‘Health Tax’ Looms

The administration has enlisted the Joint Chiefs in an effort to triple military retiree health fees. Your help is needed. Mail in the cover postcards now, before Congress acts in March.

Last month, we told you the administration is planning to propose dramatic increases in TRICARE enrollment fees, deductibles, and copayments for retired servicemembers under age 65 and steep retail pharmacy fee increases for all beneficiaries (see chart, page 28). MOAA strongly opposes this unfair proposal.

Now, the Joint Chiefs of Staff have endorsed their political leaders’ plans to double or triple retiree health care fees because the administration has told them that’s the only way they’ll get money needed for weapons systems. Putting the Joint Chiefs in the position of having to choose between people and weapons is just plain wrong.

Dr. William Winken­werder, assistant secretary of Defense (Health Affairs), met with The Military Coalition, including several MOAA representatives, in early January to explain why DoD wants to triple or quadruple TRICARE fees for retired benefi­ciaries. His arguments:

• Military health care benefits are “extremely rich” and consume funding needed for other defense programs. Military retirees pay an average of $680 in out-of-pocket health costs a year, versus $3,700 for retirees from civilian employers.
   
• There has been no change in retiree health fees since 1995.
   
• As private-sector employers have cut back on health benefits, more retirees are migrating to TRICARE. The share of retirees using TRICARE has increased from 66 percent to 78 percent in the last four years and is expected to continue rising.
   
• Defense pharmacy costs have tripled since Congress expanded pharmacy benefits to Medicare-eligible retirees in 2001.

MOAA’s director of Government Relations, Col. Steve Strobridge, USAF-Ret., responded that comparison of military versus civilian health costs ignores some critical points. Military retirement benefits are the only offset provided for the unique and extraordinary demands inherent in a 20- to 30-year military career. Military retirees have paid far greater premiums than civilians; it’s just that they paid most of them in service and sacrifice rather than in cash.

Further, he said, the Pentagon should be asking Congress for a bigger defense budget to pay for the needed benefit improvements Congress has enacted rather than seeking to fund those other defense needs out of retirees’ pockets.

MOAA thinks this is only the first round of the cost-shifting effort and that DoD is likely to seek a TRICARE For Life (TFL) enrollment fee and deductible, among other things, in the future.

The vast majority of the savings associated with these proposals comes from the assumption that the fee increases would drive 600,000 retirees out of TRICARE. Winkenwerder, asked whether DoD would propose additional fee increases if that level of migration and savings doesn’t materialize (as we believe it won’t), indicated that might be considered if the assumptions prove wrong.

This is the most serious threat to military benefits in years. The threat is immediate, because Congress will consider the issue during budget resolution debate in March.

MOAA members who want to protect their current and future health benefits need to sign, stamp, and mail the postcards on the cover of this magazine now to urge Congress to reject these proposals.

Then follow up on that mailing by using MOAA’s toll-free hot line to Capitol Hill, (866) 272-6622. Ask to be connected to your legislator’s offices and tell them you want them to reject health fee increases for military retirees.

Why Fee Hikes Are Off-Base

Here are the top seven reasons why the administration-proposed health fee hikes don’t make sense:

• Comparison with corporate practices is inappropriate. Military benefits must far exceed civilian benefits, to offset decades of extraordinarily arduous military service conditions.
   
• Military people already paid huge premiums in service and sacrifices that far exceed payments by any civilian.
   
• Increases are grossly disproportionate. The proposed 300 percent to 400 percent fee increases are 10 times the 31 percent increase in inflation (and military retired pay) since 1995.
   
• The nation has greater obligations to military retirees than corporations do to their employees. In demanding such commitments, the government assumes a reciprocal obligation to provide benefits commensurate with their extraordinary sacrifices. This is a practical as well as moral obligation. Mid-career military losses can’t be replaced the way civilians can.
   
• Eroding career military benefits undermines retention and readiness. Today’s troops are highly conscious of Congress’ actions toward those who preceded them in service. Reducing military retirement benefits would be penny-wise and pound-foolish when recruiting is already a problem and an overstressed force is at increasing retention risk.
   
• TRICARE needs fixing first. TRICARE is one of the lowest-paying plans in the country and imposes administrative requirements beyond those of other plans. Beneficiaries at many locations have difficulty finding providers willing to take them.
   
