Defense Department budget proposal would squeeze Tricare

By From page C4 | March 02, 2014

One of the two biggest changes to military compensation proposed in the president’s 2015 defense budget request would roll back, after 20 years, an offering of multiple health insurance options to millions of beneficiaries.

The other would end deep discounts on groceries, a benefit that is decades old and long had been viewed as critical to a volunteer force.

But military leaders, worried about post-war budget cuts, see gaps in readiness, risks to key weapons programs and deeper force cuts if Congress continues to block these types of compensation reforms. So they propose bold moves sure to anger service members, retirees and families.

Odds are slim Congress will approve most of them in 2014, an election year. Some lawmakers already are complaining that pay and benefit reforms should be reviewed by the blue ribbon Military Compensation and Retirement Modernization Commission, which will report its findings in February 2015.

Here, however, is how Defense Secretary Chuck Hagel and Army Gen. Martin Dempsey, chairman of the Joint Chiefs, hope to save $11 billion in compensation costs during the next five years:

Pay caps

The January 2015 military raise would be capped at 1 percent, identical to this year’s increase. Flag and general officers would not get a raise in 2015. More pay caps would follow, but no one’s pay would be cut, officials emphasize.

Health insurance

The triple-option Tricare program of Prime, Extra and Standard would be merged into some sort of fee-for-service insurance option, such as Standard, for beneficiaries under age 65.

While active-duty members still would have access to free health care, dependents and working-age retirees would face higher costs, including a share of medical expenses and perhaps a new annual enrollment fee, set initially at $285 for individuals and $569 for families.

Patient costs would be lower if they can access military treatment facilities or use “preferred” providers which offer military discounts. New co-pays would be set for retiree visits to military treatment facilities. Co-pays also would be set for military families and retirees who use emergency rooms inappropriately for routine care.

“We’re merging our Tricare health-insurance programs into a single health plan that’s restructured to encourage members to use the most affordable means of care, like military treatment facilities, preferred providers and generic prescriptions,” said a Defense official.

Tricare Prime, the managed-care option that allows beneficiaries to enroll in an approved network of providers for a small annual fee plus modest co-payments for care, presumably would end. Defense health officials argue Congress hasn’t allowed fees to be raised enough to keep Prime affordable. While managed care in the private sector still serves to dampen health costs, Prime is seen as too costly to operate for the military.

Health-care changes will focus more closely on integrating military direct care with private sector health services. Civilian support contracts will be reshaped “in ways that can improve integration with military medical facilities, reduce unnecessary overhead and achieve greater simplicity for the beneficiary and the government,” senior health officials testified Wednesday.

Beneficiaries 65 and older would continue to have access to Tricare for Life, the robust insurance supplement to their Medicare coverage. But they would face a small enrollment fee. It might be set at 1 percent of military retired pay but capped so as not to exceed $300 a year. Exact details will be available Tuesday when the budget is formally rolled out.

Commissary cuts

The prized commissary system, which offers deep discounts on groceries, would see taxpayer support slashed from $1.4 billion annually to $400 million. This would occur across three years and lower average shopper discounts from 30 percent to 10 percent compared to commercial grocers. The military would continue to subsidize commissaries overseas and at remote U.S. bases.

The intent, said Hagel, is not to close any stores. But resale industry experts say closings are inevitable once stateside stores can’t offer enough savings to keep patrons from using commercial discounters off base.

“We are not closing commissaries,” agreed one defense official. “They will be forced to close on their own.”

Exchanges, or base department stores, are self-sustaining. But they, too, could be jeopardized if they lose patrons because their top priority for shopping on base is discounted groceries. If exchanges profits fall, so too will funds for base morale, welfare and recreation programs, critics contend.

Populations hardest hit would be young military families as well as older retirees and survivors who prize store discounts as deferred compensation for years of service when pay and allowances were relatively low.

Hagel should understand that the benefit of commissaries stateside is not just to have stores on base, said Joyce Wessel Raezer, executive director of the National Military Family Association.

“The 30 percent savings is the benefit. If savings go down to 10 percent, that benefit is gone,” Raezer said.

Housing allowances

Service members living off base stateside would see Basic Allowance for Housing level off for a few years. The plan is not to cut payments, but to cap yearly adjustments until members must pay five percent of monthly rent and utility costs using other income.

In the 1990s, BAH rates covered only 82 percent of average rental costs off base. When war broke out, Congress gradually closed that allowance gap.

Today, BAH fully covers average rent, utilities and renter’s insurance. Defense officials now call that coverage “unsustainable.”

Hagel and military chiefs want to cap the allowance until average BAH covers 95 percent of rent and utilities. BAH also no longer would be set to cover renter’s insurance, saving perhaps $200 a year per recipient.

Send comments to Military Update, P.O. Box 231111, Centreville, VA, 20120, email [email protected] or tweet @Military_Update.


Discussion | 3 comments

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  • Dave ShreeveMarch 02, 2014 - 10:37 am

    What else is to be expected when you have liberal Democrats running the show. The only area of the budget they really want to cut is Defense because despite their protestations to the contrary, liberal Democrats despise the military because it takes money away from social programs designed to make people more dependent on the government, and more liable to vote for Democrats. The current administration has wasted far more money on Fast and Furious, Solyndra and other "green" energy boondogles, Obamacare, Cash for Clunkers, etc, etc, etc, than would be saved by cutting the commissary subsidy by $1 billion over three years. When the total DoD budget is in excess of $500 billion a year (not including money for operations in Afghanistan), the savings would be less than 1/4 of 1%, or as the government would call it, a rounding error. Economically it makes no sense. It is a purely political decision. It appears to me that they want to discourage people from staying in, or joining the military because of reduced benefits. Less people staying in, less money to be paid to future retirees. In the mean time, they don't care if they screw over current retirees and active duty military and their families. Same with Tricare. They want to vastly increase the costs to retirees so that they will have to go onto Obamacare, and that would also serve as a disincentive for current active duty members to stay on until retirement.

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  • Danny BuntinMarch 02, 2014 - 7:24 pm

    That is hilarious, your mad that your social program is on the chopping block. Then you point the finger at other social programs that you do not get. Comedy gold.

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  • Rich GiddensMarch 02, 2014 - 12:48 pm

    Yep, the Rat political Party hates the military and it shows. The way they see it, that GI living in dirt or flying dangerous missions has it too good but yet they themselves would never lift a finger to serve.

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