Hike Pay, Not Fees

The House Armed Services Military Personnel Subcommittee proposes no TRICARE fee increases before 2008 and seeks a larger pay raise and higher force levels.

On April 26, the House Armed Services Military Personnel Subcommittee, chaired by Rep. John McHugh (R-N.Y.), offered Congress’ first formal response to DoD’s plan to significantly raise TRICARE fees for retirees and survivors under age 65, starting this fall.

That response was a resounding “no.”

The subcommittee approved legislative provisions that would bar any increases in fees for TRICARE Prime, TRICARE Standard, or TRICARE Reserve Select (the new coverage for drilling Guard and Reserve members and families), at least through the end of 2007.

DoD’s budget proposal for FY 2007 envisions raising retired officers’ TRICARE Prime enrollment fees by 200 percent and total fees for TRICARE Standard by nearly 300 percent over the next two years, with somewhat smaller increases for retired enlisted members. Earlier this year, the Pentagon raised TRICARE Reserve Select premiums by 8.5 percent and planned similar annual increases in the future.

McHugh said the subcommittee was unanimous in thinking that the DoD-proposed fee hikes were too much, too fast. Subcommittee members proposed convening a special commission to review health care cost growth and alternative options to hold down costs and avoid such large cost-share increases for beneficiaries.

The subcommittee didn’t make any recommendation concerning DoD-proposed changes in pharmacy copayments. The DoD plan would reduce beneficiary copayments for generic drugs from $3 to zero in the mail-order system but would raise copayments for drugs bought through retail stores from $3 to $5 for generics and from $9 to $15 for brand-name drugs.

McHugh said the full committee would address the pharmacy copayment issue in early May.
The committee also recommended the following actions:

■ Manpower increases: Sustain the same 30,000 troop-level increase the Army was allowed for FY 2006 and add an extra 1,000 for the Marine Corps above the 2006 level. Restore the full strength of 350,000 for the Army National Guard, versus the 333,000 proposed in the Defense budget. Reduce Navy manpower authorizations by 12,000 and Air Force strength by 23,000.

■ Pay raise: Authorize a 2.7-percent across-the-board military pay raise Jan. 1, 2007, versus the 2.2-percent raise proposed in the Defense budget. This would be one-half percentage point larger than private-sector pay growth, continuing Congress’ seven-year effort to close the “comparability gap” between military and private-sector pay.

The subcommittee also endorsed a Pentagon proposal for additional, targeted increases for certain mid-career and senior enlisted members and warrant officers,
to be effective April 1, 2007.

■ Dependent school support: Authorize $50 million in assistance for schools near military installations, plus an additional $15 million specifically intended for schools that receive additional students because of population shifts associated with base realignments and closures.

■ Cold War medal: Authorize a Cold War Victory Medal for any servicemember who served at least 180 days between 1945 and 1991.

MOAA Letters Sway Hearing

Subcommittee leaders cite impact of 40,000 MOAA tear-out letters.

Beneficiary Views on TRICARE Fee Hikes

40,000 MOAA survey responses overwhelmingly opposed both DoD’s proposal to increase TRICARE fees by 40% to 200% over two years with subsequent 8% to 10% annual increases and an alternate plan in which health fees would increase each year by the same percentage that retired pay increases. Remaining percentages responded neutral.

Senate Bill to Guard TRICARE

Proposals curb DoD authority to charge beneficiaries.

On April 7, Sens. Frank Lautenberg (D-N.J.) and Chuck Hagel (R-Neb.) joined with four other cosponsors to introduce S. 2617, the Military Retirees Health Care Protection Act.

The new Lautenberg-Hagel bill would limit the secretary of Defense’s authority to increase some TRICARE fees and copayments, and it would prohibit certain other increases entirely. Under current law, the secretary of Defense has considerable discretion to increase TRICARE Prime enrollment fees and pharmacy copayments. The new bill would put significant limits on that authority, barring an increase in any year that would exceed the percentage of the previous year’s retired pay increase.

In a negative reaction to the secretary’s recent 8.5-percent increase in TRICARE Reserve Select (TRS) premiums for Guard and Reserve families, the bill would specify that any future TRS premium increases could not exceed the military basic pay raise percentage.

