Senate Proposes to Fund DoD Programs on the Backs of Beneficiaries

August 4, 2017

What is the reward beneficiaries receive for a career of service and sacrifice? They get to pay more for their health benefit while also funding DoD's other programs! Sounds unbelievable, but sadly it is true - if the Senate gains traction with its proposed defense authorization bill.   

The Senate, unlike the House, has proposed legislation to raise all TRICARE beneficiaries' health care fees and intends to use the funds to pay for other legislative fixes, such as the continuation of the Special Survivor Indemnity Allowance.    

The practice of finding offsets by taxing beneficiaries to subsidize other budgetary items has become a familiar behavior by Congress. For example, a provision in the FY 2016 National Defense Authorization Act (NDAA) raised TRICARE pharmacy copayments to fund lump-sum retirement payments for future entrants under the military's new retirement system.   

Increasing the retail generic copayment for military beneficiaries to $10 results in beneficiaries paying more than twice as much as civilians without health insurance pay for generic drugs at Walmart.

What does all this mean for beneficiaries? The Senate Armed Services Committee's draft bill telegraphs its intentions to continue to extract more money from you. This money would come directly through the repeal of the grandfathering of TRICARE fees for currently serving troops and through exorbitant increases in pharmacy fees. 

Historically, DoD and some in Congress continue to assert TRICARE fee increases are needed based on concerns about potential health care cost growth and a desire to shift a greater share of DoD health care costs to beneficiaries.    

MOAA believes the FY 2018 budget-proposed reversal of the TRICARE fee grandfathering and the additional pharmacy increase provisions in the FY 2018 NDAA are inappropriate for many reasons.  

One of the main reasons is DoD health costs are declining, not rising. The Pentagon's own data from its annual reports to Congress show health care cost areas of the DoD budget continue to decline from past levels. Both TRICARE For Life and purchased care costs continue to decline.

Dod health costs decling

Data supplied by the Defense Health Agency (DHA), which oversees the TRICARE program, shows a more detailed view of how health care costs continue to decrease.  The DHA is a relatively new organization, which was established a few short years ago and charged with consolidating duplicative functions within the three service medical departments. 

Examples of these functions, termed enterprise-wide support activities (ESAs), include pharmacy programs, information technology, logistics, facilities, and research development and acquisition.

MOAA has strongly supported this consolidation for a number of years. By all accounts, DHA continues to succeed in increasing efficiencies and driving the cost of health care down - well ahead of schedule. According to the data, the DHA's current six-year plan will deliver an estimated $4.3 billion in cost savings and avoidance for DoD by 2019.  

EAS Chart

The pharmacy program is one of the largest cost centers in the military's health system. A deeper dive into DoD's pharmacy program shows how military beneficiaries continue to do their part to drive pharmacy costs down.  

Beneficiaries have directly contributed to these cost savings by 1) changing their prescriptions from the retail sector to TRICARE's home delivery program 2) changing some prescriptions from brand-name to generic medications, and 3) paying higher copayments. Again, these savings have been achieved well beyond what had been forecasted. 


The bottom line is this:  Congressional intent in last year's 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. Part of MOAA's accepting this package of improvements meant acceptance of some fee increases.   

However, central to this package of sweeping TRICARE reforms was that all who had entered service prior to Jan. 1, 2018, would be grandfathered into the existing pharmacy fee structures. New entrants into the services after that date would be subject to higher fees in the future.   

Now the Senate's proposed legislation wants to roll this back and have you pay not just more, but much more.  Send your elected officials a MOAA-suggested message to prevent these steep increases.


Prevent Steep TRICARE Fee Hikes

The FY2018 national defense authorization bill negotiations are underway. The Senate's budget request includes large increases to TRICARE fees across the board. These fee increases are a direct result of the repeal of the 2017 National Defense Authorizations grand-fathering clause. The intention of the grand-fathering was to keep fees where they currently are for beneficiaries in the service prior to 1 January 2018. These fee increases are disproportional and do not reflect the service and sacrifice of the beneficiaries who have earned the health care benefit. Please send your legislators this MOAA suggested message to prevent these hefty fee increases from negatively impacting servicemembers and their families. 

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