|02-10-2006, 09:09 AM||#1 (permalink)|
MSgt USMC Ret
Join Date: Aug 2004
Location: San Diego
Final Plan For Higher Retiree TRICARE Fees Unveiled
The Bush administration, in its fiscal 2007 defense budget, unveiled its plan to raise TRICARE fees and deductibles for military retirees under age 65 and their dependents. Co-payments in the TRICARE retail pharmacy network also would climb, but for all beneficiaries except those on active duty.
Marine Corps Gen. Peter Pace, chairman of the Joint Chiefs, immediately endorsed the plan, describing it as a necessary "renorming" of TRICARE fees and deductibles left unchanged since they were set in 1995.
With equal speed, military associations attacked the proposal.
Compared to an earlier draft, the final plan accelerates phase-in of TRICARE increases so major changes occur over two years, not three.
Annual enrollment fees for TRICARE Prime, the managed care program, would double for senior enlisted (E-7 and above) and nearly triple for officer retirees. But the final plan includes a lower, third tier of fees and deductibles for retirees E-6 and below and their dependents. Their Prime enrollment fees would rise only by 41 percent, sparing a million beneficiaries from steeper increases planned for senior enlisted.
The decision to vary the TRICARE fees, said Dr. William Winkenwerder Jr., assistant secretary of defense for health affairs, "reflected significant input from the military uniform leadership…recognizing that some people have fewer dollars in retirement income than others."
The plan also calls for a raise in annual deductibles for TRICARE Standard, the military fee-for-service insurance option. And it calls for a first-ever enrollment fee for Standard users.
Once new TRICARE fees are fully reset, in 2008, they would be adjusted annually based by healthcare inflation, in fact, applying the same percentage increase used to raise premiums each year for federal civilians covered under the Federal Employees Health Benefit Plan (FEHBP).
Finally, to slow military health costs more, co-payments under the TRICARE retail pharmacy network would be raised, for generic drugs to $5, up from $3, and for brand name drugs to $15, from $9.
To encourage use of the more efficient mail order program, that $3 co-pay for a three-month supply of a generic drug would end. But a new "100-percent co-payment" would be set for a "few certain medications," officials said. Thus, for some still-to-be determined narrow group of drugs, beneficiaries themselves would pay the entire cost unless they can show medical necessity or unless there is no cheaper and effective alternative.
Testifying before the Senate and House armed services committees, Pace and Defense Secretary Donald Rumsfeld said the TRICARE changes are unanimously backed by all of the Joint Chiefs.
"We believe this healthcare benefit is unique and superb," Pace said. "We want it to continue for all of our members of the active-retired community and we believe renorming, to what you [Congress] established in 1995, is one way to assist…the goal of long-term sustained health care."
Sen. Lindsey Graham (R-S.C.), chairman of the military personnel subcommittee, lauded Pace and Rumsfeld "for putting on the table some new ways of looking at military health care…I stand ready to help."
The plan got a cooler reception from House committee members. Rep. Neil Abercrombie (D-Hawaii) said the fee increases were more evidence that the only Americans paying for the war in Iraq are military people.
Rep. John McHugh, military personnel subcommittee chairman, worried that of $578 million in projected cost savings from the TRICARE plan for 2007, $420 million "are imputed savings," which depend on "changes in behavior." In other words, McHugh said, the department expects a lot of people not to use TRICARE because of the higher fees and deductibles.
"I guess we could talk about the morality of that, if that’s the way to contain costs [by] persuading people not to use health care," McHugh told Rumsfeld and Pace. "But I’m going to put that aside."
Of more immediate concern, he continued, is what will happen if the imputed savings, which jump to $1.6 billion for 2008, aren’t achieved? Because those savings are imbedded in the defense budget, he suggested, other defense programs will be put at risk if the savings aren’t realized.
Pace said he didn’t know how savings were calculated. The Joint Chiefs focused their discussions, he said, on preserving a benefit whose annual costs have soared from $19 billion in 2001 to $37 billion in 2006. Yet the "very reasonable" TRICARE fees, set 11 years ago, have not been raised.
Rumsfeld said low fees have turned TRICARE into a "magnet" for working-age military retirees who increasingly are encouraged by civilian second-career employers to use TRICARE rather than company health plans.
