Sens. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, and John McCain of Arizona, its ranking Republican, endorse President Barack Obama's call to establish a $200 enrollment fee next year on Tricare for Life, the supplement to Medicare for 2.1 million elderly military retirees, their spouses and survivors.
The senators made their views known in separate letters to the Joint Select Committee on Deficit Reduction. The so-called "super committee" of 12 lawmakers faces a Nov. 23 deadline to recommend to Congress a plan to trim the nation's debt by $1.5 trillion over a decade.
The first-ever TFL fee would climb to $295 in 2013 and, under the president's plan, would be raised annually to keep pace with health care inflation. Levin, however, wrote that annual adjustments should match the percentage increase in enrollment fees to Tricare Prime, the managed-care option. Both the House and Senate versions of the 2012 defense bill would raise Prime fees in the future, for working-age retirees only, by the percentage increase given retirees as cost-of-living adjustments.
Levin and McCain also back Obama's other cost-saving initiative for Tricare -- charging sharply higher co-payments on drug prescriptions filled through the Tricare network of retail pharmacies.
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Obama wants co-payments at retail to be brought closer to the $45-per-brand drugs paid by federal civilian employees. But Tricare co-pays should be tied to a percentage of the government's cost per drug and thus raised automatically with drug prices. Initially, generic drugs at retail would be set at 10 percent of the department's cost. After 2013, this would climb to 20 percent. Co-pays for brand names would start at 15 percent of cost and be raised to 30 percent over time.
But Levin wrote that setting drug co-pays based on cost isn't feasible because the true cost of drugs dispensed at retail outlets is obscured by manufacturer discounts. Levin promised to work with Department of Defense officials on another plan that would bring the same savings, estimated at $20 billion over the next decade.
McCain noted the co-pay plan would "lead to significant increases in out-of-pocket costs for most DoD beneficiaries" to encourage greater use of Tricare's more efficient mail-order pharmacy option. He urged the joint committee not to embrace the co-pay plan without first consulting with Defense Department officials.
McCain's only suggestion to soften the blow for Tricare users is to have Defense Department and the Department of Veterans Affairs "use their market-force buying power to negotiate lower pharmaceutical costs, and that any savings generated by that action be passed on to the men and women who use these services. We cannot allow these fees to be raised without this action."
Levin recommended that the joint committee support the new TFL enrollment fee. McCain called it a "reasonable step" considering the hefty rise in national health care costs since Congress established TFL in 2001.
The House Armed Services Committee also commented on Obama's Tricare initiatives. Committee Republicans, led by California Rep. Howard P. "Buck" McKeon, the chairman, urged caution on any changes to military benefits in light of career demands that "are radically different from any private-sector or government-civilian endeavor. The retirement and health care systems that support the military community should reflect that reality."
Although they did not directly oppose the Tricare initiatives, House Republicans said the TFL fee plus higher drug co-pays at retail "would constitute a substantial double hit on the Tricare for Life population." And a third hit would occur as Medicare Part B fees rise, as expected, in 2012.
The White House debt reduction plan described military retirement as "out of line with most other government or private retirement plans." But it also said changes should not apply to the current force. Obama wants a powerful commission, similar to base closing commissions, to study the matter and offer a reform plan for future generations. Congress would have to approve or reject but could not alter it.
In other benefits matters, military and federal civilian retirees, survivor benefit annuitants, disabled veterans and Social Security recipients will see a 3.6 percent cost-of-living adjustment in January, their first since 2009.