MILITARY UPDATE
Income survey excluded seriously disabled retirees
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
The income survey of military retirees cited by a top defense official to argue against lifting the ban on "concurrent receipt" appears to be a flawed tool for judging the effect of severe disabilities on retiree income.
In a recent interview with Military Update, David Chu, undersecretary of defense for personnel and readiness, said the 1996 Survey of Retired Military Personnel showed average household income among all retirees, a mix of officers and enlisted, at roughly $60,000, far from impoverished.
More significantly for refuting concurrent receipt initiatives now before Congress, Chu said household income averages don't vary substantially between nondisabled and disabled retirees. That, he said, indicates that retirees with disabilities are keeping up with peers, at least in total earnings.
"So it's unclear to us what problem we're solving," said Chu, if Congress lifts the ban on disabled retirees receiving both full military retirement and full disability pay from the Department of Veterans Affairs.
The ban on concurrent receipt, which every administration for decades has fought to maintain, requires military retirees to forfeit a dollar in retired pay for each tax-free dollar they draw in VA disability compensation.
But the survey Chu cited did not have responses from retirees rated 100 percent disabled by the Department of Defense and retirees with sufficiently high VA disability ratings that all their retired pay was forfeited to the dollar-for-dollar offset rule. Simply put, the most seriously disabled retirees, those most likely to earn less in second careers, were not surveyed.
The survey sample of retirees with disability ratings of 70 percent to 100 percent was so small — 337 total out of 19,484 respondents — that an economist would deem it statistically insignificant.
Chu's staff acknowledged the resulting income comparisons aren't a perfect fit for challenging the merits of concurrent receipt; that was not a goal of the survey when conducted.
"Unfortunately, members with full (offsets for) disability were eliminated from the survey because one of the primary objectives of the survey was to make labor market comparisons between retirees and their civilian counterparts," according to a background paper from Chu's staff.
A retiree income survey that ignores the seriously disabled can't be seen as very relevant to a House initiative that would restore full retired pay to retirees with VA disabilities of 60 percent or higher. But defense officials said the results are relevant for challenging the Senate's plan to lift the ban on concurrent receipt for all 700,000 retirees with VA disabilities, at a cost of $58 billion over 10 years. It also should sway Congress to study the issue more thoroughly before making any change, officials said.
Even with the most seriously disabled excluded, the survey confirmed average earnings of retirees do decline if they have disabilities.
For instance, nondisabled retirees had average earnings in 1996 of $33,783. Retirees with 10 percent to 30 percent VA-rated disabilities earned an average of $32,150, or $1,600 less per year. Those 40 percent to 60 percent disabled earned $27,693 on average, almost $6,000 less than nondisabled retirees.
Defense officials noted the income differences fall, even disappear, when total family income, rather than individual earnings, becomes the comparison point. Family income averaged $64,116 for nondisabled retirees in 1996. It climbed to $64,915 for retirees with VA disabilities of 10 percent to 30 percent and dropped to $59,679 for those with 40 percent to 60 percent ratings. Among 252 respondents who had VA disabilities of 70 percent or higher, total family income averaged $66,052.
Chu's staff has raised another issue that is a rising complaint among veterans forced to leave service short of retirement.
"This flawed and costly legislation would pay veterans who happen to be retirees more, while doing nothing for veterans most in need, namely those short of retirement," a staff member said. "Most veterans would receive no additional payments and that doesn't seem right."
Mail-order pharmacy
TRICARE officials tapped a new company to run its mail-order pharmacy program beginning next March. The program's name also will change, from National Mail Order Pharmacy to TRICARE Mail Order Pharmacy. Express Scripts Inc., of Maryland Heights, Mo., landed the $275 million, five-year contract and will replace Merck-Medco as administrator.
Questions, comments and suggestions are welcome. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com.
