The U.S. government’s fiscal predicament has many causes. But if you had to reduce them to one sentence, it might go like this: “Congress responds to the short-term demands of particular groups, not the long-term needs of the nation as a whole.”
Case in point: the seemingly unstoppable growth of medical benefits for former military personnel under Tricare, the Defense Department’s health program. This mushrooming expense is a major reason that Pentagon health-care spending rose from $19 billion in fiscal 2001 to $52.8 billion in fiscal 2012.
The latter figure represented nearly 10 percent of that year’s defense budget.
President Obama has tried repeatedly to rein in this category of spending, on the very sound theory that resources are finite and that dollars spent on retiree health care cannot be spent equipping and training the active-duty armed forces for war — the Pentagon’s primary mission.
Military health care’s traditional role was to serve active-duty troops and their families, at no out-of-pocket cost. Tricare still does this, except for small prescription co-payments. This makes sense as an incentive to sign up for service and its attendant sacrifices.
Since 2000, however, Congress has repeatedly expanded the access of former military personnel to Tricare. By 2010, the eligible population had increased from 6.8 million a decade earlier to 9.7 million — nearly 85 percent of whom were not active-duty service personnel, according to an excellent May 2012 Armed Forces Journal article by Brittany Gregerson of the Institute for Defense Analyses.
Obama’s reforms have been rebuffed every time, by Democrats and by supposedly fiscally conservative, pro-defense Republicans.
The expansion of Tricare dates to the post-Cold War base closings in the 1990s. Some military hospitals were shut in the process, and retirees who had been allowed to use them on a space-available basis protested that Congress owed them a substitute.
Some even claimed that recruiters had offered them free health care for life when they enlisted and that Congress was welshing on this purported contract.
The courts correctly rejected this legally, and factually, spurious claim — but it fared better in the political sphere.
In 1996, Congress allowed military retirees ages 37 to 64 and their family members to join Tricare for an annual contribution that averaged 27 percent of total health-care costs for a family of three.
That contribution, however, did not increase with inflation. As a result, Tricare’s real cost to working-age beneficiaries dropped 41 percent between 1997 and 2010, Gregerson found. Not surprisingly, working-age retirees and their families began leaving employer-paid plans and signing up for Tricare.
Congress did allow a modest increase in costs for working-age retirees to take effect last year and indexed that cost increase to inflation. But those costs are still far less than what an average civilian would pay for comparable employer-provided health insurance.
Once former military personnel turn 65, they are eligible for Medicare, like everyone else. But in 2002, Congress gave them “Tricare for Life” — essentially, a free Medigap plan. Roughly 2 million people take advantage of this perk, at a projected cost to taxpayers of $9.7 billion in the current fiscal year, according to the Congressional Budget Office.
On a per capita basis, Tricare for Life is the most expensive Tricare program of the Defense Department, Gregerson writes. Beneficiaries’ utilization rate far exceeds that of the other Tricare programs’ participants — no surprise, since Tricare for Life beneficiaries have zero incentive to conserve.
Obama’s 2013 budget plan would have saved $12.8 billion over five years by gradually increasing the annual enrollment fees of Tricare’s working-age retirees, with discounts for lower-income participants, and then indexing the fees to the rate of national growth in health spending.
The maximum fee would have quadrupled to $2,000 — still far cheaper than most civilian plans. The president also proposed adding an enrollment charge to Tricare for Life.
Congress would have none of it — then or, apparently, now. Neither the recently adopted Senate budget plan for fiscal 2014, drafted by Democrats, nor the supposedly “austere” Ryan budget passed by the Republican House, touched Tricare. Hell hath no fury like a veterans’ lobby scorned, as senators and representatives of both parties know.
So do I! In anticipation of a lot of hate mail, I would note that I respect and honor America’s veterans. They should be well provided for, including reasonable health benefits. But no one — not even a veteran — is entitled to taxpayer support regardless of competing public needs.
In the case of Tricare, this is what the veterans’ lobbies have demanded of Congress, and what Congress has given them.