In addition, it would bar establishment of any enrollment fee for TRICARE Standard and prevent any further increases in the inpatient copayment for retirees using TRICARE Standard.

“Especially in a time of war, it is unthinkable that the administration would even consider dramatically increasing health care costs for those who have sacrificed for our country,” Lautenberg said at a press conference introducing the bill. “Our bill assures today’s military retirees and their families that, just as they protected us, we will take care of them when their service ends.”

MOAA strongly supports this important legislation. With the Lautenberg-Hagel S. 2617 in the Senate and Reps. Chet Edwards’ (D-Texas) and Walter Jones’ (R-N.C.) H.R. 4949 in the House, bipartisan efforts in both chambers now are aimed at preventing the kind of disproportional and inappropriate health fee increases proposed by Pentagon leaders in the FY 2007 Defense budget.

Our hope is that similar provisions will be put in the FY 2007 Defense Authorization Bill.

MOAA Part of Health Meeting

Senator Graham hosts defense, association dialogue.

MOAA President Vice Adm. Norb Ryan Jr., USN-Ret., was among the association leaders invited by Senate Armed Services Personnel Subcommittee Chairman Lindsey O. Graham (R-S.C.) to an April 4 meeting with DoD leaders. This was the second such meeting Graham has convened to try to get a better handle on the differences of opinion between Pentagon leaders who want large increases in retiree TRICARE fees and association leaders who argue that the increases are inappropriate. MOAA feels strongly that DoD has failed to pursue many other available options to reduce health costs without penalizing beneficiaries.

Graham said at the outset that he thinks the answer lies somewhere in the middle, believing that fees probably should be increased to some degree. But he agreed that that shouldn’t happen until Defense health officials have wrung out all possible savings from other options. He told Defense leaders point-blank that he won’t support increases of the size they’re proposing.

One suggestion MOAA and other associations have proposed is to obtain an independent review of DoD’s budget numbers and an objective look at ways to contain costs besides raising beneficiary fees, including consultation with DoD and association leaders.

A representative from the Government Accountability Office (GAO) also attended the meeting and accepted Graham’s tasking to conduct such a review.

MOAA looks forward to working with the GAO on this important effort and appreciates Graham’s efforts to ensure beneficiaries are treated fairly.

More Drugs to Cost $22

List of non-formulary medications growing.

Health Fee Flip-Flop

Committee restores funds for VA but not DoD.

The House Budget Committee began work on the FY 2007 Budget Resolution March 29 and wasted no time in sending mixed messages on military and veterans’ health care.

The committee quickly approved an amendment that restored $795 million to the VA’s health care budget, as requested by Veterans’ Affairs Committee Chairman Steve Buyer (R-Ind.). This restores the money cut from the budget by the administration on the assumption that the VA would begin charging certain nondisabled veterans a $250 enrollment fee for VA care.

But the committee rejected Rep. Chet Edwards’ (D-Texas) amendment to restore $735 million to the TRICARE budget for the same purpose. Edwards, who has introduced H.R. 4949 to stop the TRICARE fee increases, released a statement saying, “I made every effort to solicit bipartisan support for my amendment, but the House Republican leadership chose to oppose it, so the vote was 15 Democrats for it and 22 Republicans against it.”

MOAA was perplexed by the vote, because Armed Services Committee Chairman Duncan Hunter (R-Calif.) and Ranking Minority Member Ike Skelton (D-Mo.) had written a joint letter to budget committee members earlier in April asking them to restore the funds.

When MOAA inquired why the majority on the committee had opposed it, the informal response was that they thought that the Defense budget could make up the shortfall and absorb the $735 million more easily than the VA budget could.

MOAA is troubled by this response, which fails to acknowledge Hunter’s strongly held view that the Defense budget already is too small to meet current needs.

People Should Be Top Priority

Subcommittee chair praises MOAA’s contributions.

Invited to testify at an April 6 hearing of the House Armed Services Military Personnel Subcommittee, MOAA presented recommendations on behalf of the 36 associations of The Military Coalition.

Because a March 29 hearing had addressed health care issues (see page 28), this one was held to cover other personnel and compensation issues.

