Older retirees surprised to be in fresh TRICARE fight

April 5, 2012

by Tom Philpott

Older retirees like Air Force Master Sgt. Floyd Sears, 81, stand shoulder to shoulder with younger generations of retirees in opposing any of the higher fees being proposed for hard earned TRICARE benefits.

But Sears also agrees with many retirees of his own generation that there’s something especially wrong with the Obama administration’s plan to impose a first-ever enrollment fee on 900,000 retirees age 65 and older and their surviving spouses.

The oldest among them entered service in World War II or during the Korean War. Some completed careers with tours in Vietnam. This older generation of retirees truly was promised free health care for life, routinely as they reenlisted, if they would serve at least 20-year careers.

"I was in Strategic Air Command and even heard [SAC Commander] Gen. Curtis E. LeMay say it. The words came right out of his mouth,"Sears recalled from his apartment in the Armed Forces Retirement Home in Gulfport, Miss., where monthly fees charged residents are based on income.

That promise of "free care"is why these retirees fought in federal court and in Congress, aggressively in the 1990s, to have the government acknowledge it and keep it. Even as the court fight was being lost, Congress by 2001 had approved TRICARE for Life (TFL), designed to be a cost-free insurance supplement to Medicare for older retirees if they agreed to pay –or in most cases, to continue to pay –their Medicare Part B premiums.

Given that history, Sears and other elderly retirees were surprised to see a new TFL enrollment fee proposed in February as part of multi-prong initiative endorsed by military leaders to slow the growth of health costs.

"It’s just a slap in the face,"said Sears who retired in 1971 and receives $1789 a month in military retirement. "It’s an insult, a real insult, that we would get pushed around like that."

The TLF fee, if Congress were to agree to it, would be "tiered"based on level of retired pay. Retirees who draw less than $22,590 a year in military retired pay would pay $35 to enroll in TFL for the fiscal year beginning Oct. 1. The fee would climb annually to reach $150 by 2016. Thereafter it would be adjusted yearly to keep pace with the percentage rise in nationwide health care costs.

Tier 2 retirees, with retired pay from $22,590 to $45,178 a year, would see an initial fee of $75. That would rise incrementally to reach $300 by 2016. Tier 3 retirees, those with retired pay in excess of $45,178, would pay a $115 next October and $450 a year by 2016.

"Could I pay it? Yes, I’m not destitute,"Sears said. "But it’s the principle. When principles don’t matter anymore, boy we’re in bad shape."

Heftier fee increases are proposed for working-age retirees who use TRICARE Prime, the managed care network, or Standard, the fee-for-service insurance option. The budget also looks to save billions of dollars by raising co-payments on drugs, mostly at TRICARE retail pharmacy outlets.

But last week Sen. James Webb (D-Va.), chairman the Senate armed services subcommittee on military personnel, appeared most concerned about what TRICARE for Life users already pay in Medicare Part B premiums.

He called it "a very expensive"feature which Defense officials don’t consider when arguing that cost shares paid by retirees have declined sharply compared to total military health costs since TRICARE began in 1996.

Webb presented a bar chart showing that a retiree and spouse age 65 and older can pay together almost $7700 a year in Part B premiums.

Dr. Jonathan Woodson, assistant secretary of defense for health affairs, pointed out that Medicare Part B premiums are means tested, and only couples with combined incomes of at least $428,000 a year would have to pay the highest premiums depicted on Webb’s bar chart.

Most TFL beneficiaries, Woodson said, pay $1200 a year individually, $2400 per couple, for Part B. He also estimated that 90 percent of Medicare-eligible retirees would elect to pay for Medicare Part B coverage whether or not it was required to participate in TRICARE for Life.

Webb said he wanted his staff to look deeper into Woodson’s argument that retirees contributed 27 percent of their total health care costs out-of-pocket when TRICARE began in 1996, and that their share has fallen to 10 percent today because TRICARE fees were frozen until Congress allowed a modest increase in the Prime enrollment fees for retirees last October.

The fee increases proposed, Woodson added, would return retiree cost shares only to 14 percent of medical costs when fully implemented by 2017.

TRICARE officials later clarified that the 27 percent share of total costs paid in 1996 referred to average costs for a retiree under 65 with two dependents and receiving private sector care through TRICARE Prime or Standard. As perhaps Webb suspected, that might not relevant for arguing that elderly retirees should begin to pay an annual enrollment fee.

However Defense Comptroller　Robert Hale, who testified with Woodson last week, made a separate argument for TFL fees. When the fees are fully phased in, Hale said, a Medicare-eligible retiree and spouse would pay an additional $300 a year if their retired pay fell under Tier 1, and $900 more a year for retired couples under Tier 3. He urged Webb to compare that cost to $4000 a year that the same couple would have to pay to buy a good Medigap insurance plan to replace TFL. Webb seemed unimpressed.

"We are talking about an obligation we made to people to provide them medical care for the rest of their life, based on a compensation package that begins the day that they enlist…,"Webb said. "It is not a direct comparison in my view."

Hale urged Webb to "keep this in the context that we owe them not only good medical care but we’ve got to provide training and equipment"to the force, "a balanced package,"in this era of tightening defense budgets.

"I totally agree with that,"Webb said. "But what I am saying to you is you can’t renegotiate the front end once the back end is done. This is an obligation that was made to people whose military careers are now done."

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