• America can afford both weapons and military health care. Today’s defense budget (in wartime) is less than 4 percent of GDP, one-third lower than the peacetime-year average since World War II. A country that can afford hundreds of billions of dollars in pork and tax cuts doesn’t need to make military retirees pay for weapons.

Options Exist to Reduce Military Health Costs

The government should be doing more to improve TRICARE and promote efficiency rather than shifting more costs to beneficiaries. It should:

• encourage retention of other health insurance by making TRICARE a true second-payer to other insurance, as TFL is to Medicare;
   
• eliminate DoD-unique administrative requirements that increase contractor overhead charges (and thus increase costs for DoD);
   
• size military facilities (least costly care option) to reduce reliance on civilian Prime networks (most costly care option) and treat more Medicare-eligibles;
   
• negotiate with drug manufacturers to secure discounts in the TRICARE retail pharmacy network (the most costly venue) or seek legislation mandating drug manufacturers’ extension of federal pricing to the TRICARE retail pharmacy network (rather than passing along higher fees to beneficiaries);
   
• stimulate migration to the much-lower-cost mail-order pharmacy by eliminating all mail-order copayments and doing more to educate beneficiaries and providers on the advantages of mail-order pharmacy;
   
  On the Web

  ■For more information about the fee in­­-creases and MOAA’s efforts to avert them, visit MOAA’s Legislative Action Center online:
  www.moaa.org/healthfees.
   
• seek legislation restricting incentives private firms can offer employees to shift to TRICARE, or require matching payments to TRICARE;
   
• establish centralized DoD “high-cost pharmacy” for central ordering and filling of prescriptions for exceptionally high-cost drugs (as the Air Force already has done, with success);
   
• maximize efficiency with a single national contract for all claims processing;
   
• realign the military treatment facility pharmacy budget process for centralized funding, with a greater emphasis on accountability and cost-shifting; and
   
• test voluntary participation in Medicare Advantage Regional PPO to foster chronic care improvement and disease management programs.

VA Disability Claims Soar

Key committee chairman pledges help to ease backlog.

The House Veterans’ Affairs Committee heard testimony in December from a retired Air Force flight surgeon, senior VA officials, and a panel of veterans’ service organizations (VSOs) concerning mounting challenges facing the VA claims system.

Dr. William Jones, USAF-Ret., said his claims for service-connected disabilities have been held up for six years.

VA claims for initial disabilities have increased by 36 percent in the last five years. Witnesses testified that the system is plagued with poor quality, inconsistencies between VA offices, mounting demand, and insufficient resources.

“The VA system is programmed to procrastinate,” said one witness.

A Government Accountability Office report released at the hearing said there were 346,000 claims pending decision at the end of FY 2005 and questioned the consistency of decisions across the VA’s 57 regional offices.

The average initial claim takes more than six months to complete, and appeals of denied claims can take as long as three years. The problems are compounded by accelerating retirements among experienced VA claims workers. Inexperienced replacements feel more pressed to meet productivity goals over quality goals.

Committee Chairman Rep. Steve Buyer (R-Ind.) observed that “doing more with less is not a strategy of success.” He promised to push for more VA claims adjudicators in the coming year’s budget.

More Drugs to Cost More?

Some mental health drugs are likely moving to higher tier.

On Dec. 19, the Defense Department convened the Beneficiary Advisory Panel (BAP) to review recommendations to move certain Alzheimer’s medications, nasal corticosteroids, antidepressants, and antibiotics to the third tier ($22 copayment) of the TRICARE formulary. The drugs involved are:

• Alzheimer’s: Cognex.
   
• antibiotics: Azithromycin (Zmax only) and Ketek.
   
• antidepressants: Cymbalta, Lexapro, Paxil CR, Prozac Weekly, Sarafem, and Wellbutrin XL.
   
• nasal corticosteroids: Beclovent AQ, Nasacort AQ, Rhinocort AQ, and Vancenase AQ/DS.

The beneficiary panel, which includes MOAA’s Cmdr. John Class, USN-Ret., expressed two general concerns with the recommendations.

• The full range of medications should be made available to active duty servicemembers if deemed medically necessary by the doctor. Currently, active duty personnel are denied access to third-tier drugs except when special-ordered by a military pharmacy. In many cases, servicemembers are assigned out of the vicinity of military facilities, and they should have the same medical-necessity access as all other TRICARE beneficiaries.
   
