President Barack Obama's fiscal 2012 defense budget request brought a few surprises for military retirees.
First, the plan to raise Tricare fees for working age retirees is more "modest" than retiree advocates had expected, and might be viewed favorably in light of harsher possibilities and the mounting debt crisis.
The second surprise could discourage 103,000 veterans forced by non-combat disabilities to retire on disability short of serving 20 years. After two attempts, the Obama administration no longer is asking Congress to extend "concurrent receipt" eligibility to this large group of so-called "Chapter 61" retirees.
The administration's plan had been to phase in, over five years, some retired pay based on total years served, which would be provided atop current disability pay. Congress couldn't find money in the past two years to fund the president's initiative, citing the effect of pay-as-you-go budget rules.
House Republicans last month tightened those rules even more, disallowing any new entitlement fund by raising taxes. That, and removal of any mention of concurrent receipt in the new budget, appears to kill any chances that Obama can fulfill his promise to these retirees this year.
Defense Secretary Robert Gates' budget plan to control military health care costs includes: the limited Tricare Prime fee hike; an automatic adjustment to those fees, starting in 2013, to keep pace with medical inflation; tweaks to pharmacy co-payments; and changes to Uniformed Service Family Health Plans for future enrollees who reach Medicare age.
Here are more details:
Retirees' annual enrollment fee for Tricare Prime would increase by $60 -- to $520 -- for family coverage and by $30 -- to $260 -- for singles.
Previous Defense Department proposals to raise Tricare fees would have doubled and tripled out-of-pocket costs over several years, and included retirees younger than 65 using Tricare Standard.
"We likely will not use an index that is identical to the Medicare Part B index," Defense officials said. But it will reflect "increases in the cost of medical care" and the methodology will be "fair and transparent."
The one-time fee adjustment and follow-on indexing to medical inflation are projected to save $434 million over the five-year defense budget program.
Home delivery prescriptions already are a bargain, providing patients with 90-day supplies of pills rather than 30 dispensed at retail outlets for the same co-pay. But officials want to widen the disparity. They would end the $3 charge for mail order generic drugs and raise the co-pay for generics at retail outlets to $5, up from $3. Co-pays for brand name drugs on the military formulary would stay at $9 by mail and increase to $12 at retail pharmacies. For "Tier 3" or non-formulary brand drugs, the current $22 co-pay would be raised to $25 for both mail-order and retail prescriptions.
The new co-pays could save Tricare $2.6 billion over five years.
Beneficiaries at age 65 don't have to enroll in Medicare now. They can remain with the current plans. That would change for future Uniformed Service Family Health Plans enrollees. They would have to depend on Medicare, like other military beneficiaries who turn 65, and use Tricare for Life as second payer.
Tricare projects this will save $3.2 billion by fiscal year 2016.
In presenting the new budget last week to the House Armed Services Committee, Gates warned again that "health care costs are consuming an ever larger share of this department's budget, growing from $19 billion in 2001 to $52.5 billion in this request." He said all six members of the Joint Chiefs, in a letter to the Senate Armed Services Committee, "have strongly endorsed these and other cost-saving Tricare reforms."
Some in Congress still plan to oppose the fee increases. Sen. Jim Webb, D-Va., chairman of the Senate military personnel subcommittee, said he views any Tricare increases as violating "a moral contract between our government and those who have stepped forward to serve."