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The Honolulu Advertiser
Posted on: Monday, January 22, 2007

Battle rages to sustain TRICARE

By Tom Philpott

Senior Defense officials have renewed their call to raise TRICARE enrollment fees and co-payments for under-65 military retirees and their dependents.

Officials are warning anew that unless the cost of military healthcare is "re-balanced" so the beneficiary pays more and the government less, the prized lifetime benefit, arguably the best in the country, cannot be sustained over time.

Defense officials said they briefed key lawmakers on the planned fee increases back in 2005 and most seemed to agree that they were needed. But in early 2006, an election year, lawmakers bolted like cats from a sprinkler after the Pentagon's "Sustain the Benefit" plan officially was unveiled.

This year, Defense officials hope that, at a minimum, their call for higher TRICARE fees will win the endorsement of a new study group, the Task Force on the Future of Military Healthcare. The 14-member panel was created by Congress, but its members were appointed by the same officials pressing for fee increases.

Half of the task force already works for the Department of Defense, being senior military officers or civilian executives. Congress gave them a broad range of issues to examine. But at their first public hearing Jan. 16, Dr. David Chu, under secretary of defense for personnel and readiness, told the task force that the "elephant in the room" it needs to address "is the structure of benefits."

Ideally, DoD wants the task force to endorse higher TRICARE fees for 3.1 million beneficiaries in an interim report to Congress due in May, presumably early enough for legislative action this year when no lawmaker stands for re-election.

Defense officials briefed the task force on the military health system's skyrocketing costs. The total this year will be $38 billion, up 131 percent since 2000. Healthcare spending now is 8 percent of the defense budget but will climb to 12 percent, or $64 billion, by 2015 unless fees are increased, officials said.

Most of the growth is tied to new benefits enacted since 2001, including TRICARE for Life for 1.9 million Medicare-eligible beneficiaries. Two other key factors are medical inflation and a shift by retirees into TRICARE and away from costlier health plans earned in second careers or by working spouses.

Defense officials conceded to the task force that their plan's projected cost savings — $11.2 billion over five years — did not survive a review by the Congressional Budget Office. CBO said $6.5 billion to $7 billion savings is more likely. The TRICARE increases planned just aren't big enough to spark the behavior DoD projects: that 150,000 beneficiaries will leave TRICARE and another 350,000 will decide to stay under employer-provided plans rather than switch to TRICARE.

Dr. William Winkenwerder, assistant secretary of defense for health affairs, said "unfair criticism" has been leveled at the plan, including a charge that higher fees will be a great financial burden. Not so, he said. An E-6 retiree in TRICARE Prime, the managed care option, has been paying roughly $38 a month since 1996. That would increase to $50 over two years. Over the same period, E-6 retired pay has climbed an average of $300 a month to keep pace with inflation, said Winkenwerder.