Defense Media Network

TRICARE: Today and Tomorrow

When it was signed into law Dec. 23, 2011, the Department of Defense’s (DoD) fiscal year 2012 budget contained a provision that had never appeared in a military appropriation, despite the repeated attempts of previous administrations: a modest increase in the enrollment fee for “working-age retirees” (those under 65) enrolled in TRICARE Prime, the military’s HMO-style health insurance plan.

This was a big deal. TRICARE fees had not been increased since the program was created in 1996. The reason for this freeze – and for the ongoing and sometimes heated debates about the program – is almost entirely political. Since 2001, taxpayers and their elected legislators have sought to reward, with expanded benefits, service members’ sacrifices in the long and bloody wars in Iraq and Afghanistan. Salary, health care benefits, pensions, and special pay rates have all risen steadily in the post-9/11 era. In its budget overview, the Pentagon introduced its health care provisions by explaining that the Military Health System (MHS), which now covers 9.6 million beneficiaries, costs more than twice as much as the $19 billion spent in FY 2001 – the FY 2013 request calls for $48.7 billion.

TRICARE Dr. Jonathan Woodson

Assistant Secretary of Defense for Health Affairs and Director of TRICARE Management Activity Dr. Jonathan Woodson (far left) answers questions from staff members during a tour of the Naval Station Guantanamo Bay Hospital in August 2011. U.S. Navy photo by Mass Communication Specialist 2nd Class Kilho Park

A persistently sluggish economy, meanwhile, has reduced tax revenues, helped balloon the national debt, and compelled the Department of Defense and many lawmakers to overcome their reluctance to trim personnel costs. When the DoD released its 2013 defense budget proposal in February, it introduced its section on health care benefits with the admonition: “To address these rapidly rising costs, the Department has taken a comprehensive look at all facets of the MHS health care model – emphasizing the need to balance the number one priority of continuing to provide the highest quality care and service, while ensuring fiscally responsible management for long-term sustainment of the MHS benefit.”

The 2013 budget proposal revealed several provisions that would increase the cost of health care for retired service members and their families in 2013 and in the years ahead, including:

  • Continued increases in TRICARE Prime enrollment fees. For the highest-earning working-age retirees, the proposal called for the current (2012) annual family enrollment fee of $520 to climb to $2,048 by FY 2017; for those in the lower tier of retirement pay, it would increase from $520 to $850.
  • TRICARE Standard/Extra fees and deductibles. There is currently no annual enrollment fee for the military’s fee-for-service programs, but the 2013 budget proposed a $140 annual fee for families, to be raised to $250 in 2017. In addition, the Pentagon proposed an increase in the plans’ deductibles, from $300 per family in 2012 to $580 in 2017.
  • TRICARE For Life annual enrollment fees. The proposal called for the first-ever enrollment fees for military retirees over the age of 65 – for the highest-earning retirees, $115 annually, increasing to $475 annually over the next five years; for the lowest-earning, $35 annually, increasing to $158.
  • Higher pharmacy co-payments. The Pentagon proposed higher co-payments in every category –  generic, brand name, and non-formulary – over the next five years, with the exception of generic mail-order medications, which will remain free until 2017. Under the proposal, the non-formulary prescriptions will only be available by mail beginning in FY 2013.

In its proposal, the Pentagon pointed out that none of the proposed changes would affect servicemen and women currently on active duty.

Unsurprisingly, these proposals have not been popular with service members or military retirees – but the increase to TRICARE Prime enrollments fees seems particularly to have shocked some; $2,048, after all, is nearly four times the current family enrollment fee for the highest-paid retirees.

The rationale for such an increase goes as follows: It only seems huge because the enrollment fee has remained flat for 16 years, while private-sector health care premiums have soared. According to the annual index compiled by Milliman, an international actuarial and consulting firm, the average American family pays $4,728 in annual health insurance premiums.