MOAA Director of Government Relations Col. Steve Strobridge, USAF-Ret., thanked the subcommittee for its efforts in recent years to upgrade an extensive range of manpower and benefits programs for every segment of the uniformed services community, but he stressed that much still remains to be done. Among other priorities, he highlighted the need for:

■ increased manpower levels to ease strains on active duty, Guard, and Reserve members and families;

■ continued progress to reduce the gap between military and private-sector pay, especially for senior and mid-career warrant officers and enlisted members;

■ ensuring the availability of family support programs at gaining U.S. installations for the thousands of military families being relocated from Europe and elsewhere;

■ GI Bill improvements, particularly for Guard and Reserve personnel who currently find those benefits unusable;

■ fixes for Survivor Benefit Plan inequities that affect “greatest generation” retirees and survivors of members who die of service-connected causes;

■ elimination of the disability offset to retired pay, particularly for “unemployables” and members forced into retirement by combat wounds before they can attain 20 years of service; and

■ implementation of the same flexible spending accounts for military personnel that the government already offers all other federal employees, so they can deduct out-of-pocket health and child-care expenses from their federal income taxes.

Subcommittee Chairman John McHugh (R-N.Y.) asked Strobridge’s opinion of a concept that would change the military retirement system for new service entrants to allow vesting of retired pay at 10 years of service but delay eligibility for military retired pay until age 60. Strobridge noted that, in 1999, Congress had to repeal previous legislation that had reduced 20-year retired pay because it hurt retention. He expressed concern about what would happen if today’s members facing a third tour in Iraq had a choice between taking their vested retired pay and leaving service versus having to wait until age 60 for retired pay if they continue serving. “I have trouble seeing that as a positive retention scenario,” he said.

McHugh concluded the hearing with a compliment. “MOAA has been such an important part of helping this Congress, this subcommittee, and committee deal with those issues that are so important to those who have served, to whom we owe so much, and those who continue to serve to this day,” he said. “So thank you for that as well.”

Check Out These Key Bills

Initiatives seek health, disability, and other fixes.

Here’s a recap of some important initiatives introduced this year that might be of interest to you and your family. You can urge your legislators to support these measures by going to MOAA’s Web Base (www.moaa.org). Click on Legislative Action Center, then select Getting Involved from the drop-down menu. From there you can see Key Bills or go straight to Contact Congress.

Health care
■ H.R. 4949, Reps. Chet Edwards (D-Texas) and Walter Jones (R-N.C.), would remove the secretary of Defense’s current authority to increase TRICARE Prime enrollment fees, TRICARE Reserve Select premiums, pharmacy copayments, and TRICARE Standard inpatient copayments.

■ S. 2617, Sens. Frank Lautenberg (D-N.J.) and Chuck Hagel (R-Neb.), would significantly restrict the secretary of Defense’s current authority to impose increases in TRICARE Prime enrollment fees, TRICARE Reserve Select premiums, and pharmacy copayments, and bar any TRICARE Standard enrollment fee or increases in TRICARE Standard inpatient copayments.

Retirement issues
■ H.R. 4727, Rep. Sam Farr (D-Calif.), would allow disabled military retirees to file amended federal income tax returns for more than three tax years to secure refund of back taxes on military retired pay in cases when the VA disability compensation approval is retroactive for more than three years.

■ S. 2503, Sen. Blanche Lincoln (D-Ark.), is identical to the tax refund provisions of H.R. 4727 for disabled retirees.

■ H.R. 1366, Rep. Mike Bilirakis (R-Fla.), would extend eligibility for combat-related special compensation (CRSC) to servicemembers who are medically retired for combat- or operations-related conditions before attaining 20 years of service.

■ S. 2385, Sen. Harry Reid (D-Nev.), is identical to the CRSC eligibility adjustments of H.R. 1366.

Family issues
■ H.R. 5081, Rep. John Carter (R-Texas), would expand the Workforce Opportunity Tax Credit to include military spouses, providing employers a tax incentive to hire qualified military spouses.

— Contributors are Col. Steve Strobridge, USAF-Ret., director; Col. Mike Hayden, USAF-Ret.; Col. Lee Lange, USMC-Ret.; Col. Bob Norton, USA-Ret.;  Cmdr. René Campos, USN-Ret.; Cmdr. John Class, USN-Ret.; Cynthia Thompson; and Cass Vreeland, MOAA’s Government Relations Department.