Coburn, McCain sway Senate to bigger military RX fees

December 6, 2012

by Tom Philpott

Late-hour speeches by Republican Sens. Tom Coburn (Okla.) and John McCain (Ariz.) on runaway military health costs led the Senate Tuesday to shelve a defense bill amendment that would have spared family members and retirees more burdensome co-pays on drug prescriptions filled off base.

The timing of their opposition, in the last hours of consideration of the 2013 defense authorization bill when amendments were only being approved by unanimous consent, allowed Coburn and McCain to block the Senate from supporting the softer House-passed plan for raising prescription fees.

There will be a second chance next week when House-Senate conferees iron out differences in separate versions of the defense bill. But Coburn and McCain, using fresh scoring of costs from the Congressional Budget Office, were able to raise new doubts among some senators over the long-term cost implications of adopting the House plan.

"This is paid for, but it is smoke and mirrors,"Coburn told colleagues on the Senate floor . "We have used a trick…that will require [more funding for] the health account…which means we will not have $1.7 billion for naval exercises, for flight training, for tank training, for range training."

That challenge got a strong endorsement from McCain, ranking Republican on the armed services committee, who repeated Robert Gate’s words as defense secretary in 2010 that health costs "are eating us alive."

"We are going to have to find ways to bring these costs under control and still, at the same time, provide our veterans with the benefits they have earned,"McCain said, in arguing against the House plan which was presented as an amendment from Sens. Jack Reed (D-R.I.), Marco Rubio (R-Fla.) and Claire McCaskill (D-Mo.).

McCain attacked the notion that raising fees would harm readiness.

"I know of no one who joined the military because of TRICARE, [though] I hear [it] from all the retirees…I have not yet met a single 18-year-old, including my own son who joined the Marine Corps, who said: ‘Gee, I want to join the Marine Corps because of TRICARE.’

"No,"McCain continued, "they joined…to serve their country. 　They understand our obligation to them is not to hand them a bankrupt Defense Department [where] all the costs are in things such as TRICARE and retirement benefits…so we can't provide them with what they need to fight."

The reality is that pharmacy co-pays will rise this spring for family members and retirees. By how much will be determined by a House-Senate conference committee that will be meeting next week behind closed doors.

The Senate defense bill, passed 98 to 0, now has no language to block or alter the Obama administration’s drug co-pay plan. Under it, drugs dispensed on base would stay free, and co-pays for generics in retail outlets would remain $5. But co-pays for brand names at retail on the military formulary would jump to $26 from $12. Non-formulary drugs, which cost TRICARE more, would no longer be dispensed at retail, only through mail order. Co-pays for brand names at mail order would pop to $26 from $9, but mail order prescriptions usually are for 90 day s versus 30 at retail.

The administration also wants co-pays adjusted by $2 annually until they reach $34 in 2016.　 After that, the pharmacy fees off base would be adjusted annually to keep pace with medical inflation.

The House plan, which military associations helped to design, allows more modest initial increases in drug fees and would tie annual increases thereafter to the percentage rise in military retired pay. This plan would at least match health cost savings of the administration’s plan by requiring elderly beneficiaries to use mail order to refill maintenance drugs, at least for a year. The expectation is that seniors will like the convenience and stay with mail order, saving TRICARE billions of dollars yearly in retail drug costs.

But a Senate source said Coburn and McCain were able to derail the amendment so easily because the Congressional Budget Office had found it would cost a lot more money than expected after 10 years if adjustments stayed tied to retiree COLAs rather than medical inflation. To address this, advocates agreed to have the COLA link sunset after 10 years. But Senate leaders chose instead to avoid further action on the amendment.

Steve Strobridge, director of government relations for Military Officers Association of America, said the Senate seemed primed to adopt the House-passed plan until, suddenly, it fell victim to "misplaced concerns"over its impact on health costs. Its opponents painted the amendment as maintaining the status quo, he said, when in fact it represents "significant concessions"with co-pay hikes and the mail order requirement for elderly.

"These concerns about drug costs taking money away from other defense programs are completely, 100 percent bogus,"Strobridge said. "The fact is the Pentagon has been using health care money to fund other things for the past several years. And the whole point of this amendment is that health care money should be used to fund health care."

Defense officials earlier this year sought to reprogram $700 million from health care into other accounts. Strobridge said that would have brought total reprogramming of health dollars to $3 billion over the last three years, a period when defense officials insisted health costs are out of control.

Coburn predicted the House-backed plan would become law because the "service organizations want us to do it. But it is not the right thing to do. We have to begin, as we negotiate to increase revenues from the very wealthy in this country, declining expenses at the Defense Department. Everybody has to share [in controlling costs]. If they don't share now, they will share much more painfully in the future."

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