• In some cases, the beneficiary panel urged a longer transition period to ensure beneficiaries are informed about the changes and have an opportunity to discuss alternative medications with their doctors. Class noted that the panel had not yet seen a DoD communication plan to inform the TRICARE Standard population and their providers about such changes.

The recommendations were submitted to Dr. William Winkenwerder, assistant secretary of Defense (Health Affairs), for a final decision.

MOAA Talks Recruitment, Retention

Ryan highlights family issues at spouse conference.

CinCHouse, a nonprofit organization of primarily military spouses, sponsored a conference the second week of January to exchange ideas between military families and military leaders. The goal was to raise awareness of retention and family support policies, recognizing that more than half of the current force is married or has family responsibilities.

MOAA President Vice Adm. Norb Ryan Jr., USN-Ret., participated as a guest speaker on a panel addressing the topic, “Do Pay and Benefits Impact Recruitment and Retention?” He helped lead a lively discussion about the quality of life of men and women serving today and those who have served in the past.

Ryan highlighted the effects leadership can have on recruiting and retention and the idea that every policy decision should consider the spouse and family. One government official said family programs tend to be the first ones cut during tough budget times like these. Ryan and others countered that, if defense leaders believe what they themselves say about the importance of military people and families, they should be willing to make the appropriate investment in them.

“It all starts with an adequate defense budget,” Ryan said. He highlighted the seeming misalignment of national budget priorities, in that today’s wartime defense budget is less than 4 percent of our gross domestic product. That’s much lower than the 5.7 percent average — counting only peacetime years — for the six decades since the end of World War II.

“The only weapon system that has never let this country down is our military personnel and their families,” said Ryan, indicating his disagreement with those who contend the military has to cut people programs to pay for weapons.

Dump Disabled ‘Back Tax’

Legislators work to help disabled retirees recover income taxes.

Most VA disability claims are resolved in less than a year. But lost paperwork, administrative errors, and rejected claims appeals delay thousands of disability awards for years on end.

The VA disability award is retroactive to the date of the application — so a good chunk of past retired pay should have been tax-free. For a refund of back taxes paid, disabled retirees must file an amended tax return for each applicable year.

Then they run into a major sore spot: The IRS statute of limitations prohibits filing amended returns beyond the last three tax years. VA administrative glitches and insensitive tax laws cost these disabled retirees thousands of dollars — through no fault of their own.

MOAA thinks this unfair situation needs fixing. So we drafted proposed legislation and found two supportive House sponsors. At press time, Reps. Sam Farr (D-Calif.) and Michael Bilirakis (R-Fla.) were planning to introduce a bill in February that would allow the filing of amended returns for more than three tax years.

WIA Warriors Testify

America’s finest cite need for “seamless transition.”

The Veterans’ Disability Benefits Commission held its first public hearing of 2006 on Jan. 19 to hear testimony from soldiers receiving care from Walter Reed Army Medical Center (WRAMC) and VA facilities.

The witnesses provided riveting testimony on their personal challenges and recommended improvements for military and VA care.

Four of the servicemembers suffered amputations after being wounded in Iraq. Sgt. Edward Wade, USA-Ret., of the 82nd Airborne Division, lost an arm and also suffered a traumatic brain injury (TBI). Wade obtains care for his TBI at the VA Medical Center in Richmond, Va., but has had to battle the Army to obtain care at WRAMC for the loss of his right arm.

The panelists also urged:

• delaying delivery of VA services until patients are ready to receive it. Capt. David Rozelle, USA, now the coordinator of peer-visitor activities at Walter Reed — who lost his right foot in his first Iraq tour and returned to Iraq after rehabilitation to lead his company on a second combat tour — said most wounded soldiers need several months before they’re ready to consider their options and process benefits information;
   
• involving spouses, parents, and other family members in information outreach;
   
• ensuring wounded servicemembers have assured access to TRICARE and VA facilities. Army Capt. Marc Giammatteo reported that while he was home in Hartford, Conn., on convalescent leave from Walter Reed, the local VA facility refused to provide care for his severely wounded leg because he was still on active duty; and
   
• providing equal access to care for wounded members of the Guard and Reserve. Capt. Troy O’Donley, ARNG, had to insist on remaining on active duty to receive care at WRAMC. He urged tailoring transition assistance services to Guard and Reserve members after they’re demobilized and return home.

MOAA and The Military Coalition will continue to press Congress to make these and other improvements to the “seamless transition” process.