Survivor Benefits | Bills would increase age-62 annuity.

Miller, Snowe Sponsor SBP Fixes

Rep. Jeff Miller (R-Fla.) and Sen. Olympia Snowe (R-Maine) are championing the cause of military widows in the 108th Congress.

On Feb. 5, Miller, joined by a bipartisan group of 118 initial cosponsors led by Reps. Jim Moran (D-Va.) and Ed Schrock (R-Va.), reintroduced legislation (H.R. 548) that would phase in a series of annuity increases for Survivor Benefit Plan (SBP) beneficiaries who are age 62 and older. See the full list of cosponsors on MOAA's Web site, http://capwiz.com/moaa/issues/bills/.

At press time, Snowe was about to introduce a companion bill in the Senate. Snowe is picking up the SBP improvement mantle from Sen. Strom Thurmond (R-S.C.), who retired last year after many years of supporting legislation to help military widows.

This year's bill is an upgraded version of the H.R. 548 and S. 145 sponsored by Miller and Thurmond, respectively, in the 107th Congress. The biggest change is that it would raise the minimum age-62 SBP benefit to 55 percent of retired pay (versus the current 35 percent) over five years instead of the 10-year schedule envisioned in previous plans.

The increased cost of the faster benefit rise would be partially offset in two ways. First, the new bills would authorize a one-year open enrollment period, during which currently nonparticipating retirees would be able to enroll and cover their spouses with the improved benefit. Because it would take some time for the Department of Defense (DoD) to prepare for an SBP "open season," the bills envision that the open season would begin Oct. 1, 2004. The initial increase in SBP benefits would start then, as well, so that the bill would entail no first-year cost.

Increases in the minimum SBP benefit for current and future survivors age 62 and older would be increased on the following timetable:

Oct. 1, 2004: 40 percent of covered retired pay
Oct. 1, 2005: 45 percent
Oct. 1, 2006: 50 percent
Oct. 1, 2007: 55 percent

MOAA and The Military Coalition (TMC) believe strongly that such relief for military survivors is long overdue.

This belief was reinforced by recent acknowledgement by DoD actuaries that the federal subsidy for SBP has declined to 16.4 percent - versus the 40 percent subsidy originally intended by Congress. The subsidy has declined mainly because of increased retiree longevity (so that they pay premiums longer). In contrast, federal civilian SBP programs (which pay federal civilian survivors 50 percent or 55 percent of retired pay for life) enjoy subsidies ranging from 33 percent to 48 percent.

The key to success will be to convince Congress to include budget authority for SBP improvements in the FY 2004 Budget Resolution. That would provide the Armed Services committees the authority they need to put this legislation in the FY 2004 Defense Authorization Act. MOAA and TMC will be campaigning for support, especially among members of the House and Senate Budget committees.

We hope you will help this effort by taking the time to sign, stamp, and mail the postcards on the back cover of this magazine (see box, below).

Budget | DoD budget depressed compared to GNP.

2002 People Costs at 20-Year Low

Over the past few months, administration officials - some in the Pentagon and some in the Office of Management and Budget - have complained that personnel costs take up too much of the defense budget.

They've used that rationale to justify opposing fair compensation for disabled retirees, resisting military manpower increases needed to ease the strain on servicemembers and families overstressed by manpower cuts and mission increases, and even proposing to cap future military pay raises for the troops we're now sending to war. At least the president stepped in and put the kibosh on that last one (see page 28).

But all these claims that the country can't afford the cost of fair and reasonable manpower and compensation programs led us to check a few statistics. And the data show that those claims are unadulterated hogwash.

In FY 2002, personnel costs made up 25 percent of the Department of Defense (DoD) budget. The only time that number has been lower in the last 25 years was during the "hollow force/erosion of benefits" era of 1979–81 (21 percent to 23 percent). But that doesn't tell the real story either. There are more things than personnel costs that affect that statistic, such as how much is spent on procurement. What happens when DoD takes a "procurement holiday," as has happened over the last decade? The personnel share of the budget goes up, that's what. If procurement had continued at the pace that virtually everyone in government now recognizes was actually needed, the personnel share of the defense budget would have been much lower.

