Battle over military health-care premiums slows — for now

December 5, 2011

Now that the sweeping defense authorization bill for 2012 has passed the Senate and House, the fight over Tricare, the health insurance plan for the military, has reached a truce — for the moment.

House and Senate negotiators are working out differences in the defense authorization bill before it goes to President Obama, but Tricare is not among the contested issues.

As of Oct. 1, retirees of working age saw their annual health-care premiums jump to $520, up from $460 for families, and to $260, up from $230 for individuals. Pharmacy co-payments also rose between $2 and $3 each, bringing them closer to parity with federal employee health plans such as BlueCross BlueShield. (Those enrolled before Oct. 1 were grandfathered at the old rate for one year, while those enrolling after Oct. 1 pay the higher rate.)

The increases were the result of a lengthy campaign by the Defense Department to slash health-care and other personnel costs by billions of dollars. Tricare fees had not changed in 17 years.

The Defense Department is authorized to raise fees without approval from Congress, but Congress passed legislation for three years running that blocked any increase. This year, there was no such bill.

Service groups initially opposed any increase, then relented. The debate shifted to how high Tricare fees for military-age retirees should climb in the future.

Language approved by both chambers would cap increases at the rate of the cost-of-living adjustment in retired military pay, which has ranged in recent years from zero to 5.8 percent, according to the Military Officers Association of America.

But a last-minute effort last week by Sen. John McCain (R-Ariz.) to convince the Senate to raise fees higher died. McCain proposed, then withdrew, an amendment that would have tied future increases to the annual growth in health-care costs. That growth is estimated at 6 percent per year. The Pentagon, too, had favored tying the increase to health-care costs.

The debate is likely to come up again with the next budget, with the Pentagon pushing for higher fees and service groups pushing to keep them where they are.

“What has gone through, we think is reasonable and fair,” said Steve Strobridge, director of government relations for MOAA. “But the fees shouldn’t go up any more than your pay does.”

The Obama administration, meanwhile, announced plans last fall to set up a board similar to the base realignment commission (BRAC) to make long-term reforms to the military retirement system.

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.

Lisa Rein covers the federal workforce and issues that concern the management of government.
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