House panel votes to block cost-shares

By Tom Philpott: Military Update

A House panel has voted to block for at least two years any increases in TRICARE beneficiary cost-shares. It’s the first formal step by Congress to derail the Bush administration’s plan to raise fees, co-payments and deductibles for military retirees under age 65 and their families.

The armed services subcommittee on military personnel also brought good news to active duty, Reserve and National Guard personnel by endorsing a January 2007 pay raise of 2.7 percent. That is half a percentage point higher than what the administration sought. If the raise is approved by the full Congress, it would be an eighth straight year of annual military raises set .5 percent above private sector wage growth.

The subcommittee also endorsed the administration’s plan for an additional “targeted” raise for warrant officers and some senior enlisted. This special raise would take effect next April 1. Details of the targeted raise haven’t been released.

Language to block the TRICARE fee increases, and the surprise boost in the 2007 pay raise, were highlights of subcommittee actions on personnel provisions of the fiscal 2007 National Defense Authorization Act (HR 5122). The full armed services committee will hold its mark up of the bill May 3 and additional amendments impacting military personnel will be voted on.

Rep. John McHugh, R-N.Y., personnel subcommittee chairman, said retirees can be confident the fee increases pushed so “energetically” by Defense officials are dead until at least 2008. After the hearing, McHugh gave a more colorful assurance that the higher fees are shelved for now. He said unlike Freddy Krueger, murderer in the movie Nightmare on Elm Street, these proposals won’t come back to life soon to scare military retirees.

Whether the Senate will approve any part of the administration’s TRICARE fee adjustments is still a little uncertain. Lindsey Graham, R-S.C., chairman of the Senate military personnel subcommittee, wants them delayed and an independent review conducted of real TRICARE cost growth and the projected cost-savings from the administration’s plan.

What doomed that plan in the House were both the timing and the details, McHugh told Military Update. Timing in the sense that the nation is fighting a war and that some of those warriors who deployed to Iraq and Afghanistan soon would be among the pool of TRICARE beneficiaries targeted by the higher fees. That bothered many lawmakers, he said.

There also was great concern over specifics of the plan, McHugh said. The increases were seen as too steep and too swift, with TRICARE Prime enrollment fees leaping 200 percent over two years for senior enlisted retirees and 300 percent for retired officers.

The projected cost-savings of $11 billion by 2011 also was suspect. Most of it would come not from easy to add revenues for the government from the higher fees but from assumed “behavior modification,” McHugh said. That is, Defense officials were betting that large numbers of beneficiaries working in second careers either would stop using TRICARE or would decide not to shift into TRICARE from employer-provided health plans.

Language approved by the subcommittee specifically would prohibit the Defense Department from raising beneficiary cost-shares until Dec. 31, 2007, for TRICARE Prime (the managed care plan), TRICARE Standard (the fee-for-service option) and TRICARE Reserve Select.

In the interim, the subcommittee would order DoD to establish a special task force of Defense, military and outside medical experts to study military health care and recommend changes in fees and co-payments. The Government Accountability Office (GAO) and the Congressional Budget Office (CBO) would be tasked separately to verify data on military health care cost growth and projected savings from any fee changes.

McHugh said CBO already had lowered the administration’s estimate of $735 million in cost-savings for fiscal 2007 if all fee hikes were adopted. Congress will have to try to accommodate the loss of those cost-savings in shaping the rest of the defense budget.

Still alive, McHugh suggested, are some aspects of the administration’s plan to change the co-payment schedule for the TRICARE retail and mail-order pharmacy benefit. For example, he said, the subcommittee likes the idea of ending a $3 co-payment on generic drugs obtained by mail.

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