Congress: Expert at kicking the Defense savings can down the road

Walter Pincus
Reporter April 15, 2013

Congress has an opportunity to save billions in Defense Department spending without hurting national security — but odds are that lawmakers won’t do it.

President Obama has set the stage in his fiscal 2014 budget, proposing new health-care fees for retired service personnel and calling for a new Base Realignment and Closure Commission (BRAC), which would propose closing excess military facilities.

In some ways, these are much like the president’s suggestions to increase Medicare fees and limit the growth of Social Security payments.

Consider the health-care fees for military retirees.

In 1996, when the retirees’ broad health-care system — called Tricare — was fully implemented, a retiree family of three contributed about 27 percent of its health-care expenses when using civilian care, according to the Defense Department. While health-care costs since then have nearly tripled, that same family’s contribution — including Tricare enrollment fees, deductibles and cost shares — has dropped to “less than 11 percent,” according to the Defense Comptroller Web site.

While everyone else’s health-care costs shot up, those for retired military sharply dropped. Other taxpayers made up the difference. That differential played a part of the overall increase in Military Health System costs from $19 billion in 2001 to a requested $49.4 billion for fiscal 2014.

Today, a working retiree under age 65 pays a yearly fee of $539 for Tricare Prime annual family enrollment, up from $520 set in 1996. The Obama plan has a means test element: Next year, that fee would rise to 2.95 percent of the individual’s base retirement pay and slowly rise to 4 percent by 2018. A retired corporal would pay less than a master sergeant, but there would be a ceiling of $1,226 by 2018.

Another change: The fees for flag officers would rise more sharply with their ceiling — the same 4 percent — from $539 to $1,840 by 2018.

There also would be a new enrollment fee for working retirees under 65 who enroll in Tricare Standard/Extra, where they use private fee-for-service civilian doctors. Currently, retirees do not pay extra for that. The proposed fees are modest, an added $140 annually next year for a family, which rises to $250 by 2018.

In addition, there would be a new enrollment fee for retirees 65 and older who are in Tricare-for-life, the 2001 program that permitted retirees who enrolled in Medicare to use the military program as their second payer for the roughly 20 percent of costs not covered by Medicare. While civilian “Medigap” plans often cost $2,000 a year, military retirees had no added enrollment fee.

Next year, however, they would have a fee based on a percentage of their retirement pay. It starts at 0.5 percent with a ceiling of $150 annually, rising to 2 percent, or $613, by 2018. Again flag officers would have a higher ceiling, reaching $818 by 2018.

Obama also wants to modestly raise the Tricare pharmacy benefit program for all retirees and family members of active-duty personnel.

Defense Comptroller Robert Hale told the House Armed Services Committee on Thursday, “We save about a billion dollars from the Tricare fees and co-pays. If we don’t do that, we will have to take that money out of readiness or modernization.”

Rep. Joe Wilson (R-S.C.), chairman of the Armed Services personnel subcommittee, who claimed costs are not rising as fast as Hale said, responded, “People are very satisfied. Military families appreciate this benefit. Commitments have been made to our veterans and to military families. Why would we be increasing the fees when, in fact, the program is working well?”

Rep. Thomas J. Rooney (R-Fla.), a member of the House Appropriations Committee, said Friday he “strongly” opposes Tricare changes. “We cannot ask our veterans to pay the price for Washington’s overspending,” he said.

If you think Congress is hesitant about military health-care fees, watch how members dance away from closing excess military facilities.

BRAC is a dirty acronym on Capitol Hill. Pentagon experts determine the costs of closings, including funds to mitigate the impact on local economies, returning unused land to its original state, and constructing or renovating facilities for realigned forces. They also estimate the long-term savings.

The BRAC panel, whose bipartisan members are chosen by the president and congressional leaders, holds hearings on facilities Defense proposes to close or realign. That allows local residents and lawmakers to have a say before the panel makes a decision. The president can suggest changes but the panel draws up the final list. Congress votes up-or-down on the package, without a chance to make changes.

The last BRAC, in 2005, underestimated the immediate costs involved, thereby delaying gains from closures and giving legislators the chance to attack the system. But BRAC 2005 occurred when the military was growing and funding was not an issue. BRAC rounds in the 1990s saw faster gains because then, like today, forces were shrinking.

John Conger, deputy defense undersecretary for installations and environment, told a House Appropriations subcommittee on Friday that in 2005 “we ended up spending more money than we had expected. . . . That said, we are doing nothing but saving right now . . . $4 billion a year and that recurs forever.”

Members of Congress don’t think long-term, particularly on an issue that would have an immediate negative impact on their constituents.

Rep. Howard P. “Buck” McKeon (R-Calif.), chairman of the House Armed Services Committee, said last week that BRAC is a “third rail” for legislators and that voting for a commission “would be very tough for this Congress right now.” He added that he knew force reductions raised the issue of why so many bases are needed “and we need to look at it.”

Kicking such budget issues down the road has characterized Congress for two years and that doesn’t appear to be changing.

For previous Fine Print columns, go to washingtonpost.com/fedpage.

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