Personnel costs constituted 30.8 percent of the defense-minus-procurement budget in FY 2002 - versus 37 percent in 1991, 47.6 percent in 1986, and 34 percent in 1976. Today's figure, by that measure, isn't far from 1981's 28.6 percent low.

Rather than bemoaning needed "people program" increases, DoD budget hawks should consider that such increases would be much more in line with their normal share of the DoD budget, versus the recent historic low. And that's before you even consider the size of the DoD budget itself, which has plummeted as a percentage of the gross national product (GNP), the best measure of the nation's economic capability.

In 1976, the Defense budget stood at 5.4 percent of the GNP. That figure rose in the 1980s but began to decline toward the end of the Cold War. The DoD budget now stands at 3.2 percent of the GNP - barely half the 1986 figure and still far below the 5 percent of 1979's military doldrums. See the box above for a more complete statistical summary.

Will "people costs" rise again for 2003 and beyond? Yes. And history says that's appropriate and affordable.

Further, most of the increase DoD leaders complain about is due to a trust fund deposit for expected health care costs that won't occur until 30 or 40 years in the future. Those deposits don't cover care for current retirees; they account for the expected future cost of caring for people now on active duty - after they've retired and attained age 65. That trust fund deposit counts against DoD's budget, but it's not a real cash outlay. It's only an accountant's notation that helps quantify a future bill the government will have to pay.

Meanwhile, the real cost of delivering care to current Medicare-eligible retirees and survivors in FY 2002 turned out to be $1 billion less than DoD had expected to pay.

We'll say it again: With a force that's 30 percent smaller than it was 15 years ago, it's not personnel costs that are the problem. It's the failure to recognize that the cost of needed people-program upgrades, long-delayed modernization, and ever-increasing operations with a much-reduced force can't be balanced on the backs of active, Guard, Reserve, and retired members and their families and survivors without long-term retention and readiness consequences.

Health Care | Nobody wants March 1 payment cut.

Congress to Act Fast on Medicare Rates

With a deadline looming, legislators are working quickly to prevent a March 1 4.4 percent cut in Medicare payment rates for doctors. Although nothing is certain, as this article went to press there was every expectation Congress would act before March 1.

Our efforts took a huge step forward when Sen. Charles Grassley (R-Iowa), chairman of the Finance Committee, managed to persuade his fellow committee members to endorse a halt to the cuts. They agreed to put an additional $1.6 billion in the omnibus FY 2003 Appropriations Bill (H.J. Res. 2), scheduled for passage in early February. The plan would provide relief for Medicare-participating doctors, some rural hospitals, and certain others.

At press time, H.J. Res. 2 was in conference negotiations between the House and Senate. As a result of the overwhelming support of MOAA members and the public at large, we remain confident that the funding will be included in the final version of the bill.

Although this bill would be a vital first step to resolving the Medicare/tricare provider crisis, more action is needed to ensure the long-term stability of the program. H.J. Res. 2 will buy Congress time to consider more permanent improvements to the Medicare reimbursement plan. MOAA will aggressively press for legislation that will guarantee increases in reimbursement rates and assure the long-term reliability of medical care for all military beneficiaries.

Congress | Legislators put their priorities on record.

108th Congress Starts with New Bills

With the start of the new Congress, legislators have begun offering a stream of new bills. Here is a list of selected bills of interest to MOAA members:

• H.R. 303 (Rep. Michael Bilirakis, R-Fla.) would eliminate the disability offset to military retired pay for all retirees with 20 or more years of service.

• H.J. Res. 3 (Rep. William M. Thomas, R-Calif.) would prevent implementation of planned March 1 reductions in Medicare reimbursement rates. It would freeze Medicare payments at the higher 2002 levels until Congress can change the flawed rate formula. It also would allow Medicare Part B late-enrollment penalty relief to let military beneficiaries take advantage of TRICARE For Life (TFL).

• H.R. 36 (Bilirakis) and S. 249 (Sen. Hillary R. Clinton, D-N.Y.) would allow qualifying survivors over age 55 to retain Dependency and Indemnity Compensation (dic) if they remarry after 55. Currently, they forfeit that compensation if they remarry at any age.

