Hurdles Remain High for any Bump in Retiree TRICARE Fees

The Defense Department's top health official believes that "within the next year or two" TRICARE fees, co-pays and deductibles will "begin to gradually go up" for military retirees.

But Dr. S. Ward Casscells, assistant secretary of defense for health affairs, also says he "has a lot of sympathy with" the argument of older retirees that they served during times when military pay was low and lifetime health care was promised if they served at least 20 years.

Dr. Gail Wilensky, co-chair of the Task Force on the Future of Military Health Care which has endorsed higher TRICARE fees for retirees, believes Congress will be receptive if fee increases are part a broader effort to make military health more efficient.

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"But how much they choose to do next year, in an election year when we're in a war period, and how much they might do the year after, is a more difficult question," Wilensky said after a day briefing key lawmakers and Capitol Hill staff on task force recommendations.

With the U.S. military still fighting two protracted wars, with Congress showing a strong bias toward reelection over fiscal discipline, prospects appear slim that military retirees will face higher TRICARE fees anytime soon.

This month the House-Senate conference report on the 2008 defense authorization bill, which has blocked TRICARE fee increases for a second consecutive year, said Defense officials have "options to constrain the growth of health care spending in ways that do not disadvantage" military retirees.

Political winds, it seems, continue to guard the wallets of millions of military beneficiaries.  The task force proposes that retirees under 65 and their families face a four-year phase in of higher fees and co-payments under TRICARE Prime, the managed care option.  It calls for higher deductibles under TRICARE Standard, the fee-for-service option.

Retirees age 65 used TRICARE for Life, wrap-around insurance to Medicare.  They would begin paying a new annual enrollment fee of $120, under the task force plan.  Most fees would be adjusted annually based on the rise in the cost of civilian-purchased care for TRICARE users.  Drug co-pays would be raised to encourage use of mail order rather than the two more outlets of base pharmacies and the TRICARE retail network.

Casscells told a small group of reporters Dec. 13 that he believes military retirees will see the start of a gradual rise in out-of-pocket medical costs over the next few years.  The task force "just made so much sense," he said.  It argues that 12 years of frozen fees can have an "adverse" impact the benefit, Casscells said.  When beneficiary cost shares stagnate, the benefit becomes overused and under appreciated.  A third concern, he said, is the steady migration of working-age military retirees away from employer-provided health plans and on to TRICARE rolls, driving up system costs.

"TRICARE has gotten so popular that, if we subsidize it artificially, we will do so at the detriment to our military treatment facilities," he said.

Casscells said more health care dollars need to be shifted into maintaining and staffing base hospitals and clinics.  "Even take a flagship like National Naval Medical Center at Bethesda [Md.]," he said.  "They are not as full [of patients] as they need to be to maintain excellence.  Patients have choice now and they tend too often to go into the private sector."

Unless the pattern is reversed, he said, "we won't have the numbers of patients needed to justify a neurosurgical trauma specialist or a radiologist or a pediatric endocrinologist...We have to maintain those skills."

The task force's call for higher fees are "being discussed now" inside the Pentagon and with the Office of Management and Budget.  In some form they likely will be endorsed in the president's fiscal 2009 defense budget to be delivered to Congress by early February, he said.

Casscells noted that Congress continues to block fee increases for retirees.  He blamed that, in part, on the design of earlier proposals calling for steep and quick increases.

"The staff in my office said, 'Well, the civilian sector, they're doing this too.  Co-pays are going up.  Deductibles are going up.' The veterans said, 'Well, that's not my problem.  We had a deal with you.  And furthermore, when I signed up, the pay was really lousy so we didn't get well taken care of on the front end. And now we want to hold you to your original bargain.' "

Casscells said he understands the argument made by service associations on behalf of older retirees that they served when pay was low and lifetime access to health care was a promised benefit.

"So I do think we need to be as generous as we can afford to be -- without taking away from the health care we offer to serve in theater."

After briefing lawmakers, task force co-chair Wilensky said Congress takes seriously recommendations to slow health cost growth.  But lawmakers want higher fees considered only as part of a broader effort to make the health system more efficient.  The task force, for example, does call for: a realignment of contract incentives so military direct care and civilian purchased care operate more flexibly; reforms to health care procurement; an audit of TRICARE enrollees to ensure that only eligible beneficiaries gain access; and a greater emphasize on wellness and disease prevention.

Most of these initiatives, however, don't require legislation.  So they might provide only a fig leaf of political protection in any future vote to raise TRICARE fees.

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