Fact vs. Fiction on Military Personnel Costs (Part 2). The next several legislative updates will preview, in installments, a November Military Officer magazine article examining Pentagon assertions that your pay and benefits will break the bank. This week’s excerpt shows how critics skew the “facts” by using a misleading baseline.
The Election vs. Your Pay and Benefits. With Congress scheduled for only a few work days in September, another big decision that affects you and your family is being deferred until the post-election lame-duck session.
Walgreens and TRICARE Update. There was a surprising announcement this week about Walgreens’ future participation with the TRICARE pharmacy program.
What Do You Know? How much do you know about military retirement and survivor benefits? Take our short quiz below!
Fact vs. Fiction on Military Personnel Costs (Part 2)
The next several weeks’ legislative updates will preview, in installments, a November Military Officer magazine article in which MOAA’s Government Relations staff examines Defense leaders’ assertions that your pay and benefits will break the Pentagon bank. This week we take a look at the misleading baseline year many studies cite when discussing military spending.
“Cost Growth Since 2000 is Out of Control”
One trick used by Pentagon bean-counters is to cite personnel and health cost growth “since 2000” or “since 2001.”
Have costs grown since then? Certainly, but using that baseline without appropriate context is grossly misleading.
First, it implies the turn of the century was an appropriate benchmark for reasonable personnel and healthcare spending. Nothing could be further from the truth.
At that time, years of budget cutbacks had grossly depressed military pay, cut retirement value by 25 percent for post-1986 entrants, and booted beneficiaries over 65 out of military health care.
As a result, retention was on the ropes, and the Joint Chiefs of Staff were imploring Congress to fix the problems to prevent a readiness crisis.
Congress has worked over the last decade to restore military pay comparability, repeal the retirement cuts and restore promised health coverage for older beneficiaries. In other words, the cost growth was essential to keep the previous cutbacks from breaking the career force.
Most recent military compensation studies ignore that essential context and leap to the erroneous conclusion that cost trends of the last decade will continue indefinitely.
Not so.
Now that pay comparability has been restored, there won’t be any further need for extra pay plus-ups above private sector pay growth. Similarly, Congress won’t have to approve another TRICARE for Life program or pass another retirement restoration initiative. Those were one-time fixes that won’t be repeated.
But by using a 2000 or 2001 baseline, budget-cutting advocates make cost trends look worse than they are.
Back then, everyone in the Administration and Congress acknowledged the necessity for pay, retirement and health care fixes.
A decade later, many of those same officials and their successors express shock that the fixes cost money. They find it convenient to forget that Congress deemed those changes less costly than continued erosion of our defense capability.
(Did you miss part 1 of the series last week? It includes a bombshell chart the critics don’t want legislators to see.)
The Election vs. Your Pay and Benefits
Senate leaders now say they won’t bring the FY2013 Defense Authorization bill up for action until after the November 6th election.
This adds one more massive task to the “lame duck” session of Congress squeezed between the November election and inauguration in January.
So far, those backed-up tasks include:
- Agreeing on an alternate debt reduction plan to avoid sequestration and the “fiscal cliff” scheduled to take effect on January 1
- Avoiding a scheduled 27% cut in Medicare/TRICARE payments to doctors that would devastate access to care
- Passing a defense authorization bill to sustain important pay needs and avoid massive TRICARE Pharmacy copay increases
MOAA is very concerned that Congress is cramming far too much work into a short and chaotic time.
These are issues that have major implications for the military community and every other segment of America. Congress has had all year to work on them without success.
Expecting legislators to come up reasonable solutions and necessary compromises in a couple of weeks at the end of the year after a particularly partisan election is an extraordinarily high-risk proposition.
Walgreens and TRICARE Update
Walgreens left the TRICARE retail network when its contract with Express Scripts expired at the end of last year.
While Walgreens is the largest pharmacy chain in the country, the TRICARE pharmacy network still has over 57,000 drug stores nationwide – more than the combined number of McDonald’s and Starbucks stores.
Since Walgreens’ departure, TRICARE pharmacy contractor Express Scripts, Inc. (ESI) has been monitoring the effects on beneficiary satisfaction and access to other retail and community pharmacies, and has experienced relatively few complaints from former Walgreens customers.
Recently, Walgreens announced plans to get back with ESI, having lost millions in business since the breakup. Many – including MOAA – thought that meant Walgreens would be rejoining the TRICARE network soon.
Not so fast.
This week, ESI announced that while it will partner with Walgreens on some of its other programs, Walgreens won’t be readmitted to the TRICARE pharmacy network.
Our sources indicate the decision was based on several factors, including the relative lack of customer complaints about Walgreens’ departure and the broad availability of other retail alternatives.
But the key driver is money.
Other pharmacies have offered new network discounts that have yielded bigger savings for ESI and TRICARE.
And use of the TRICARE mail-order pharmacy system has risen 10%, indicating many of the former Walgreens customers began trying that venue, which is much cheaper for DoD.
Under those circumstances, the concern was that readmitting Walgreens would end up raising TRICARE pharmacy costs.
While the math is understandable from DoD’s standpoint, these new windfall savings only raise new questions about Pentagon efforts to impose steep copayment increases on beneficiaries because of allegedly “skyrocketing costs.”
What Do You Know?
How much do you know about military retirement and survivor benefits? Take our short quiz below! Answers are from the FY2011 end-of-year report prepared by the DoD Actuary.
1. In 2010, what percentage of retirement-eligible officers actually retired from service?
A. 31.7%
B. 20.4%
C. 16.4%
Answer: C. 16.4% represents the smallest percentage of retirement-eligible officers that actually retired since 1969 (13.4%).
2. How many retirees have paid into SBP for at least 30 years?
A. 317,100
B. 153,437
C. 97,844
Answer: B. Retirees attain “paid-up” status and are no longer required to pay SBP premiums once they attain age 70 and have paid 30 years of premiums.
3. What percentage of all military retirees are women?
A. 5.4%
B. 1.7%
C. 7.3%
Answer: A. 110,807 out of a total of 2.036 million military retirees.