Military Update
Army surgeon general says financing gap remains
Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.
By Tom Philpott
Lt. Gen. James B. Peake, Army surgeon general, said military medical budgets are tight again for fiscal 2002, which began Oct. 1. But not so tight that hospital commanders, as in years past, will have to make "perverse" management choices to stay under their budget until Congress rides to the rescue.
Peake said he hopes the era of chronic budget shortages for Army medicine is ending. But the war on terrorism has made the money challenge more uncertain.
Army medicine has been especially busy this fall with four "areas of operation," Peake said in a Nov. 5 interview. First, the attack on the Pentagon killed 125 soldiers, sailors and civilian workers, as well as 64 airline passengers and crew. It injured another 114 people. Army medics helped with their care and assisted in locating and identifying remains.
Army medicine also provided infectious disease experts and related support to civil authorities in response to mail-borne anthrax attacks.
If Army medical response teams aren't deployed already for the war in Afghanistan — and Peake said he could not say — they soon will be.
Finally, Army medicine is deeply involved, along with the other services and defense officials, in the start of TRICARE for Life for 1.4 million elderly beneficiaries.
Terrorism. War. A new $4 billion-a-year benefit plan.
"It's different from Kaiser," quipped Peake, referring to the large nationwide health maintenance organization. "We've got more balls to juggle."
One ball Peak hoped to set down after a year as the Army's top medical officer was that of budget shortages. The Bush administration, congressional leaders, the Joint Chiefs of Staff all agreed that chronic shortfalls created a kind of death spiral for the services' direct care health system. If base hospitals or clinics lack staff or supplies to treat patients, the patients use TRICARE Prime, a network of contract physicians, or TRICARE Standard, a fee-for-service insurance plan. Both cost more than on-base care. As TRICARE costs rise, pressure builds to trim more from direct care. That results in even more patients going "downtown" for care.
That's the spiral. To stop it, Congress and the administration agree, they need to fully finance service medical budgets. So how did they do in 2002?
Better, Peake suggested, but a financing gap remains.
The Army sought $5.5 billion to cover "critical" medical needs. Budget guidance, with help from TRICARE accounts, came in at $5.3 billion, $200 million below the mark. That difference will slow efforts to treat more patients on base, improve facility maintenance, purchase new equipment, improve dental readiness, support the military blood drive.
Peake said the services' pharmacy budget will rise 15 percent, which is excellent. Money for on base, or direct, care will increase by 5.7 percent, which is up from the 3.5 percent average growth of recent years. But TRICARE support contracts are slated to jump 12 percent, a disparity Peake can't quite reconcile.
"We have the same requirements, in terms of delivering healthcare in many ways, that they do," he said of the TRICARE contracts.
But what Army hospitals and staff need is fiscal stability, Peake said. In 11 of the past 15 years, Congress stepped in near the end of a budget year to close a funding gap, usually with a budget supplemental. That uncertainty turned medical spending into a series of peaks and valleys, which creates inefficiencies and forces "perverse" decisions on staffing and resources, Peake said.
Defense Secretary Donald Rumsfeld and top aides recognized this and, before the war on terrorism, vowed to replace late-hour budget supplements with a medical system properly financed year to year. But Peake said the war itself likely brings unexpected medical costs.
How many patients, for example, are avoiding long waits and extra security checks required to reach a base hospital and, instead, are using TRICARE options?
"When we shut all our installations down, our productivity dropped, depending on where you were, 20 to 30 percent," Peake said. There were "significant drop-offs" in clinic traffic. "Whether that care went downtown is a little hard to know yet." If it did, TRICARE contractor costs will rise.
How will deployments of Army medical teams for Operation Enduring Freedom strain readiness accounts and affect family access to on-base care? What additional Army resources, if any, will have to be committed to the anthrax vaccine program or to other biological terrorism threats?
The big, long-term budget challenge, Peake said, is the condition of military treatment facilities. The Army medical maintenance backlog is $1.5 billion, severe enough to put hospital certification at risk at some sites. Peake reports a separate medical construction backlog of $1.9 billion.
Peake said he appreciates that Congress and the administration must weigh competing priorities, and that while there's a commitment to "fully fund" military medical budgets, there is some question over what that means.
"I don't know that we've ever laid the full bill on the table, frankly," he said, "or that we've been allowed to."
While Army medicine isn't fully financed yet, budgets are improving, top officials are listening and the number of patients being seen on base is rising again. The 2002 budget moves in the right direction, Peake said.
"I think I've been able to give better budgets to our people then they have had for a while," Peake said. Medical commanders now need to spend accordingly, he said, replacing worn-out equipment, hiring staff, repairing facilities — still doing so efficiently, but as though the herky-jerky budget days were over.
If they aren't, perhaps this time there's only a war to blame.
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