Military health spending to be slowed

Tom Philpott: Military Update

Congress will worsen a near crisis of runaway military health care costs if it enacts a Senate-backed provision to open the new TRICARE Reserve Select program to all drilling Reserve and National Guard members, the Defense Department’s top health official has warned.

In testimony before a House subcommittee, Dr. William Winkenwerder said military health costs have doubled in just the last four years, from $18 billion a year to more than $36 billion, largely because of enhancements in benefits for retirees and their families.

However, Winkenwerder also blamed a decade-long freeze on TRICARE enrollment fees and co-payments, which he suggested the Defense Department will try to raise after consulting military leaders and Congress.

As assistant secretary of defense for health affairs, Winkenwerder is Defense Secretary Donald Rumsfeld’s top policy adviser on medical readiness and managing health care delivery for nine million beneficiaries.

By next spring, the Defense Advisory Committee on Military Compensation established by Rumsfeld is expected to arm defense leaders with recommendations to slow military health spending, at least in part by having beneficiaries pick up a larger share of their medical costs.

Ideas being weighed include higher enrollment fees and co-pays for TRICARE Prime, the managed care option; higher deductibles for users of TRICARE Standard, the fee-for-service option; a first-time annual enrollment fee for TRICARE Standard; incentives for military retirees working in second careers to use employer-provided health benefits; offering tax-deferred health savings accounts to military beneficiaries.

At a briefing for the advisory committee last July, Dr. Sue Hosek, a benefits analyst, noted that the TRICARE Prime enrollment fee for family coverage is still $460 a year, the level set in 1996. As of 2004, she said, the typical civilian employer health plan cost workers almost $2,700 a year.
However, Hosek warned that a TRICARE premium increase big enough to make a real difference in total program costs would “represent a significant benefits cut” so it should be “considered along with a package of changes.”

If U.S. forces, as expected, are still at war when the committee recommendations surface, Congress might be reluctant to raise individual health costs, at least for active duty members, reservists and their families.

The House armed services subcommittee on military personnel invited Winkenwerder on Oct. 22 to discuss a wide range of health-related issues. He chose to focus his opening remarks on rising military health costs, a matter he said is “of vital importance … to the future of the whole country.”

If costs aren’t brought under control, he warned, the “sustainability” of the military’s “world class” health benefit is threatened. The current $36 billion budget will climb to $50 billion in four or five years, Winkenwerder said. Even the Joint Chiefs, he added, are now worried that health spending is impacting programs of higher priority for the nation’s defense.

Military pharmacy budgets have increased by 500 percent since 2001, he said, to more than $5 billion a year.
By 2009, he added, 75 percent of military health dollars “will be spent on the cost of paying for retiree health care, and just 20 to 25 percent will be spent on active duty service members and their families.”

Defense officials have complained for several years about growth in personnel costs, particularly for health care and retiree and survivor entitlements. With military associations and veteran groups lobbying lawmakers hard and effectively to fulfill long-standing promises or to eliminate benefit inequities, Congress continues to enact improvements.

Health costs nationally are rising, Winkenwerder said, but not nearly as fast as in the military. Recent enhancements include TRICARE for Life, a supplement to Medicare; the TRICARE Senior Pharmacy program for older retirees, spouses and survivors, and expanded medical benefits for reserve and Guard personnel for periods before and after mobilization.

He described the premium-based TRICARE Reserve Select (TRS) program, which Congress passed last year to entice demobilizing Reserve and Guard personnel to extend their service obligations, as a plan that “hits the spot” in balancing the needs of reservists with the needs of the nation.

More than 16,000 beneficiaries are covered by TRS. Enrollment began last April. It’s a scaled-down version of TRICARE Standard, but the plan is open only to members deactivated from post-9/11 deployments. They get a year’s coverage for every 90 days of continuous active duty served, if they remain in drill status. The monthly premium is $75 for member-only coverage or $233 for family, plus Standard deductibles and co-payments.

Congress should do nothing more on reserve health benefits, Winkenwerder said, until TRS has had time to run.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at:
milupdate@aol.com