President Obama’s fiscal 2012 defense budget request brought a few surprises for military retirees.
First, the plan to raise TRICARE fees for working age retirees is more “modest” than retiree advocates had expected, and might be viewed favorably in light harsher possibilities and the mounting debt crisis.
Surprise two could discourage 103,000 veterans forced by non-combat disabilities to retire on disability short of serving 20 years. After two tries, this administration no longer is asking Congress to extend “concurrent receipt” eligibility to this large group of so-called “Chapter 61” retirees.
The Obama plan had been to phase in, over five years, some retired pay based on total years served, which would be provided atop current disability pay. Congress, the past two years, couldn’t find dollars to fund the president’s initiative, citing the effect of pay-as-you-go budget rules.
House Republicans last month tightened those rules even more, disallowing any new entitlement fund by raising taxes. That, and removal of any mention of concurrent receipt in the new budget, appears to kill chances this year that Obama can fulfill his promise to these retirees.
Defense Secretary Robert Gate’s budget plan to control military health care costs includes: the limited TRICARE Prime fee hike; an automatic adjustment to those fees, starting in 2013, to keep pace with medical inflation; tweaks pharmacy co-payments; and changes to Uniformed Service Family Health Plans (USFHP) for future enrollees who reach Medicare age.
Here are more details:
• TRICARE fees — The increases are small and target only retirees under 65 enrolled in TRICARE Prime, the managed care network. No users of TRICARE Standard, the fee-for-service option, or TRICARE for Life, the prized insurance supplement to Medicare, would see higher fees.
Retirees’ annual enrollment fee for TRICARE Prime would climb by $60, to $520, for family coverage and by $30, to $260, for singles.
• Medical inflation — TRICARE Prime fees for retirees would be raised annually starting in 2013 to keep pace with health care costs.
The one-time fee adjustment and follow-on indexing to medical inflation are projected to save $434 million over the five-year defense budget program.
• Pharmacy copayments — Prescriptions filled on base will remain free. But to encourage greater use of mail order, now called “home delivery,” and to discourage use of far more costly retail pharmacies, drug co-pay changes are to change.
Mail order already is a bargain, providing patients with 90-day supplies of pills rather than 30 dispensed at retail outlets for the same co-pay.
But officials want to widen the disparity. They would end the $3 charge for mail order generic drugs and raise the co-pay for generics at retail outlets to $5, up from $3. Co-pays for brand-name drugs on the military formulary would stay at $9 by mail but would climb to $12 through neighborhood retail pharmacies. For “Tier 3” or non-formulary brand drugs, the current $22 co-pay would be raised to $25 for mail order and retail.
The new co-pays could save TRICARE $2.6 billion over five years.
• USFHP enrollment — More than 100,000 military beneficiaries are enrolled in Uniformed Service Family Health Plans (USFHP) in six areas of the country. These are former Public Health Service hospitals that Congress designated to be TRICARE Prime providers to enrolled military beneficiaries.
USFHP beneficiaries at age 65 don’t have to enroll now in Medicare. They can remain with the USFHP. That would change for future USFHP enrollees.
They would have to go under Medicare, like other military beneficiaries who turn 65, and use TRICARE for Life as second payer.
TRICARE projects this will save $3.2 billion by fiscal 2016.