The Korb "Solution"

In a recent issue of Armed Forces Journal, Regan-era defense official-turned-progressive Lawrence Korb offers his "prescription" for the military's health care problem.

His essay is based on hard facts; it's no secret that Defense Secretary Robert Gates and other senior leaders are deeply concerned about escalating medical costs for active duty personnel, their dependents and military retirees. The annual bill for Tricare, DoD's "off-base" health care system is now $50 billion; put another way, the program now consumes roughly 9% of the Pentagon's annual budget--and it's share of the pie is growing rapidly. During the eight years that George W. Bush was in office, the Tricare budget grew by 163%.

From Mr. Korb's perspective, rising military health care costs can be blamed on a variety of factors, including the high price of specialized care for troops wounded in Iraq and Afghanistan. But--surprise, surprise--he pins much of the blame on the Bill Clinton (for changing the military retiree system) and Bush Administration for excessively increasing those benefits, to retain qualified personnel.

In the waning days of the second Clinton administration, Congress, at the request of the Joint Chiefs of Staff, made two changes to the military compensation system that the administration refused to challenge. First, in 1999, Congress raised the percentage of base pay that a military retiree would get after 20 years of service from 40 percent to 50 percent. Second, in 2000, Congress authorized and the administration approved allowing military retirees and their family members to keep Tricare benefits for life. Previously, when military retirees and their family members turned 65, they became part of the Medicare system like everyone else.

When these measures were adopted, military recruiting and retention were in excellent shape and there was no analysis to support a claim that these two costly actions would improve the quality of the men and women joining or remaining in the armed forces. In fact, personnel officials within the Office of the Secretary of Defense recommended that these changes not be accepted because of their long-term costs.

During the Bush administration, the military and civilian leaders in the Pentagon and the White House compounded the problem in four ways: They failed to request that the president and Congress activate the Selective Service System to deal with the manpower-intensive conflicts in Iraq and Afghanistan; they used the wrong metrics to determine the size of the annual pay raise; they failed to veto or even to threaten a veto when Congress provided larger-than-requested pay raises; and they refused to request a long-overdue increase in Tricare premiums every fiscal year.

There are a couple of problems with Mr. Korb's analysis. As we noted in a recent post, Tricare was created--in large part--because Bill Clinton refused to fund military health care. Facilities were closed and the medical corps was cut, along with the rest of the armed forces. With fewer hospitals, clinics and health care providers, the armed forces had to send virtually all military retirees (and many dependents) to civilian doctors and treatment facilities, where costs were far higher.

Almost a decade ago, Air Force magazine highlighted the fiscal problems facing military health care. The publication discovered that Mr. Clinton had been underfunding (emphasis ours) the system by roughly $500 million a year. So, President Bush inherited a system that was short of money, facilities and health care professionals. Facing those realities, the new administration decided it would be easier to pump more money into Tricare--with the understanding that military health care bills would increase significantly.

How serious was the Clinton mistake? As former Air Force Surgeon General Paul Carlton explained back in 2001, military facilities were capable of providing care at prices far below those of civilian hospitals. According to Carlton, the price tag for an appendectomy in a military hospital was about $300--the cost of a surgical pack. The same procedure for an armed forces beneficiary in a civilian facility was $6,000. So, runaway military health care costs actually began under Bill Clinton, a fact largely ignored in Korb's analysis.

As for his "cure," Mr. Korb offers ideas that are a rehash of existing policies, and solutions that would have a serious impact on many military families:

The Pentagon and Congress can work together to alleviate this situation by taking five steps. First, require that military retirees who have access to health insurance through their job or that of a family member use that system rather than Tricare. Second, apply a means test for deciding whether retirees and their family members older than 65 are eligible for Tricare for Life as opposed to relying solely on Medicare. Third, raise Tricare premiums from $460 a year to $1,000 for a military family and then adjust that figure annually to reflect the rising costs of health care. Fourth, use MAC, rather than base pay, as a basis for deciding on the size of the annual pay raise. Fifth, after the U.S. withdraws from Iraq and Afghanistan, reduce the size of the ground forces to pre-9/11 levels.

News flash for Larry Korb: when military retirees receive medical benefits from civilian employers, that latter system becomes their primary health plan. I discovered that first-hand a few years ago, when I signed a contract as a long-term substitute in a local school system. With my participation in the school's health care system, that plan served as my primary medical insurance, and Tricare became the secondary carrier.

At first glance, Mr. Korb's proposal to raise Tricare premiums for military families makes a certain amount of sense. There hasn't been a premium increase in more than a decade, despite escalating military health costs, and retired senior officers can easily afford to pay more.

But raising premiums also ignores an important fact: the "typical" military retiree isn't a Colonel or General, but rather an E-6 (Technical Sergeant in the USAF). An E-6 leaving the armed forces after 20 years in uniform earns a pension of $1,800 a month. Raising the Tricare premium will take a real bite out of the average retiree's budget, particularly in an era of limited civilian employment prospects, and limited cost-of-living adjustments.

And finally, Korb's suggestion to cut force levels after our disengagement from Iraq and Afghanistan is equally preposterous. A premature exit from either locations could have dangerous repercussions for national security. There is also a sense that we need to retain larger ground forces, as a hedge against potential conflicts in places like Korea and the Persian Gulf. There is no appetite for fighting protracted, future campaigns with an undersized Army and Marine Corps, where some units have served two combat deployments in only three years.

One thing is clear; DoD is facing huge budget cuts, and health care will almost certainly be slashed. If Obama's health care scheme survives, there will be a push to move many Tricare recipients into the new government program. The Pentagon could (presumably) pay an annual "tax" and largely eliminate Tricare, accelerating the transfer of many military members into national health care.

If that happens, it would represent the latest in a long series of broken promises on military medical care. When I joined the armed forces in the early 1980s, I was "guaranteed" lifetime access to on-base health care. That promise went out the window when Bill Clinton underfunded the system and created Tricare. Now, with that program's costs spiraling out of control, it's a sure bet that the military health care system of 2015 will look much different from today. And, as in any discussion of the "government" and medical care, "different" does not mean "better."