Deficit plan could impose new costs on military’s Tricare

September 20, 2011

The deficit reduction plan put forth by President Obama on Monday would increase pharmacy co-payments for military beneficiaries and establish a first-ever annual fee in the military’s Tricare for Life health benefits for Medicare-eligible retirees.

But while describing the military retirement system as “out of line” with most other government or private retirement plans, the White House balked at making any immediate major changes. Instead, it announced plans to establish a board similar to the base realignment commission (BRAC) to make long-term reforms to the military retirement system.

Wary of the political fallout from cutting benefits for troops serving in two wars, the White House plan said “any major military retirement reforms should include grandfathering provisions that ensure that the country does not break faith with military personnel now serving, including those serving in Afghanistan and Iraq.”

The costs of Tricare, the military health care, have raised alarms, particularly as the debt crisis has worsened. In February, then-Secretary of Defense Robert M. Gates called Tricare, which is projected to cost $65 billion annually in five years, “simply unsustainable.” But veterans groups reacted negatively to the White House proposals Monday, arguing that military service is not comparable to civilian work.

“When you look at military retirement and health-care plans and try to make them more like civilian plans, it’s an apples-to-oranges comparison to us,” said Mike Hayden, deputy director of government relations for the Military Officers Association of America. “Especially when you take a look at the last 10 years, when approximately 1 percent of the American people have been carrying the burden for the other 99 percent.”

Richard L. DeNoyer, the national commander of the Veterans of Foreign Wars, called the proposals “an extreme breach of faith” with members of the military.

Peter Gaytan, executive director of the American Legion, said that while the veterans organization “fully understands” the fiscal crisis, “we don’t feel targeting the small percentage of Americans who have chose to serve our country is the way to solve it.”

The administration is proposing to introduce annual fees to Tricare for Life, a Medicare supplement entitlement for military retirees and their dependents who are older than 65. A $200 annual fee would be charged beginning in 2013, and it would gradually increase. The proposal would save $6.7 billion over 10 years, according to the White House.

“We remain against any such fees, most especially on seniors who reside on fixed incomes,” said Joe Davis, a spokesman for the VFW.

The White House wants to raise Tricare pharmacy co-payments closer to parity with federal employee health plans such as BlueCross BlueShield. The increased co-payments, which the White House estimates would save $20.6 billion over 10 years, excludes active-duty members but would affect their families and all military retirees.

“Instead of consistently trying to bring the military closer to parity with civilian or other federal employee plans, perhaps what we most want to see and hear is how America is going to bridge the shared sacrifice gap by raising their right hand to fight our nation’s wars,” Davis said. “Then we can talk about parity.”

The military retirement commission proposed by the White House would make recommendations that take into account not only cost, but the impact of changes on military readiness and the quality of the force. Like the BRAC commission, its proposals could be accepted or rejected in whole by the president and Congress, but not altered. In July, the Pentagon’s Defense Business Board recommended sweeping changes to the military retirement system, but no action has been taken.

Steve Vogel is a reporter for the national staff of The Washington Post who covers the federal government and frequently writes about the military and veterans.
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