Pentagon Budget Targets Pay, Benefits, Tricare

Ohio Air National Guard Senior Airman Bruce Moman, an Aerospace Medical Services Journeyman from the 180th Fighter Wing Medical Group, takes the blood pressure of a patient as part of an annual physical health assessment. U.S. Air Force photo

The formal rollout Tuesday of the Defense Department's Fiscal 2015 budget stressed a commitment to cutting pay, benefits and health care costs in an effort to fund the ability of the force "to project power and win decisively."

"Given the sharp growth in military compensation, such as medical costs that have more than doubled since 2001, the Department is taking steps in the FY2015 budget request to slow the growth in military pay and health care costs," the Pentagon said in its $495.6 billion budget request.

The detailed plan followed the budget outline put forward by Defense Secretary Chuck Hagel last week that would continue to reduce the size of the Army and the Marine Corps while boosting readiness "to yield a smaller but more ready and capable force."

As expected, the plan sought to spare favored programs from cutbacks, including cyberwar, Special Operations, nuclear deterrence and drone operations.

The Pentagon's budget plan was also counting on an additional $26.4 billion in funding for Fiscal Year 2015 that would come from a proposed $52 billion Opportunity, Growth and Security Initiative to be included in President Obama's federal budget plan. The Pentagon's share would be $26 billion, with the rest going to jobs training and education.

Approval of the initiative that would be partly paid for by raising taxes was highly problematic in an election year, but the Defense Department already had plans for how it would be spent.

Under the initiative, the Air Force would get two additional F-35 Joint Strike Fighters, 10 C-130s and 12 MQ-9 Reaper drones; the Army's helicopters would be modernized; and the Navy would get eight more P-8 Poseidon submarine hunters.

In addition, the initiative would fund much-needed repairs to base facilities and housing. The baseline defense budget had enough money to keep facilities and base housing safe and secure "but not enough to keep up with long-term deterioration," the Pentagon's budget overview said.

The budget proposal acknowledged that cutting pay and benefits would be an uphill battle with Congress. Last month, Congress scrapped the Pentagon's plan to cut cost-of-living adjustments for working-age military retirees.

"Finding the appropriate balance in the current fiscal and political environment is a monumental challenge," the Pentagon said.

The projections put forward by the Pentagon through 2019 were also counting on an additional $115 billion in funding that would come from Congress easing up on the mandatory defense cuts called for under the sequester process.

In way of explanation, the Pentagon said on pay, benefits and health care that "if this area does not take a reduction when the overall defense budget decreases, these costs can quickly eat into the training and equipping portions of the budget."

The charts prepared by the Pentagon to justify the cuts showed that military pay and benefits increased from $99.5 billion in FY2001 to $183.8 billion in FY2012.

The budget proposed by President Obama called for a one percent pay raise in FY2015, down from the 1.8 percent initially projected, with additional one percent pay raises for FY2016 and FY2017, 1.5 percent in FY2018 and 1.8 percent in 2019. The savings in pay would be about $3.8 billion through 2019, the Pentagon said.

On base housing, the proposal called for the Base Housing Allowance to cover 95 percent of housing rental and utility costs by FY2019, and renter's insurance would be eliminated from the housing rates. The savings would be $5 billion, the Pentagon said.

On base commissaries, the Pentagon proposed reducing subsidies for commissaries by $1 billion over three years. The reduction would leave the Defense Commissary Agency with an annual appropriation of about $400 million in FY29017, compared to the current subsidy of $1.4 billion. The savings on reducing the commissaries' subsidy would be about $3.9 billion, the Pentagon said.

One of the most controversial initiatives in the budget plan was the proposal to consolidate the Tricare managed care and fee-for-service options – Tricare Prime, Standard and Extra – into one Military Treatment Facility system.

The changeover would involve "modestly higher deductibles and co-pays," the Pentagon said, "to encourage members to use more affordable means of care."

Under the changes, "a retiree family will pay about 11 percent of total health care costs – well below the original 27 percent when the program was established in the mid-1990s," the Pentagon said.

-- Richard Sisk can be reached at richard.sisk@monster.com

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