establishment of new TRICARE fee increases, according to DoD officials, will be “plowed back into readiness.” 

Congressional intent in last year's 2017 NDAA legislation was to pave the way for sweeping changes to the Military Health System and the TRICARE program. The reforms focused on improving the beneficiary experience ranging from access to care, to streamlining TRICARE benefit options. For years, MOAA has advocated for many of these improvements. Part of the accepting this package of improvements means accepting some reasonable fee increases and the establishment of new TRICARE participation fees where none had previously existed. 

Central to this package of sweeping TRICARE reforms last year was that all currently serving, as well as those retiring prior to Jan. 1, 2018, would be grandfathered into the existing fee structures. New entrants into the services after Jan 1., 2018, would be subject to much higher fees. This budget seeks to eliminate the grandfathering and places almost all beneficiary categories in line for these much higher fee hikes. 

The proposed budget would keep all program requirements in the newly formed TRICARE benefit option structures of TRICARE Prime and TRICARE Select. That includes the establishment of open season for enrollment as currently exists in many civilian health plans.

MOAA is encouraged by the following key initiatives rolled out in this administration's first budget proposal:

  • No fee changes for active duty.
  • Medically retired members and their families and survivors of those who died on active duty would be treated the same as active duty family members with no participation fee and lower cost shares.
  • To ensure equity among active duty family members who might not live near a military treatment facility, there would be a no-cost care option available regardless of their assignment location.

In contrast, the budget was very specific in detailing a variety of fee changes and increases, including:

  • A rollback in the grandfathering of large TRICARE fee increases. All categories of beneficiaries, except active duty, active duty family members in TRICARE Prime, and TRICARE for Life, would see even larger fees across the board. There are no changes for TRICARE for Life beneficiaries. Retired TRICARE beneficiaries under age 65 would be hit the hardest.
    • $350/$700 (single/family) for TRICARE Prime (retiree) enrollment
    • $450/$900 (single/family) for TRICARE Select enrollment
    • Various copayments and deductibles would also rise. For instance, with family coverage under TRICARE Select, deductibles would be reset at $300 to access network providers and $600 for non-network providers. The deductible for single coverage would be $150 for network coverage and $300 for out-of-network providers.
  • Raises TRICARE pharmacy fees, tripling them over a ten-year period. This includes generic medications obtained through the TRICARE home delivery program.
  • Increases in the catastrophic caps for retirees from $3,000 to $3,500.
  • All new increases in premiums, copayments and deductibles and catastrophic caps would increase annually based upon a previously unused National Health Expenditures (NHE) index instead of the currently used index of annual COLA rates. The NHE is projected to be 5.9 percent by 2019.

These are selected highlights of the proposals. We'll provide additional details in our next update with calculations to illustrate how the cumulative changes would affect various categories of beneficiaries.

MOAA's initial concerns about the proposals, in addition to the disproportional fee hikes that would occur through the repeal of the grandfathering clause, include:

  • Breaking faith and precedent with the troops, who are traditionally grandfathered into the current cost and benefit structure.
  • The focus on driving more care into the Military Treatment Facilities through higher cost incentives before most access to care initiatives have been implemented and tested.
  • Tying all health care fees, including premiums and copays, to a medical inflation index that is projected to grow at close to 6 percent per year. MOAA continues to believe fee adjustments should be capped at the annual COLA percentage.
  • The continued effort to escalate pharmacy copays, which have already been doubled and tripled over the past 5 years.

“It's important to appreciate the budget submission is just the first step in a long process,” says MOAA President and CEO Lt. Gen. Dana T. Atkins, USAF (Ret). “MOAA and our partners in The Military Coalition will be working with leaders and staffs of the House and Senate Armed Services committees in the coming months in our ongoing efforts to improve the Military Health System while doing our best to protect against imposing disproportional fee increases on those who earned their military health care coverage through decades of service and sacrifice.”

 

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