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The Honolulu Advertiser
Posted on: Monday, February 13, 2006

Bush plans healthcare fee increase

By Tom Philpott

The Bush administration, in its fiscal 2007 defense budget, unveiled its plan to raise TRICARE health insurance fees and deductibles for military retirees under age 65 and their dependents. Co-payments in the TRICARE retail pharmacy network also would climb, but for all beneficiaries except active duty.

Marine Corps Gen. Peter Pace, chairman of the Joint Chiefs, immediately endorsed the plan, describing it as a necessary "renorming" of TRICARE fees and deductibles left unchanged since they were set in 1995.

With equal speed, military associations attacked the proposal.

Compared to an earlier draft, the final plan accelerates phase-in of TRICARE increases so major changes occur over two years, not three. Details are at www.tricare.osd.mil/stb.

Annual enrollment fees for TRICARE Prime, the managed care program, would double for senior enlisted (E-7 and above) and nearly triple for officer retirees. But the final plan includes a lower, third tier of fees and deductibles for retirees E-6 and below and their dependents. Their Prime enrollment fees would rise only by 41 percent, sparing a million beneficiaries from steeper increases planned for senior enlisted.

The plan also calls for a raise in annual deductibles for TRICARE Standard, the military fee-for-service insurance option. And it calls for a first-ever enrollment fee for Standard users.

Once new TRICARE fees are fully reset, in 2008, they would be adjusted annually based by healthcare inflation, in fact, applying the same percentage increase used to raise premiums each year for federal civilians covered under the Federal Employees Health Benefit Plan.

Finally, to slow military health costs more, co-payments under the TRICARE retail pharmacy network would be raised, for generic drugs to $5, up from $3, and for brand name drugs to $15, from $9.

Testifying before the Senate and House armed services committees, Pace and Defense Secretary Donald Rumsfeld said the TRICARE changes are unanimously backed by all of the Joint Chiefs.

"We believe this healthcare benefit is unique and superb," Pace said. "We want it to continue for all of our members of the active-retired community and we believe renorming, to what you (Congress) established in 1995, is one way to assist ... the goal of long-term sustained healthcare."

Sen. Lindsey Graham, R-S.C., chairman of the military personnel subcommittee, lauded Pace and Rumsfeld "for putting on the table some new ways of looking at military healthcare. ... I stand ready to help."

The plan got a cooler reception from House committee members. Rep. Neil Abercrombie, D-Hawai'i, said the fee increases were more evidence the only Americans paying for the Iraq war are military people.

Rep. John McHugh, R-N.Y., military personnel subcommittee chairman, worried that of $578 million in projected cost savings from the TRICARE plan for 2007, $420 million "are imputed savings," which depend on "changes in behavior." In other words, McHugh said, the department expects a lot of people not to use TRICARE because of the higher fees and deductibles.