Issue: Fee increases will soon likely be proposed again just as they have been in the past. For example, in 2008, the Pentagon recommended dramatically raising health costs for retired families for FY2009 and future years by:
- Raising the $460 family TRICARE Prime enrollment fee as high as $2,086
- Raising annual $300 family TRICARE Standard deductibles as high as $1,147
- Raising retail pharmacy co-pays from $3 generic/$9 brand /$22 non-formulary to $15/$25/$45 (note: retail pharmacy hikes would have applied to all beneficiaries)
The good news is that the FY2011 budget proposed by DoD does not contain any fee increases. The bad news is that the Secretary of Defense has said the FY2012 budget will propose some level of fee increases, which may or may not mirror those proposed in 2008.
Background: The Secretary of Defense in many venues has asserted that rising health care costs are competing with weapons programs and “eating the department alive”. Defense leaders say hikes are intended to bring military beneficiary costs more in line with civilian practices and to devote more of the budget to weapons modernization programs. MOAA believes:
- Comparison with corporate practices is inappropriate. Exceptional military medical and retirement benefits are the primary offsets for enduring decades of extraordinarily arduous service conditions. Military retirees pay huge "up front" health premiums through 20-30 years of service and sacrifice. Historical retention studies show few Americans are willing to pay that heavy premium for that benefit
- Increases previously proposed by DoD were grossly out of line with benefit levels enacted by Congress. The percentage increases in health fees in any year should not exceed the percentage increase in retired pay. Congress and DoD knew enacting TRICARE For Life wouldn't be cheap, and should not be surpised costs have grown since TFL enactment
- The Nation's obligation to military retirees exceeds corporate obligations. The government has a moral and practical reciprocal obligation to provide benefits commensurate with the extraordinary commitments it requires from career service members. Mid-career military losses can't be replaced like civilians can
- Eroding benefits for career service can only undermine long-term retention and readiness. Today's troops are very conscious of Congress' actions concerning their future benefits. MOAA surveys show 95% of active-duty members oppose such increases. Reducing military retirement benefits would be especially ill-advised when a severely overstressed force is already at increasing retention risk
- The priority should be fixing TRICARE. Doctors say TRICARE is one of the lowest-paying plans in the country and imposes far more administrative requirements than other plans. Beneficiaries at many locations have difficulty finding providers willing to take them
- The country can afford to pay for both weapons and military health care. Recent defense budgets (in wartime) represent only about 4% of GDP -- far lower than the 5.7% peacetime-year average since World War II. The world's richest country doesn't need to make military retirees pay for weapons
MOAA Position: The government has many options to contain costs without penalizing beneficiaries. See a list of potential cost-saving options. MOAA believes TRICARE fees should not rise in any year by a percentage that exceeds the percentage growth in their military compensation.
Key Bills/Status: MOAA supports H.R.816, which would remove the Secretary of Defense’s authority to arbitrarily raise health fees, and S. 1776/H.R.3961, which would repeal the statutory formula that imposes large annual cuts in Medicare and TRICARE payments to doctors.
