Military retirees may face big bump in health costs

The Virginian-Pilot
© December 21, 2007

WASHINGTON

A Pentagon task force proposed dramatic increases Thursday in the health insurance premiums paid by more than 3 million military retirees and their families, warning that medical costs are growing faster than the federal budget or the U.S. economy.

The 14-member panel unveiled a complicated fee structure that would more than double the annual cost of family coverage for 1.1 million military retirees under age 65, hiking their average fee from $460 to $1,100. While all those retirees would see fee increases, the exact amount for each would be tied to his or her pension, so those who retired at a higher rank would pay more.

Another 1.9 million retirees over 65 also would bear added costs; the panel urged that they be charged a $120 annual enrollment fee on top of the monthly premium - currently $96.40 for most retirees - they pay for Medicare's Part B supplemental insurance.

More than 137,000 military retirees live in Virginia, according to Defense Department figures compiled in 2005; some 53,000 of those are in Hampton Roads, a group of Old Dominion University researchers

estimated in 2003.

The task force suggested that premiums remain unchanged for active duty troops; most of those choose the military's Tricare Prime program, which is provided free of charge.

The proposed increases seem sure to trigger a storm of protest from military retiree organizations. In each of the past three years, the groups have persuaded Congress to block other Defense Department proposals to restructure the military's health care costs, leaving premiums frozen at 1996 levels.

The proposals "focus almost exclusively on (Defense Department) costs and very little on what level of benefit career military people earn by virtue of their decades of service and sacrifice," Steve Strobridge, government relations director for the Military Officers Association of America, wrote in a message slated for delivery to association members today.

He argued that "military people pay far larger premiums than any civilian - but pay them up front and in-kind," with their service.

The task force report proposes a number of sensible reforms to improve the efficiency of the military health system, said Joyce Wessel Raezer, chief operating officer of the National Military Family Association. But in an election year, those plans are likely to be lost in a fight over the fee increases, she suggested.

Raezer predicted that the military associations will be particularly wary about adding to the costs of elderly retirees, whose advocates argue that they were promised free care for life if they made a career of the military.

"We believe they're already paying more than a nominal fee in that they have to pay for Part B," she said.

"It's not fair," said Libby Morrison, a retired Navy commander who lives in Virginia Beach. "I never had to go to war, never had to go in harm's way, but the people that have, they deserve these benefits. And to start pinching pennies with them is not right. It's not right."

Fights also are likely over the task force's proposal to link insurance costs for younger retirees to the size of their pensions.

"If they're going to have an increase, it should be across the board," said retired Air Force Lt. Col. James Dellaripa, president of the Hampton Roads chapter of the Military Officers Association of America.

Dellaripa is over 65 but said he dislikes the idea of penalizing younger retirees.

"Any increases for those people that are under 65, to me, is a little unfair. They have served, and they have been promised certain benefits, and they're eroding those benefits."

Dellaripa, who stressed that he was speaking for himself and not the officers association, said he understands that "an increase is necessary, but it ought to be toned down to be realistic." Retired officers like him won't feel the pinch as much as retired enlisted personnel, he said - especially those who may still have growing families.

Along with premium increases for retirees that would be phased in over the next four years, and then adjusted annually to reflect changes in health care costs, the task force urged substantial hikes in prescription drug charges for both retirees and active duty troops.

The cost of the cheapest prescription drug at a pharmacy that participates in the military's Tricare network would jump from $3 to $15, while brand-name "nonformulary" drugs would cost $45 per prescription, up from $22 today.

Gail Wilensky, the economist who co-chaired the task force, called the proposed fees "very modest" compared to the insurance premiums paid by civilians and other federal workers. She added that the recommendations are geared toward pushing retired troops to take a larger role in managing their health care.

The military has been struggling for more than a decade with dramatic increases in its health care costs. The task force said the Pentagon's annual health care bill will hit $64 billion by 2015, more than 19 percent of the projected total defense spending that year. The services spent $39.4 billion on health care in 2007.