The Military Coalition, a consortium of three dozen military and veterans associations, opposes the higher fees, deductibles and co-pays.
Jim Lokovic, director of government relations for the Air Force Sergeants Association, co-chairs the coalition’s retired affairs committee. He said a big worry for enlisted retirees is the effect of linking future fee adjustments to the percentage rise in FEHBP premiums. FEHBP increases typically outpace retiree cost-of-living adjustments which would mean a steady decline in the value of military retirement as health costs climb.
Steve Strobridge, with Military Officers Association of America and the coalition’s co-chairman, said the changes "are worse than expected." He called Pace’s argument that 1995 fees need to be readjusted "bogus."
Working retirees, in effect, are being asked to pay a portion of the cost of enacting TRICARE for Life (TFL) in 2001 for service elderly, Strobridge said. He argues the administration is ignoring a law that "pretty clearly states" payments for the TFL trust fund should be coming out of the Treasury Department’s budget so they do not impinge on Defense programs.
For a detailed chart showing the TRICARE Fee changes visit http://www.military.com/TRICARE_Fee.
|02-17-2006, 03:07 PM||#2 (permalink)|
Re: Final Plan For Higher Retiree TRICARE Fees Unveiled
DoD proposes TRICARE premium increases for younger military retirees
WASHINGTON (AFPS) – The Defense Department is proposing that working-age military retirees and their families pay higher premiums to help address rising health care costs that have doubled over the past few years, senior DoD officials said here today.
The proposed changes would apply only to eligible military retirees under age 65 and their families, officials said. There would be no change for active duty military or their families, or military retirees age 65 or older and their families. (Note: These proposed premium increases would not apply to retirees and their family members covered by TRICARE for Life, a combination of Medicare and TRICARE. These beneficiaries pay for their coverage with Medicare Part B premiums. They are usually age 65 or over.)
When the TRICARE health care program for active duty and retired military members and their families was established in 1995, retirees then were contributing about 27 percent of the cost of their benefit, Dr. William Winkenwerder Jr., the assistant secretary of defense for health affairs, said during an interview with Pentagon Channel and American Forces Press Service reporters at the Pentagon.
However, military health care costs doubled from $19 billion in 2001 to just over $37 billion in the 2006 defense budget, Winkenwerder said. And today's average military retiree contribution for health care coverage has dropped to about 10 to 12 percent, he said.
"Their contribution did not change, while the value of the benefit continued to rise," Winkenwerder said. If approved by Congress and signed off by the president, the proposed TRICARE rate hikes for retirees under age 65 would be phased in over fiscal 2007 and 2008. That should bring up younger retirees' share of TRICARE costs closer to the 1995 level, he said.
By comparison, Winkenwerder said, civilians under private plans generally pay between 35 and 40 percent of their health care costs.
The current TRICARE Prime annual enrollment fee for retirees is $230 for individuals and $460 for families for both enlisted and commissioned military retirees, according to DoD documents. The proposed changes would increase TRICARE Prime enrollment fees for junior enlisted retirees at pay grades E-6 and below to $325 per individual and $650 for families by October 2008.
Enlisted retirees at pay grades E-7 and above would pay $475 for individuals and $950 for families by October 2008 under the proposed changes. And retired officers of all ranks would pay $700 per individual and $1,400 per family.
After that, the share of health care costs paid by military retiree would be indexed to the Federal Employees Health Benefits Program that covers federal workers and retirees.
If nothing is done now, then DoD could be paying $64 billion for military health care in 2015, Marine Gen. Peter Pace, chairman of the Joint Chiefs of Staff, said today during his testimony before the House Armed Services Committee.
Another reason for increased DoD health care costs, Pace told the committee, is that many younger military retirees are using their TRICARE health care benefits at the behest of their civilian employers, rather than access company health plans.
Finding ways to manage increased military health care costs "is something we just have to face up to, because it's an enormous amount of money," Defense Secretary Donald H. Rumsfeld, at the same House hearing with Pace, said to committee members.
The alternative to not raising rates, Winkenwerder said, would be to degrade a first-class benefit for retired military members and their families.
"You can see our benefit is a much better benefit, and we want to keep it that way," Winkenwerder said.
(Note: These premium increases have been proposed but not yet approved. Congress is reviewing this as well as the entire proposed federal budget.)
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