Officials wrangle over health care change

By Tom Philpott: Military Update

Ignoring the intimidating props — boxes of angry letters from thousands of military retirees — senior Defense officials and military leaders appeared last week before a contentious House subcommittee to make their case for hiking TRICARE fees sharply for under-65 retirees and their families.

In the verbal sparring that ensued, Pentagon leaders gave as good as they got. But no lawmaker took the role of referee. All threw punches on behalf of retirees, and treated with kid gloves a second panel of witnesses representing dozens of pro-retiree military associations and veteran groups.

The Pentagon’s plan to boost out-of-pocket TRICARE costs for 3 million beneficiaries, to include a tripling of managed care enrollment fees for retired officers and a doubling for senior enlisted retirees, seemed to shatter some traditional alliances and form new ones.

Republicans and Democrats together questioned the realism of projected cost savings from raising TRICARE fees and the wisdom of doing so in wartime. The active duty four-star officers in the room spoke in support of the increases. Retired officers led the opposition.

David S. C. Chu, under secretary of defense, and William Winkenwerder Jr., the Pentagon’s health affairs chief, reminded the armed services’ subcommittee on military personnel that, since 1995, TRICARE benefits and the beneficiary population have grown, program costs have soared, yet TRICARE fees have remained the same. They portrayed it as a bureaucratic oversight that now needs correcting. Otherwise, military health costs, which have doubled since 2001, could double again by 2015.
Defense leaders were joined by the vice chiefs of the Army, Navy, Air Force and Marine Corps who echoed the contention that a prized benefit will be difficult to sustain unless fees are raised.

“For 11 years we have not done just service to this benefit, in that we failed to index” TRICARE fees and co-payments to inflation, said Adm. Robert F. Willard, vice chief of naval operations. Benefit enhancements, rising medical costs nationwide and a widening disparity between TRICARE cost-shares and private health insurance premiums have led to a migration of working retirees and their families back into TRICARE.

That recent shift, said Chu, is encouraged by civilian employers, some using cash incentives, hoping to trim their own health care obligations.

Indexing TRICARE fees to medical inflation back in 1995, said Willard, “would have prevented the current crisis that we find ourselves in.”

But Rep. Vic Snyder of Arkansas, ranking Democrat on the panel, challenged Willard’s use of the word “crisis.”

“A crisis implies we’re not going to pay for anything. We’re going to pay for health care for our men and women in uniform, and retirees. We’re going to sustain the program. The question is how … and right now there’s not a lot of … enthusiasm for the method you all have proposed,” Snyder said.

He also questioned department hand-wringing over the widening disparity between TRICARE fees and private health insurance premiums.

“We want there to be a disparity because that’s part of what we give for people turning their life over to us 24 hours a day,’’ said Snyder.

Snyder referred then to comment from Gen. Robert Magnus, assistant Marine Corps commandant, in defense of the higher fees, that TRICARE would remain the “gold standard” of health plans.

If that’s true, Snyder suggested, migration of retirees will continue despite higher fees because “people are going to jump from the silver standard. They’re going to jump from the copper and bronze standard.”

“The issue is … can we sustain the gold standard,” said Chu. “What happened in the last 10 years is we polished the gold standard to a very high luster. The result is that private companies and state governments are trying to shift their appropriate medical costs to the Department of Defense.”

To the charge the planned fees would climb too far and too fast, Chu said another way to look at them is that for 11 years, “our beneficiary population has enjoyed a relief from indexing.”

Defense officials estimate the higher fees will save $11 billion by 2011. The assumptions are that 144,000 current users will decide to leave TRICARE and another 350,000 beneficiaries, who would have shifted to TRICARE if fees stayed frozen, will stay with their private sector plan.

What the estimates really mean, said Snyder, is that 500,000 retirees don’t agree that the increases are modest, as Chu suggests.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: