Alarmed that soaring healthcare costs are crimping budget dollars for higher-priority defense programs, the Joint Chiefs intend to endorse the Defense Department's plan to raise TRICARE fees sharply over the next three years for retirees younger than 65 and their families, senior military officers say.

One officer described a likely scenario, early this year, of the nation's top military leaders sitting shoulder to shoulder before the armed services committees to testify that medical costs are a critical readiness issue.

Higher TRICARE fees for younger retirees also will be endorsed in the Quadrennial Defense Review report, which the service chiefs are completing to propose a realignment of military programs to meet future needs. The QDR recommendations are expected to be unveiled in early February, when the Bush administration also sends its 2007 defense budget request to Congress.

The "24-star" endorsement, a reference to the six four-star officers comprising the Joint Chiefs — the chairman, vice chairman, and top officer of the Army, Navy, Air Force and Marines Corps — is seen as necessary to persuade Congress to accept the first TRICARE fee increases in a decade.

Defense officials want annual enrollment fees for TRICARE Prime, the military's managed care plan, to triple by October 2008 for working-age retired officers, from $230/$460 a year (individual/family coverage) up to $750/$1,500, and to double, to $450/$900, for under-65 enlisted retirees.

Retirees who use TRICARE Standard, the military's traditional fee-for-service health insurance, would also see their annual deductible raised. They also would pay an annual enrollment fee for the first time. Beyond 2008, all TRICARE fees and co-payments would be indexed to medical inflation.

TRICARE retail pharmacy co-payments also would be raised, which would be the only change to affect Medicare-eligible retirees, too. The goal would be to discourage purchase of maintenance medicines through the more expensive retail network, by increasing the $3 copayment for generic drugs to $5 while offering free generic drugs by mail. The current $9 copay for brand drugs would jump to $15 retail and $10 by mail order. Officials assume a 14 percent shift of TRICARE retail users to base pharmacies or into the mail order program.

Dr. William Winkenwerder Jr., assistant secretary of defense for health affairs, and his staff developed the proposed fee increases as a way to slow the rise in health costs, most of which is traced to the start in 2001 of the TRICARE for Life and senior pharmacy programs for elderly beneficiaries.

The idea behind Winkenwerder's plan is to have working-age retirees and family members pay a bigger share of their TRICARE costs or use alternative health plans offered by civilian employers.

TRICARE officials estimate that the higher fees and a decline in users will dampen projected healthcare costs by $12 billion within five years and $32 billion through fiscal 2015. But the numbers are viewed as optimistic, even by senior analysts, one source explained. They assume that 600,000 current beneficiaries, facing higher fees, will shift to employer-provided health insurance by 2011.

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