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The Honolulu Advertiser
Posted on: Monday, February 27, 2006

Retirees may pay more for care

By LIZ SIDOTI
Associated Press

WASHINGTON The Bush administration wants many military retirees to pay more for healthcare, a proposal that could force the Republican-run Congress to choose between savvy politics and budget discipline.

Annual healthcare costs for the military have doubled to nearly $38 billion in the past five years, nearly one dollar of every $12 the Pentagon spends. The price tag is projected to soar to $64 billion by 2015.

To help contain those costs, President Bush's proposal includes higher prescription drug co-payments for all beneficiaries of military healthcare except those on active duty and increased annual enrollment fees for military retirees under age 65.

If lawmakers want to follow Bush's lead and control spiraling health care expenditures, they will have to vote to boost costs for some of the nation's military families in a year in which the entire House and one-third of the Senate is up for re-election.

Congressional support for the proposal is uncertain. Lawmakers question whether the plan is the best route, and they have rejected similar efforts in the past.

The Pentagon says curtailing healthcare costs is an urgent matter.

"Our current trend is unsustainable," Dr. William Winkenwerder Jr., assistant secretary of defense for health affairs, said.

Critics, including some lawmakers, accuse the administration of seeking to save money by raising fees to steer military retirees toward health plans their current employers sponsor. That would take a burden off the Pentagon's healthcare system, called TRICARE.

"That's not saving money, that's kind of doing the little shell game," said John Class, deputy director of government affairs for healthcare at the Military Officers Association of America.

Private employers, as well as some state and local governments, increasingly are asking military retirees on their payrolls to use TRICARE to avoid having to pay insurance premiums for those employees.

"We have created a magnet to attract a whole lot of people into this that otherwise might not have been in it," Defense Secretary Donald H. Rumsfeld told the House Armed Services Committee recently. "And it is something that we just have to face up to because it's an enormous amount of money."

"This is not what Congress intended," Winkenwerder added in an interview.

The Pentagon projects it could save $14.8 billion over the next five years if Congress approves Bush's plan.

Rep. John McHugh, chairman of the House Armed Services military personnel subcommittee, questioned the projections. He said the Pentagon appeared to be counting on savings from military retirees choosing their current employers' plan rather than the military coverage once the proposed increases kick in.

"I guess we could talk about the morality of that. Is that the way to contain costs?" McHugh, R-N.Y., said during the House hearing.

Critics say the Pentagon calculations assume that 600,000 military retirees will not enroll in TRICARE after the changes take effect.

About 9 million current or former military personnel are eligible for coverage under TRICARE, the military's HMO-like program. Of those, advocacy groups say about a third are retirees under age 65 and their families.

The federal government's share of healthcare costs for the military totaled $19 billion in 2001 and accounted for 4.5 percent of the defense budget, the Pentagon says.

Officials estimate that the projected cost of $64 billion by 2015 would account for 12 percent of the budget.

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