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Pentagon losing battle over health fees

Lawmakers prepare to abandon proposed fee increases on health care for some military retirees.

BY DAVID LERMAN
(202) 824-8224

March 15, 2006
http://www.dailypress.com/news/local/dp-87415sy0mar15,0,1706034.story?coll=dp-news-local-final

WASHINGTON -- A Pentagon plan to raise health-care premiums on military retirees younger than 65 appeared all but dead on Capitol Hill after key lawmakers signaled their opposition Tuesday.

The dramatic proposal to increase fees and deductibles by as much as threefold in some cases - part of the Defense Department's 2007 budget - has weathered a storm of protest from veterans groups since it was unveiled last month.

"That's obviously something I don't think is going to happen over a two-year period," said Sen. Lindsey Graham, R-S.C., chairman of the Senate Armed Services subcommittee on personnel, who held a hearing on the plan Tuesday. "To me, this is a long-term process."

Military retirees - veterans with at least 20 years of service - complained it was unfair to ask them to absorb steep increases in health-care costs in the next two years. Many say they had been promised free life-time health care when they enlisted.

The proposed increases would hit an estimated 3 million retirees younger than 65, including thousands in Hampton Roads. Active-duty personnel would not be affected.

"We see the proposed health-care increases as inappropriate and disproportionate," said retired Vice Adm. Norb Ryan Jr., president of the Military Officers Association of America. Referring to his members, Ryan said, "They know they already paid huge up-front premiums in the form of years of sacrifice."

Veterans groups appear to have beaten back the Pentagon plan barely a month after it was first introduced.

Leaders of the House Armed Services Committee have already criticized the proposal and other House members are scheduled to introduce legislation today to block the plan.

Pentagon leaders have pushed hard for the measure, which they say is needed to curb soaring health-care costs that threaten to siphon money away from critical weapons programs.

The Defense Department's health-care costs have nearly doubled over the past five years, from $19 billion in 2001 to more than $37 billion this year, according to congressional testimony. By contrast, this year's shipbuilding budget is about $11 billion.

Military leaders noted there has been no increase in annual premiums for Tricare - the military health insurance system - for 11 years. As a result, they said, premiums have not kept pace with inflation. Beneficiaries paid 27 percent of their total health care costs in 1995, compared to just 12 percent today.

The Pentagon proposal, officials said, would adjust current fees and deductibles to account for inflation since 1995. But many retirees would be hit with a new enrollment fee for the first time. Tricare Standard, the military's traditional fee-for-service option, currently has no enrollment fee. The Pentagon plan would impose a fee for retired officers next year of $150, or $300 for a family. The fee would be less for retired enlisted personnel.

"It would move the earned medical entitlement into an insurance program," said Tanna Schmidli, who heads the National Military Family Association. "Unless retirees pay this premium, they will be locked out of any care at a military treatment facility."

Graham, the subcommittee chairman, said he was open to fee increases in the future but would not be rushed into an increase this year. "Erosion of benefits is coming," he said. "The question is, will it come in a way that people can afford?"