• H.R. 100 (Rep. Christopher Smith, R-N.J.) would modernize the Soldiers and Sailors Civil Relief Act and improve the economic and legal protections for active duty, National Guard, and Reserve servicemembers.

• H.R. 548 (Rep. Jeff Miller, R-Fla.) would increase the Survivor Benefit Plan (SBP) age-62 annuity to 55 percent over five years (see article, page 19).

• S. 19 (Sen. Tom Daschle, D-S.D.) would authorize full concurrent receipt; restore tax equity for military homeowners and drilling reservists; establish a mandatory funding mechanism for the Department of Veterans Affairs (VA) health care system; and permit prescriptions from non-VA providers to be filled at VA pharmacies.

  (Note: S. 19 is not intended as a vehicle for legislative action but as a statement of the Democratic leadership's support for these initiatives in the 108th Congress. The individual provisions of S. 19 will be introduced as separate bills.)

• S. 55 (Sen. Tim Johnson, D-S.D.) would tie the yearly rate of Montgomery gi Bill Assistance to the cost of attending a public college or university.

• S. 56 (Johnson) and H.R. 58 (Rep. Chet Edwards, D-Texas) would allow military retirees to enroll in the Federal Employees Health Benefit Program (FEHBP) as an alternative to tricare. Retirees who entered service before June 7, 1956, would be exempt from paying FEHBP premiums.

• S. 202 (Sen. Mike DeWine, R-Ohio) would allow a tax credit for reserve training expenses and for employers who support employees in reserve service.

• H.R. 133 (Rep. Peter King, R-N.Y.) would repeal the 1993 increase in taxes on Social Security benefits.

• H.R. 358 (Rep. Terry Everett, R-Ala.) would codify Arlington National Cemetery burial rules.

We are grateful to all of the sponsors listed above for their legislative support of military and veterans' issues. You can help by asking your legislators to cosponsor these and other important initiatives. Visit MOAA's Web site at http://capwiz.com/moaa/issues/bills/ to view a summary of MOAA-supported bills and MOAA-suggested messages to your legislators.

Congress | New subcommittee leaders named.

Changing Chairs in Armed Services

House Armed Services Committee (HASC) Chairman Duncan Hunter (R-Calif.) announced on Jan. 9 a reorganization of HASC subcommittees to conform more closely to the structure in the Senate. The HASC's ranking minority member is Rep. Ike Skelton (D-Mo.).

The Military Personnel Subcommittee, chaired by Rep. John McHugh (R-N.Y.), will become the Total Force Subcommittee and absorb the responsibilities of the Panel on Morale, Welfare, and Recreation.

Rep. Curt Weldon (R-Pa.) chairs the Tactical Air and Land Forces Subcommittee (covering most Army and Air Force programs), while Rep. Joel Hefley (R-Colo.) heads the Readiness Subcommittee. The Strategic Forces Subcommittee, led by Rep. Terry Everett (R-Ala.), will oversee missile defense, space, and energy programs.

Rep. Roscoe Bartlett (R-Md.) chairs the Projection Forces Subcommittee, overseeing Navy and Marine Corps programs and deep strike bombers, and Rep. Jim Saxton (R-N.J.) will lead a new Terrorism, Unconventional Threats and Capabilities Subcommittee.

In the Senate Armed Services Committee, chaired by Sen. John Warner (R-Va.) with Sen. Carl Levin (D-Mich.) as ranking minority member, Sen. Saxby Chambliss (R-Ga.) will chair the Personnel Subcommittee, where Sen. Ben Nelson (D-Neb.) will be the ranking minority member.

Other Senate subcommittees and their leaders include Airland, Sen. Jeff Sessions (R-Ala.); Emerging Threats and Capabilities, Sen. Pat Roberts (R-Kan.); Readiness and Management Support, Sen. John Ensign (R-Nev.); Seapower, Sen. Jim Talent (R-Mo.); and Strategic Forces, Sen. Wayne Allard (R-Colo.). There will be a host of new faces on the Senate committee, including Sens. Lindsey O. Graham (R-S.C.), Elizabeth Dole (R-N.C.), and Mark Pryor (D-Ark.).

