Military Veterans' Lawyer Blog

4. Health Care Affecting Weapons Buy Military retiree health care has long been a source of tension for active duty personnel and the retirees’ needs. In 1997, then USAF Surgeon General, Lt. General Charles H. Roadman II, discussed the impact of military need and budget on health care:

I also believe military leaders are faced with a social expectation problem because we recruited and retained on a promise to provide military retirees and their dependents health care for life. It’s not in Title 10. It’s not funded. But there is not an ounce of doubt in my body that we recruited and retained based on that [promise].

Lt. General Roadman’s statement illustrates the notion that this budget tension is not a new problem. What is new is the current and anticipated rise in health care expenditures to 12% of the DoD budget by 2015. This Title 10 deficiency noted in 1997 by Lt. General Roadman is reiterated today in other proposed findings of H.R. 579 that point out previously passed laws prohibited this fee shifting:

(13) The Department of Defense has chosen to count the accrual deposit to the Department of Defense Medicare-Eligible Retiree Health Care Fund against the Department of Defense’s budget, contrary to the amendments made by section 725 of Public Law 108-375.

(14) Department of Defense leaders have reported to Congress that counting such deposits against the Department of Defense’s budget is impinging on other readiness needs, including weapons programs, an inappropriate situation which section 725 of Public Law 108-375 was intended expressly to prevent.

Congress clearly states retiree health care is to be funded – it is unfair to continuously pit the needs of active-duty personnel against the needs of those whose service is ended.

5. Difference between civilian and military retirees.
An argument often heard as a statement to justify increasing the burden on military retirees is that civilians pay more for health care. This is a flawed argument. Civilian and military careers are not comparable. Military members accept hazardous and physically demanding positions with considerably less pay than paid to their civilian private sector counterparts. This lifetime of lower pay affects the ability to fund personal retirement plans, and, in acknowledgment, low cost or free health care promised as an offset to accepting military duty.

Conclusion.
Part 2 of the DoD Plan for Covering Military Retiree Health Challenged by GAO Blog discusses Sustain the Budget. The GAO report casts doubt on Sustain the Budget saving $1.9 billion for FY 2008. It is certain, Sustain the Budget will affect military retirees, with some retirees leaving TRICARE but not in the numbers required to balance the DoD budget. The question remains whether Sustain the Budget is the best plan for the nation to meet the escalating health care expenses within DoD. Unfortunately, Sustain the Budget does not answer where retirees will get health care coverage nor does the GAO agree with DoD’s estimates on the budget savings the DoD anticipates by retirees leaving TRICARE.

The escalating health care costs for retirees leave Congress with a dilemma. Congress clearly must choose from differing options. The options include either funding additional health care within the DoD budget, allowing the Sustain the Budget proposal to go into effect and affect retirees’ health care, or pass H.R. 579 and its companion Senate Bill to protect retirees’ health care and affect the DoD budget.

The 110th Congress proposed protecting retirees’ health care in H.R. 579, but Congress must decide on the path to follow and act. Precedent was set in 1986 when Congress stopped hospitals from avoiding emergency patients by passing the Emergency Treatment and Active Labor Act (EMTALA). Military retirees deserve no less protection – an act of Congress to prevent avoiding of veterans and the removal of military retiree health care funding from DoD.

However, the future of H.R. 579 is not bright. H.R. 579 referred to the Subcommittee on Military Personnel on February 1, 2007, where it continues to flounder. No further action has occurred on this bill even with 178 cosponsors. This bill appears headed for death in subcommittee.

Congress’ decision rests upon, does Congress believe a military retirees’ health care is not merely a benefit, but an entitlement, bought and paid for through decades of service protecting this country. Or does Congress believe the fiscal needs to control DoD health care costs and agree with the Bush Administration that military retirees’ health care should be aligned with general civilian health care plans as the cost containment measure for reducing the escalating health care of retirees.

