Friday, March 30, 2012

The Budget Buster?

It's become Exhibit A in the Pentagon's plans to cut spending. According to former Secretary of Defense Robert Gates (and his successor, Leon Panetta), health care costs are spiraling out of control. By one estimate, the military's annual medical bill--for active duty personnel, retirees and dependents--tops $69 billion a year, a three-fold increase over the past decade. And, the same "experts" say that much of the growth has occurred in TRICARE, the health care program for dependents and retirees.

But many haven't heard "the rest of the story," to borrow a phrase from the late Paul Harvey. Turns out that TriCare isn't exactly the budget buster we've been led to believe. Speaking at a Virginia military education conference on Wednesday, retired Marine Corps Lieutenant General Jack Klimp, President of the National Association of Uniformed Services, reported that TRICARE returned at least $500 million to DoD last year, and the final total may be closer to $1 billion.

That's right, the very health care program described as a budget-buster has actually been running below cost projections. So why the disinformation campaign?

Well, for starters, there are lots of senior officials in DoD who'd like to get rid of the retiree healthcare account, once and for all. From their perspective, nothing's worse than a bunch of codgers (and their dependents) who expect the government to keep its promises, then complain to Congress when those obligations aren't met. Never mind that the "codgers" (as new members of the military) were promised free, on-base health care for the rest of their lives, in exchange for the hardships of a military career. As far as the DoD crowd goes, pushing dependents and retirees into Obamacare (or some other plan) would generate tremendous cost-savings, and rid the Pentagon of a troublesome constituency.

Currently, DoD is moving to raise TRICARE fees for program participants. Under a proposed sliding scale system, military retirees with the highest pensions (more than $45,000 a year) would pay $1.950 a year per family for TRICARE Prime, the top-of-the-line plan for retired military personnel and dependents. Retirees at the lower end of the pay scale (even those making less than $22,000 a year) would see an increase in their annual enrollment fee, from $520 to $850 a year. Those increases would be phased in over the next four years, along with enrollment fees and deductibles for less-generous plans (TRICARE Extra and TRICARE Standard). Until now, those plans never charged an enrollment fee.

For "civilian" families paying hundreds (even thousands) of dollars a month for health care insurance,such complaints may sound like whining. But it's worth remembering that military retiree health care benefits were earned through decades of service and sacrifice. And most retired members of the armed forces don't fit in the upper-income category, either. As we've noted before, the typical military retiree left the service as a E-6, with a take home pension of $1600 a month. The propose increase in TRICARE Prime represents about five percent of their annual pension--and that doesn't include their co-pays for prescription drugs, doctor's fees and other expenses.

Most military retirees understand that keeping co-pays at 1994 levels was unrealistic. But they would also appreciate a little more honesty from DoD on the program's real financial condition. If TRICARE is running below budget projections--and returning money to the Pentagon--that doesn't exactly buttress the case for a 400% fee increase, which some retirees will see over the next four years.

Likewise, program beneficiaries would value greater efforts (on the part of government officials) to keep promises that were made when they signed up. We're already light-years away from the original guarantees regarding health care for military retirees. Most of those who served their country would like to see someone try to honor those commitments (or semblance thereof), instead of cooking up new schemes to drain more money out of TRICARE beneficiaries, or push them into other insurance plans.


Frank said...

Additional savings would be available if the services had a better control of active duty personnel using civilian providers for primary/specialty care services without proper referrals. More and more military personnel are failing to use the military medical treatment facilities for common cold systems, routine exams and multiple other diagnoses during normal hours and running to civilian providers after hours. Before TRICARE came into existence this was not a problem.

George Smiley said...

Frank, you are absolutely correct. And the savings would be even greater if personnel were required to use military treatment facilities for minor surgery and similar procedures. Lest we forget, TRICARE came into existence because Bill Clinton decided to gut on-base healthcare and was promised illusory savings through a managed care system. As a former surgeon general of the Air Force pointed out, the military can perform an appendectomy on base for about $300, essentially the cost of a surgical pack. The same surgery off-base is more than $7,000, even when it's performed on an out-patient basis.

One more thing: if TRICARE is such a great program, why are many of the retired flag officers still seen on base?