Veterans' Health Care | Medicare reimbursement, access to be revisited.

Modifications to VA System Announced

On Jan. 16, Department of Veterans Affairs (VA) Secretary Anthony Principi made two surprise announcements that are important to nondisabled veterans who want to use VA medical facilities.

First, he announced that, because demand by nondisabled veterans has far outstripped the VA's funding capacity, the VA will bar enrollment of any new "category 8" veterans for the rest of this year. These are nondisabled veterans who have incomes above the threshold that qualify them as indigent, depending on where they live.

But he tempered that declaration by announcing that he has worked out a deal with Medicare officials and the White House to credential VA facilities as Medicare HMOs and use that route to bring some Medicare-eligible category 8 veterans back into VA care. Under this concept, known as Medicare subvention, Medicare would pay the VA for enrolling these older veterans.

The suspension of enrollments will affect about 164,000 category 8 veterans expected to seek enrollment this year. All veterans currently enrolled - including those in category 8 - are grandfathered in the VA health care system. Enrollment will remain open this year to all new category 1 to 7 veteran applicants. VA enrollment stands at about 6.8 million veterans.

Medicare HMO plans provide care under Medicare contracts. The VA would offer a drug benefit as part of the plan. VA officials say no law change will be required to implement the new system, but it will take time to work out the details, including how the VA will meet Medicare access standards. The HMO plan will be phased in over time as facilities meet those standards. Category 8 veterans who want to enroll must have both Medicare Part A (inpatient) and Part B (outpatient) coverage.

MOAA is concerned about the budget constraints that have forced prioritization of VA eligibility but is encouraged by Principi's innovative efforts to help address the situation. We have long supported VA Medicare subvention as a way to help close the gap between demand and resources that has plagued the VA for years.

Military Pay | Administration proposes average 4.1 percent raise for 2004.

President Nixes OMB Pay-Cap Plan

Score one for common sense. We've been disappointed, to say the least, by Pentagon civilian leaders' recent opposition to needed changes like concurrent receipt and military manpower increases. But give them credit for standing tall in battling the president's budgeteers to protect the troops' pay raises.

In mid-January, the president agreed with Pentagon leaders and rejected his budget chief's penny-wise and pound-foolish plan to cap active duty, Guard, and Reserve members' 2004 and future raises below the average American's.

Given that the country already is putting troops in harm's way around the globe and is deploying another 100,000 troops for a potential war in Iraq, the decision should have been a no-brainer. But this pay-raise dustup is an important warning that some highly placed people in the administration want to put people programs on the casualty list in future budget battles.

The good news is that the military pay raise the president is proposing to Congress would continue to reduce the pay comparability gap with the private sector. If Congress agrees, most officers would see a 3.7 percent raise in 2004 - one-half percentage point higher than the average American's 3.2 percent raise. Some warrant officers would get larger raises. E-1s (basic trainees) would see a 2 percent raise, reflecting Pentagon studies that show entry-level pay is already competitive. But E-2s and higher grades would receive at least the average American's 3.2 percent, with significantly higher raises for mid-career and senior ncos (up to 6.25 percent, depending on grade and years of service).

TRICARE | Survey seeks to quantify problems.

Help MOAA Identify Provider Shortfall

Most members know that a top MOAA goal is to attract more providers to tricare. We're talking to legislators and Department of Defense officials about legislative and policy options to accomplish that.

But we always hear, "We need to identify the specific areas with the most significant access problems and gather data about the extent of those problems."

If we're going to get the problem solved, we need your help in getting our arms around it in a very specific way.

To that end, we've set up a simple survey form on MOAA's Web Base (www.moaa.org/legislative/tricaresurvey2003) to let MOAA members and others provide information on problems they have experienced in finding doctors who will accept new tricare Standard patients.

The response options are limited so we can consolidate answers in a database format, but we've also provided a space to describe the problems in your area in your own words.

The more input we get from you, the easier it is to say what those areas are and the more ammunition we have to fight for your benefits.

The survey's focus is on how hard it is to find a tricare provider in your area, not on problems with specific providers or claims issues. And please report only recent conditions (experiences within the last 12 months). We can't base new initiatives on data from several years ago.