Retirees have earned their “universal health care” and stopping DoD from changing retirees’ health care is best achieved by passing H.R. 579 and its companion Senate Bill. Congress must act now to protect retiree avoiding and the cutting of retiree health care funding from the Department of Defense.
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Part 1 introduces the DoD’s plan to increase fees on retirees, but this is nothing new. In 2007 DoD attempted to force fee increases on retirees by creating a deficit in the DoD budget for TRICARE payments. The following Parts 2 & 3 are my commentary on DoD’s plan to “Sustain the Budget.”

My commentary on the 2007 H.R. 579 “Military Retirees Health Care Protection Act” and DoD.

Rapidly rising health care costs are forcing changes to health care plans throughout the nation. Even the Pentagon budget is not immune. Military retiree health care is once again at risk as the Pentagon forages for sparse money to buy future weapons systems. The Bush Administration proposed a $22.5 billion Pentagon budget for Fiscal Year (FY) 2008. Although a large budget, this budget does not adequately fund retiree health care. In response to the rising health care costs, the Pentagon zeroed in on military retiree health care benefits as the target to aid their budget needs. The FY 2008, Department of Defense (DoD), “budget counts on a $1.9 billion savings by raising TRICARE fees for military retirees next year.” For the Pentagon to achieve the Administration’s desired cost control measures, 500,000 military retirees must leave TRICARE. Both the Senate and House reacted loudly. First, Congress directed the Government Accounting Office (GAO) to analyze the DoD budget plan pertaining to military retirees. Secondly, Congress proposed bills in both the House and Senate aimed to protect military retirees from DoD budgeters. However, to date the House and Senate have failed to pass the legislation affording retirees’ protection.

1. Administration’s Budget Shortage First, the Pentagon’s health care expenses are real and require payment. The escalation in health care expenses are verified by the GAO that reports “the fact that [DoD] health care spending more than doubled from 2000 to 2005 and continues to escalate….” As a result of this increase by 2015 DoD estimates health care costs will consume 12% of its budget compared to 7.5% in 2005. Of particular concern is the rising expense to pay for military retiree health care. “According to calculations by DoD officials, retirees and dependents under age 65 paid for approximately 27 percent of their overall health care costs in 1996 and about 12 percent of these costs in 2005.” In an attempt to slow rising health care expenses, DoD included the proposal “known as Sustain the Budget” in the DoD FY 2008 budget.

The Bush Administration budget submission incorporates Sustain the Budget and states that the “Administration is committed to ensuring that service members and their families have access to high quality medical care throughout the world. To support these efforts, the Budget provides $22.5 billion in the Defense Health Program (including $1.9 billion in anticipated beneficiary cost sharing).” Sustain the Budget proposes reducing the rising DoD health care costs by not funding a portion of the retirees’ health care. Stated differently Sustain the Budget proposes reducing the rising DoD health care costs by reducing the funding for retirees’ health care and raising premiums on retirees to pay for the shortfall. The DoD’s assumption is that retirees will either leave TRICARE or pay more for enrollment fees and co-payments to remain in TRICARE.

2. Number of Veterans to be “Avoided.”
The premise of Sustain the Budget in the President’s 2008 budget is that the proposed deficit of $1.9 billion “aligns military health care premiums and co-payments for retirees under 65 years of age with general health care plans.” This realignment counts on the $1.9 billion deficit being made up for by charging military retirees higher enrollment fees with an expectation of driving up to half-a-million former troops from the TRICARE rolls. Fewer retirees in the TRICARE system equates to reduced health care expenditures for DoD. Secondly, higher fees to retirees also reduce DoD expenditures. Two examples of the fee shifting to retirees can be seen in increased enrollment fees and higher co-payments. Enrollment fees for Officers and their families would rise from $460 to $1,400 while retired junior enlisted family fees would rise from $460 to $650. DoD would also raise co-payments for prescription drugs.

In response to Sustain the Budget, the House reacted in January 2007 through Congressmen Edwards (D., TX) and Jones (R., NC), who sponsored H.R. 579, “Military Retirees Health Care Protection Act” as the legislation to protect retiree’s health care from the DoD.