Working-age retirees have been targeted particularly for fee increases because many – though certainly not all – have launched second careers in the private sector. The Pentagon believes the artificially low TRICARE benefit gives these retirees an incentive to stay with government-purchased insurance, rather than join an employer’s plan.

Of course, a budget proposal is only the beginning of a debate, and the TRICARE Prime provision is one of many benefit cuts that Congress has signaled it may want to walk back – though, given the provisions of the Budget Control Act of 2011, it’s not clear whether some current proposals would comply with current legislation.

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Craig Collins is a veteran freelance writer and a regular Faircount Media Group contributor who...

    li class="comment even thread-even depth-1" id="comment-89114">

    When I first entered the Air Force in 1974 I was told by personnel at CBPO, my bosses and other Air Force senior leaders that my family would receive free medical care for life if I chose to spend an entire career in the military. Well, I did just that, retiring after 30 years, 17 assignments and 15 “pack up” moves.

    I was away from family, extended family for extended periods of time. I missed scores of birthdays, holidays and time that most civilians do not have to sacrifice. I’ve been in war zones where my life and the life of my wife was threatened. I endured months of living in a tent, in the hottest and coldest of climates.

    I was unable to buy a house due to frequent PCS moves and I was not making “big money” until far into my career and far later after my civilian peers with the same experience levels and education. So, while I’m just getting underway in starting to pay off my 30-year fixed loan, the vast majority of my civilian friends have either paid off their homes are within a few years of doing so. Some have considerable equity while all of them are now able to take the money they were paying for a mortgage and invest it elsewhere. And don’t forget that their spouses may have chosen a career, too, something which my wife was unable to do because of our frequent and short-notice moves. So, we don’ t that 30 years of extra salary and another retirement fund to lean on.

    But now I’m being told that my Tricare rates are going up because they haven’t done so since the late 90’s? That my costs need to be more on par with my civilian counterpart. Are you kidding me?

    li class="comment odd alt thread-odd thread-alt depth-1" id="comment-89366">

    My experience is similar to that expressed by WOB, except that my 20+ year career, which began in 1960, was with the Navy. I remember being told on countless occasions by senior personnel, both enlisted and officer alike, that by choosing to make the Navy my career for at least 20 years, my family and I would receive free (i.e., earned) medical and dental care for life. As far as I was concerned they were employees of the United States Navy with authority to make such offers. As a matter of fact, I remember one of them telling me that the reason my pay was so low was because some of it was being withheld to help pay for my future retirement benefits. Like WOB, I, along with my wife and two young sons, packed up and moved seven times, four of which were trans-Atlantic moves. Less than a year after I retired the “Free Lifetime Dental” went down the drain. What happened to that promise? Now our Earned Medical Benefits are being threatened to go the same way. If I were a young officer or enlisted man or woman in the United States military service at this time, the last thing I would do is make a career of it.

    li class="comment even thread-even depth-1" id="comment-89733">
    YEP, USN (ret)

    All I can say is that the fabric of the nation is rapidly changing. I believe it is changing for the worse. What was valued years ago, does not carry the same value to many Americans today. All it takes to wipe away military retiree benefits, is signing a new budget with damaging provisions into law. That’s it. There is no such thing as a promise from Governement. Once the value of a military career decreases, the benefits are quick to follow no matter where you are in the cycle of using them. Just retired a couple years ago myself after 26. How could I recommend to my kids to take a similar path?

    li class="comment odd alt thread-odd thread-alt depth-1" id="comment-89925">

    Ditto on previous comments of many moves (18 in 25 yrs Navy) negating home buying and causing wife to work odd jobs disadvantageous to a career, suffering from low pay……how can you make that up to a GI and family, poor health care overseas (lost a child), inadequate housing, living in war zone, etc….. We have too many civilians in all aspects of govt that have no idea what hardship is like other than to work overtime…. Even in Pentagon….. And to suffer health problems the rest of your life after risking your own life… For whom, for what….
    Memories of past proposals easily forgotten today……everything for the budget…. Hogwash