WASHINGTON, Sept. 19, 2011 — Military retirees would pay an annual fee for TRICARE-for-Life health insurance and TRICARE pharmacy co-payments would be restructured under the deficit reduction plan President Barack Obama released today.
“If we’re going to meet our responsibilities, we have to do it together,” Obama said during a Rose Garden speech to announce the President’s Plan for Economic Growth and Deficit Reduction. The plan reduces $4.4 trillion from the $14.7 trillion federal deficit over 10 years through a combination of spending cuts and increased tax revenue.
For the military portion, Obama said the government will save $1.1 trillion from the drawdown of forces in Iraq and Afghanistan, which are to be complete at the end of this year and in 2014, respectively.
The plan includes savings of $6.7 billion over 10 years by establishing “modest annual fees” for members of TRICARE-for-Life, which becomes a second-payer insurance to military retirees who transition to the federal Medicare program upon turning age 65. The change would begin with a $200 annual fee in fiscal 2013.
The plan also includes savings of $15.1 billion in mandatory funds and $5.5 billion in discretionary funds over 10 years by restructuring co-payments for TRICARE pharmacy benefits.
To bring the TRICARE plan more in line with private and other federal plans, the president’s proposed plan would eliminate co-pays for generic mail-order drugs, while shifting retail co-pays from a dollar amount to a percentage co-pay. The change would apply to military families and retirees, but not active duty service members.
These changes will ensure fiscal responsibility without compromising quality care for service members and their families, Pentagon Press Secretary George Little said in a statement released today.
Defense Secretary Leon E. Panetta “has consistently emphasized the need to keep faith with our troops and their families,” Little said.
“That includes maintaining the highest quality health care for them,” he continued. “We will continue to maintain the highest possible health care, but during this period of fiscal belt tightening, we may see modest cost increases in TRICARE enrollment fees and co-pays to sustain the health system.”
The changes are necessary to help reduce the deficit and ensure the long-term strengths of the programs, a White House news release issued after Obama’s speech said. The changes also would help to level “a measurable disparity” between military retirees and private sector workers, it says.
The statement notes that the administration has expanded GI Bill benefits, job training and veterans’ homeless prevention programs, and proposed tax credits for employers to hire veterans.
“Still, as the cost of health care rises and benefit programs across the public and private sectors are being restructured to remain solvent,” the release says, “it’s important that programs that serve military retirees and veterans are modernized to be able to meet the needs of the future.”
The plan also would create a commission to “modernize” military benefits through a process based on that of the 2005 Base Realignment and Closure Commission, the White House release said. Under the proposal, the Defense Department would make a proposal to the commission, which can alter the proposal before sending it to the president. The president may not alter the proposals, but would decide whether or not to send it to Congress. The Congress would have to approve or disapprove without modifications.
“The administration believes that any major military retirement reforms should include grandfathering provisions that ensure that the country does not break faith with military personnel now serving,” the statement said.
Obama said the proposal to save $4 trillion “finishes what we started last summer” when he and the Congress agreed to $1 trillion in cost savings. Under the plan, the deficit — the difference between revenue and spending — would level out in 2017 where spending is no longer adding to the nation’s debt.
While “we are scouring budget for every dime of waste and inefficiency,” Obama said, the proposed plan also closes corporate tax loopholes, raises taxes on millionaires and makes changes to Medicaid and Medicare in an effort to help small businesses and middle class Americans, and protects spending on education, science and infrastructure such as roads and bridges.
“We’re asking everybody to do their part so no one has to shoulder too much burden,” Obama said.
U.S. Department of Defense
Office of the Assistant Secretary of Defense (Public Affairs)