Obama Proposes TRICARE Changes

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)