In a repeat of the battle that’s played out over the last two federal budget cycles, the Defense Department is proposing to raise the fees military retirees pay for their health care. Groups that represent current and former service members are fighting to stop them, blasting the proposals as unfair.
DoD’s 2014 budget included provisions that would raise retiree health care fees on a sliding scale determined by the size of a retiree’s annuity — a modified version of a proposal Congress shot down in December when it passed the 2013 authorization bill for Defense.
Speaking to reporters last week, Defense Secretary Chuck Hagel said it’s one of the steps DoD must take to bring its growing personnel spending under control.
“The current fiscal environment has demanded that we take another look at personnel costs, which represent roughly one-third of the 2014 budget request,” he said. “We’re seeking additional changes to the TRICARE program to bring the beneficiaries’ cost share closer to the levels originally envisioned when the program was originally created. Altogether, these personnel savings, which have the strong support of the Joint Chiefs of Staff, will save about $1.4 billion in 2014 and $12.8 billion over the next five years.”
Also included in those savings figures is a pared-back military pay increase: uniformed troops would get a 1 percent raise next year rather than the 1.8 percent that would be needed to keep up with projected private sector wage inflation.
Banding together to oppose higher fees
But a coalition of military groups told Congress this week that the raise is far too small, and the fees for retirees in the TRICARE health insurance system are far too large.
Currently, retirees pay $539 per year for family coverage. The fees next year would range from $548 to $900 a year depending on the size of a retiree’s pension check. DoD argues the fee increases are modest.
But Steve Strobridge, the director of government relations at the Military Officers Association of America, said retirees have already paid their health care premiums by serving at least 20 years in uniform.
“That’s why assertions that military retirees pay far less for their health care than civilians do are so aggravating to the military community,” he said. “When someone gives me that argument, I ask, ‘If the military deal is so great, are you willing to pay what they did to earn it? Would you sign up to spend the next 20 years being deployed to Iraq or Afghanistan or wherever the next fight is?’ That’s when people realize military people already pay far steeper premiums than any civilian. Most of it paid in-kind, not in cash.”
That same argument proved persuasive last year on Capitol Hill when Congress rejected a similar proposal to rein in health care costs. But with sequestration having taken effect and with nine more years of budget caps in place, Hagel told the Senate this week that things are different now.
“In many cases, modest reforms to personnel and benefits, along with efforts to reduce infrastructure and restructure acquisition programs, met fierce political resistance, and were not implemented. But we are now in a completely different fiscal environment, dealing with new realities that will force us to more fully confront these tough and painful choices,” he said.
The Pentagon says that even though retiree health fees would go up, the share of the overall health care tab those beneficiaries pay would still be far lower than it was in 1996, when TRICARE was first created. The department points out that the cost of providing health care since then has doubled or tripled, while the share of costs borne by retirees has only increased 30-40 percent.
But Strobridge said there’s a very clear reason for that: until recently, DoD never asked for annual increases.
“One of the big problems here is that DoD went for a long time without exercising the authority it had to do any fee increases,” he said. “What that told people each year was that they didn’t think any fee increases were appropriate. When you do that for a decade at a time, people kind of get the impression that that’s the way things are going to be. Then you get a new secretary of defense who decides to dramatically raise the fees. That is unacceptable. What we’ve been after is trying to put principles in law that address what the fees are, what’s the reason for them and what’s the adjustment methodology.”
From the perspective of military retirees, Strobridge said a scheme of means testing is an inappropriate adjustment methodology. He said it would discriminate against military members since there is not a similar sliding scale for federal civilian retirees.
“And under that perverse system, the longer and more successfully you serve, the worse your benefits are,” he said.
Strobridge testified before the Senate Armed Services personnel subcommittee as a member of the Military Coalition, an alliance of several organizations that represent military members and retirees.
Another member, Kathleen Moakler of the National Military Family Association, said sequestration could reduce access to TRICARE services among currently-serving military members. She said her group also worries about which support programs will be cut or scaled back.
“DoD’s civilian furloughs will affect military families. Many of those civilians are military spouses, so while military pay is not affected, the overall income of some military families will be impacted,” she said. “Furloughs and hiring freezes could also force family service centers to adjust hours. Smaller staffs will result in longer waits for families needing counseling, financial advice, new parent support, survivor outreach and victim advocates. We’re pleased DoD has announced that there would be no school-level furloughs at the end of the current school year. But we’re concerned about what happens at the beginning of the next school year.”
Hale acknowledges icy reception to 2014 proposal
After appearing for a full week of testimony before congressional committees, Bob Hale, the DoD comptroller, said he thinks it’s probable that sequestration will remain in place for at least the remainder of 2013. As for the cost saving proposals Congress has rejected before and that DoD is now reintroducing, including TRICARE fees and base closures, he acknowledged the reception to the 2014 proposal so far has been a bit icy.
“Congress has approved several of our TRICARE initiatives before, and I have to give them credit for that,” he said. “I don’t think they were real pleased to see another set, but it’s going to get harder for them. Budgets are tightening significantly.”
Sen. Lindsay Graham (R-S.C.), an Air Force reservist who is a few years away from retirement, is one of only a handful of lawmakers who are willing to openly express a willingness to consider higher fees on retirees.
“To the beneficiary community, I certainly want to listen to your concerns, but I’m looking for a generous benefit that’s sustainable,” he said. “Because if it’s not sustainable, it’s a false promise. We cannot get ourselves in a situation in a declining military budget that pits retiree health care against modernization, weapons and active duty needs. There’s got to be some way to make this program more sustainable and ask some of us to have a gradual premium increase.”