Military Retirees' Health Care May Rise

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Associated Press | February 21, 2006

WASHINGTON - The Bush administration wants many military retirees to pay more for health care, a proposal that could force the Republican-run Congress to choose between savvy politics and budget discipline.

Annual health-care costs for the military have doubled to nearly $38 billion in the past five years, nearly one dollar of every $12 the Pentagon spends. The price tag is projected to soar to $64 billion by 2015.

To help contain those costs, President Bush's proposal includes higher prescription drug co-payments for all beneficiaries of military health care except those on active duty, and increased annual enrollment fees for military retirees under age 65.

If lawmakers want to follow Bush's lead and control spiraling health care expenditures, they will have to vote to boost costs for some of the nation's military families in a year in which the entire House and one-third of the Senate is up for re-election.

Congressional support for the proposal is uncertain. Lawmakers question whether the plan is the best route, and they have rejected similar efforts in the past.

The Pentagon says curtailing health care costs is an urgent matter.

"Our current trend is unsustainable," Dr. William Winkenwerder Jr., assistant secretary of defense for health affairs, said.

Critics, including some lawmakers, accuse the administration of seeking to save money by raising fees to steer military retirees toward health plans their current employers sponsor. That would take a burden off the Pentagon's health care system, called TRICARE.

"That's not saving money, that's kind of doing the little shell game," said John Class, deputy director of government affairs for health care at the Military Officers Association of America.

Private employers, as well as some state and local governments, increasingly are asking military retirees on their payrolls to use TRICARE to avoid having to pay insurance premiums for those employees.

"We have created a magnet to attract a whole lot of people into this that otherwise might not have been in it," Defense Secretary Donald H. Rumsfeld told the House Armed Services Committee recently. "And it is something that we just have to face up to because it's an enormous amount of money."

"This is not what Congress intended," Winkenwerder added in an interview.

The Pentagon projects it could save $14.8 billion over the next five years if Congress approves Bush's plan.

Rep. John McHugh, chairman of the House Armed Services military personnel subcommittee, questioned the projections. He said the Pentagon appeared to be counting on savings from military retirees choosing their current employers' plan rather than the military coverage once the proposed increases kick in.

"I guess we could talk about the morality of that. Is that the way to contain costs?" McHugh, R-N.Y., said during the House hearing.

Sen. Lindsey Graham, R-S.C., chairman of the Senate Armed Services personnel subcommittee, said he'd be willing to pay a little more for health care once he retires from the Air Force Reserves in a few years.

"You're having to choose between health care premiums, guns, bullets, airplanes and ships," Graham told Rumsfeld at a Senate Armed Services Committee hearing this month.

Critics say the Pentagon calculations assume that 600,000 military retirees will not enroll in TRICARE after the changes take effect.

About 9 million current or former military personnel are eligible for TRICARE coverage. Of those, advocacy groups say about a third are retirees under age 65 and their families.

The federal government's share of health care costs for the military totaled $19 billion in 2001 and accounted for 4.5 percent of the defense budget, the Pentagon says. Officials estimate that the projected cost of $64 billion by 2015 would account for 12 percent of the budget.

Health care costs across the country have soared over the past decade and the military has not been immune. But Pentagon officials also attribute their rapid growth in medical costs to Congress' efforts to expand access to TRICARE, and an influx of military retirees using TRICARE instead of private plans.

The amount military retirees younger than 65 must pay for health care coverage to join TRICARE Prime, the military's HMO-like program, has not changed since 1995, even though the Pentagon's share of the costs have risen.

Those enrollment fees - $230 annually for an individual and $460 for a family - would rise under Bush's plan. Depending on military rank at the time of retirement, individuals would pay from $325 to $700 by 2008, while a family would pay $650 to $1,400.

Annual enrollment fees and deductibles also would increase for those enrolled in TRICARE Standard, the military's open-access plan.