The Officer January/February 2011 : Page 14

Capitol Hill ConneCtion Budget Battle lines Capt Marshall a. hanson, Usnr (ret.) roa DireCtor of legislation Military families and retirees could take a hit through budget cuts. he Pentagon is preparing for battle this year. Unfortunately, it’s against military families, retirees, and perhaps even serving reservists, rather than just terrorist extremists. The bomb will drop in February with the release of the president’s budget, in which Department of Defense (DoD) leadership will recommend benefit cuts for those who aren’t sent into harm’s way. Unlike in past years, DoD leadership plans this year to back up these recommendations with numbers justifying that fewer funds be spent on beneficiaries. While specifics aren’t yet known, ROA can deduce a few major areas of attack. At a minimum, DoD will propose reducing commissary subsidies and increasing health care fees. Throughout 2010, Pentagon leaders decried that personnel costs are draining money from readiness and weapon systems. Tom Gordy, executive director of the Armed Forces Marketing Council, suggested to ROA that the Pentagon will eliminate the $1 billion Defense Commissary Agency appropriation and that commissary prices could rise 5 percent to offset the subsidy. Active duty families could receive an additional $600 per year, while retirees will not receive any dollar offset for higher prices. Mr. Gordy anticipates that DoD will also revisit the concept of merging the exchange and commissary systems, changing the commissary from a benefit to a profit center. When the Bush administration first suggested changes to Tricare health fees in 2006, ROA requested a brief moratorium on fee changes until actual health care costs were known. Congress has not permitted an increase in Tricare fees since. Yet health care represents 6 percent of the Defense budget, and in 2010, DoD finally published what it says are health care costs for different groups of individuals. DoD says the annual cost per beneficiary in Fiscal Year (FY) 2009 for Tricare Prime was $4,202, and for Tricare Standard the cost was $3,584 (lower because of standard co-payments). While the Tricare for Life (TFL) cost was $3,874, DoD Health Affairs says this was only 20 percent of the overall cost; Medicare pays the balance, and $2,000 of that TFL cost is just for the pharmacy benefit. In comparison, individual Tricare Prime retired beneficiaries pay an annual enrollment fee of $230. The 14 the Tricare annual standard deductible is $150. Prime families pay $460 annually, while the standard deductible is $300. The Pentagon doesn’t explain how it developed these costs, nor has it been independently verified, as ROA proposed in the past. Of historical note, when the Pentagon first submitted dollar calculations to Congress about TFL, its numbers included a share of sunk infrastructure cost. DoD’s proposal might come from several earlier health care models. DoD might revisit an increase in Tricare fees and deductibles for both Tricare Prime and Standard. The original 2005 plan was to nearly double the Prime fees for enlisted, and triple them for officers over a two-year period. Standard users would have an annual enrollment fee added, and deductibles would be doubled for officers and increased by one-third for enlisted personnel. Pharmacy copayment would increase as well. Another past suggestion would have DoD get out of the health care business except for serving members. Families and retirees would join the Federal Employee Health Benefits Plan. Unanswered is whether monthly premiums would be the same as paid by other federal employees or would be reduced by an additional subsidy. Still another proposal is that the Department of Veteran Affairs (VA) take over the medical treatment of military retirees. Currently, VA already provides Medicare subvention for some veterans. Not addressed is what medical coverage would be provided to families of the retirees. Expectations will remain speculative until the president introduces his budget. If passed, the FY 11 National Defense Authorization would not allow any Tricare increases for this year. Rep. Joe Wilson (R–S.C.), likely the next chairman of the House Armed Services Subcommittee on Military Personnel, said in an interview with freelance military columnist Tom Philpott that he is committed to protecting Tricare beneficiaries from fee increases. Jim Webb (D–Va.), chairman of the Senate Armed Services subcommittee on Personnel, told Politico that he wouldn’t be the one to cut defense spending from health care and other military entitlement programs.  O fficer / J anuary –f ebruary 2011

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