After introducing H.R. 579, Congress directed the Government Accounting Office to evaluate and report on the Administration’s proposed budget and its effect on military health care. The GAO published their report in May 2007. The GAO report cites the DoD’s plan to save $9.8 billion over five years depended “largely on the assumption that the increased fees and deductibles will result in approximately 500,000 retirees and dependents under age 65 either leaving or choosing not to enroll in TRICARE – collectively referred to as avoided users….” However, the GAO report disagrees with the DoD assumptions and estimates the number of “avoided” retirees to be more likely 100,000 retirees. This 400,000 person difference is due to the other 400,000 retirees being unable to get civilian health insurance and likely remaining or trying to remain on TRICARE rolls. Therefore, the GAO states the DoD anticipated $1.9 billion savings in FY 2008 is unlikely, which in-turn affects the $9.8 billion five-year savings.

The House, through the Military Retirees Health Care Protection Act, proposes a prohibition on increases in charges under contract, increases in cost-sharing pharmacy benefits and patient care, and increases in TRICARE premiums. Specifically, the bill calls for a prohibition after April 1, 2006 for such increases in co-payments, deductibles, or premiums. Similar bills have been filed in the Senate including, S 1547, the National Defense Authorization Act for Fiscal Year 2008 and S.C.R. 21, the Fiscal Year 2008 Budget Resolution.

Passage of H.R. 579, would remove the DoD’s option to increase the retirees’ health care funding. The needs of the DoD and retirees are diametrically opposed. The DoD is required to pay the retiree’s health care from its fiscal year budget. Not insignificantly, the retiree’s need for health care does not end when a person leaves the military. This difference is illustrated through H.R. 579’s proposed findings that note:

(12) The significant majority of the savings the Department of Defense associates with the proposed fee increases is expected to come from deterring a large portion of TRICARE beneficiaries from using their earned military health benefits.

Avoiding 500,000 retirees is required for the DoD to pay for the $1.9 billion deficit included in their FY 2008 budget. The GAO reports this reduction of 500,000 retirees is unlikely and thus the DoD budget submission contains a shortage that must be paid for through some other cuts in the budget or an increase of funding from Congress.

3. Older Veterans may find health care coverage in the private market hard to obtain.
The GAO supports their lower number of retirees leaving TRICARE and disputes the optimistic assessment of the DoD in achieving the removal of 500,000 retirees from TRICARE based on the age and health of retirees. Specifically, the GAO found that “[m]any beneficiaries in this group [military retirees], [are] particularly older and sicker individuals, are unlikely to have lower-priced health insurance options available to them and would therefore be likely to continue to use TRICARE.” The DoD’s Sustain the Budget is premised on retirees leaving TRICARE, an assumption the GAO disputes. Simply, if retirees do not leave TRICARE, DoD will have a multi-billion dollar deficit within the five-year budget.

The current budget dilemma has DoD leadership searching for creative means to find funds to buy new weapon systems and to pay for the Global War on Terror (GWOT). With the DoD budget too small to cover all the requirements, the retiree health care budget is an increasingly attractive source of unprotected funds, ripe for the picking. Sadly, this nation is fighting a global war with a peacetime defense budget. The military retiree’s escalating health care is the line-item the Pentagon seeks to control as a means of paying for current active duty budget shortfall.
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TRICARE fees for retirees are once again under attack. Tom Philpott of Military.com reports Defense Sec. Gates believes “Retiree TRICARE Fees Should Rise.” http://www.military.com/features/0,15240,189145,00.html?ESRC=eb.nl Sec. Gates is quoted as saying TRICARE fees have not increased since 1995, and “the department is to spend $47 billion in health care in 2010, costs that are ‘eating the Department alive'”.

Sec. Gates and the Department of Defense are reported to have learned their lesson from the attempts to raise TRICARE fees under the Bush administration. See Part 2 and 3 of this Blog is my analysis of the previous administration plans to raise TRICARE fees in 2007.

Mr. Philpott reports a Louisiana Air National Guard Lt. Colonel at the Air War College at Maxwell Air Force Base, Alabama on April 15, 2009, stated “[i]t occurs to me that TRICARE takes advantage of a community that is unwilling and unused to complain[ing].” This is absolutely the case.