Posted on: Monday, May 2, 2005
Generous Pentagon benefits questioned
Washington Post
WASHINGTON — Confronting medical costs that have doubled in four years, military officials and congressional leaders last week said the Pentagon needs to rethink the generous coverage it provides or risk making sacrifices in other areas of the Defense Department budget.
A rich benefit package, coupled with expanded retiree coverage, have thrust the Pentagon into the same financial predicament that is threatening the profitability of such major companies as General Motors Corp., administration officials told the Senate Armed Services subcommittee on personnel Thursday.
The cost of covering 9 million active-duty members, retired personnel and their families rose from $18 billion in 2001 to $36 billion this year, said William Winkenwerder Jr., assistant secretary of defense for health affairs. By 2010, that figure will likely reach $50 billion, he said, with 70 percent devoted to retiree coverage.
"Looking to the medium- to longer-term, quite candidly, we are concerned," Winkenwerder and David S.C. Chu, undersecretary of defense for personnel and readiness, said in written testimony. The total defense budget is approximately $419 billion.
One of the main culprits is Tricare for Life, the program enacted in 2001 that guarantees comprehensive coverage for retirees. This year, the retiree program will cost $11 billion, Winkenwerder said, although a portion is being invested in a long-term trust fund.
"We're going to have to look to redesign that promise in the future" or the budget challenge "will continually get out of hand," said Sen. Lindsey Graham, R-S.C., chairman of the subcommittee.
Over the past decade, military personnel, retirees and their families have experienced virtually no increase in co-payments, while federal civilian workers saw out-of-pocket costs increase between 57 percent and 87 percent, Winkenwerder told the panel.
At a time when the average American worker pays $2,600 a year in health insurance premiums, most people enrolled in Tricare pay less than $500, said S.D. Hosek, co-director of the Center for Military Health Policy Research at the nonprofit Rand Corp. And while most medications cost less than $10 under Tricare, private plans charge $10 to $40.
