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TRICARE Fee Increase
Tom Philpott | December 08, 2005
Defense Department officials have drafted plans to raise TRICARE enrollment fees and deductibles sharply over the next three years for military retirees under age 65 and their families, about three million beneficiaries.
If the changes touted by senior Defense officials are adopted, annual enrollment fees for TRICARE Prime, the military’s managed care option, would triple by October 2008 for working-age retired officers and double for enlisted retirees.
Yearly deductibles for retirees using TRICARE Standard, the fee-for-service health insurance option, would double for officers and rise by a third for enlisted. Also, for the first time retirees who use TRICARE Standard would pay an enrollment fee in addition to their deductible.
Pharmacy co-payments also would be raised but for all retirees and their families, regardless of age, if they use the retail drug network or the TRICARE mail order program to buy brand name drugs on the military formulary.
The aim of these initiatives is to slow the projected rise in military healthcare costs by as much as $12 billion over five years and $32 billion through fiscal 2015. This would occur, proponents argue, by having working-age retirees pay a greater share of TRICARE costs and by encouraging others to switch to their employer-provided health insurance.
One assumption being used to estimate cost savings is that for every 10 percent increase in out-of-pocket costs, the number of beneficiaries using TRICARE Prime or Standard will fall by one percent. If accurate, 600,000 beneficiaries would drop out of TRICARE plans by 2015.
Defense officials have expressed alarm over a recent migration of retirees into TRICARE and away from employer-provided health insurance. Dr. William Winkenwerder, assistant secretary of defense for health affairs, has said that some civilian employers are offering their retired military workers cash incentives to use TRICARE instead of company insurance.
Bryan Whitman, deputy assistant secretary of Defense for Public Affairs, said defense healthcare spending, if left unchecked, could reach $64 billion by 2015, or 12 percent of total defense spending, endangering a prized benefit. In fiscal 1995, he said, healthcare was only five percent of the defense budget.
TRICARE Prime enrollment fees of $230 a year for individual coverage and $460 for family coverage, and the TRICARE Standard deductible of $150 (single) and $300 (family) haven’t been raised since they were set more than a decade ago. Whitman said this contributes to growth in department costs.
Budget documents contend the TRICARE fee structure in only one-third as costly to users as equivalent civilian plans. Defense officials not only want fees and deductibles raised for retirees and their families, in three hefty annual increments, but also want fees after that indexed to inflation so they climb in lockstep each year with growth in medical costs nationwide.
Some of the planned TRICARE increases won’t require a change in law, only in regulation, although department plans for fees are sure to be the subject of congressional hearings in 2006. Lawmakers could step in to block or amend the plan if the planned increases seem unreasonable.
Draft budget papers predict a “pushback” from retiree organizations. The first shot was fired Dec. 8 when the Military Coalition, a consortium of 36 service associations and veterans’ groups, sent a letter to members of the House and Senate armed service committees urging that they oppose department plans to shift a larger share of medical costs to retirees.
Congress gave military retirees better health benefits as an “offset to the unique demands and sacrifices inherent in a military career,” the coalition said. Requiring them to pay more for health care, the letter argues, “is not a prudent course of action, especially when the nation is at war.”
The “benefit adjustment” scenario being discussed, both in the fiscal 2007 budget formulation process and resource-sharing debate for the Quadrennial Defense Review, calls for all under-65 retirees to pay more to use TRICARE Prime, Standard and Extra, the preferred provider network option, but retired officers also would pay more than enlisted retirees.
Prime enrollment fees (now $230/$460) would be raised for retired officers to $400/$800 (individual/family) next October, to $600/$1200 a year later and to $750/$1500 by October 2008, the start of fiscal 2009. Enlisted retirees under 65 would see Prime enrollment fees climb to $300/$600 next October, to $375/$750 a year later and to $450/$900 in October 2008.
First-ever enrollment fees for TRICARE Standard would start for officers at $150/$300 (individual/family) and rise to $225/$450 by October 2007 and to $300/$600 in 2008. Enlisted retirees would pay $100/$200 next October, rising to $150/$300 the next year and to $200/$400 in 2008.
Annual deductibles under TRICARE Standard and Extra, now $150/$300, would climb for retired officers to $200/$400 next fall, to $250/$500 in October 2007 and to $300/$600 in 2008. Enlisted retirees would see their Standard deductible rise to $175/$350 next October, remain there for two years and rise to $200/400 in October 2008.
Co-payments under the TRICARE pharmacy program would be reshaped to discourage purchase of maintenance medicines in the more expensive retail network. The $3 co-payment for generic drugs will rise to $5 in the retail network but would be free if order by mail. The current $9 co-pay for brand drugs would rise to $15 in retail network and $10 by mail.
For a detailed chart showing the proposed TRICARE Fee changes visit www.military.com/TRICARE_Chart.
Let your public officials know how you feel about the TRICARE fee increase, visit the Military.com Legislative Center.
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Copyright 2008 Tom Philpott. All opinions expressed in this article are the author's and do not necessarily reflect those of Military.com.