Bush Wants Military Retirees to Pay More for Health Care

February 21, 2006 (PLANSPONSOR.com) - To help contain annual health care costs for the military, President Bush has proposed increased health care costs for military retirees.

The Associated Press reports that the Bush proposal includes higher prescription drug co-payments for all beneficiaries of military health care except those on active duty, and increased annual enrollment fees for military retirees under age 65.

The amount military retirees younger than 65 must pay for health care coverage to join TRICARE Prime, the military’s HMO-like program, has not changed since 1995, even though the Pentagon’s share of the costs have risen, according to the news report. The enrollment fees of $230 annually for an individual and $460 for a family would rise under Bush’s plan, depending on military rank at the time of retirement, to $325 to $700 for an individual or $650 to $1,400 for a family, by 2008.

Annual enrollment fees and deductibles also would increase for those enrolled in TRICARE Standard, the military’s open-access plan.

Annual health care costs for the military have doubled to nearly $38 billion in the past five years, nearly one dollar of every $12 the Pentagon spends, the news report said. The costs are projected to reach $64 billion by 2015. The federal government’s share of health care costs for the military totaled $19 billion in 2001 and accounted for 4.5% of the defense budget, the Pentagon says. Officials estimate that the projected cost of $64 billion by 2015 would account for 12% of the budget.

Critics of the Bush proposal, including some lawmakers, accuse the administration of seeking to save money by raising fees to steer military retirees toward health plans their current employers sponsor, taking some burden off the Pentagon’s health care system, TRICARE. Meanwhile, private employers, as well as some state and local governments, increasingly are asking military retirees on their payrolls to use TRICARE to avoid having to pay insurance premiums for those employees.

The Pentagon projects it could save $14.8 billion over the next five years if Congress approves Bush’s plan. About 9 million current or former military personnel are eligible for TRICARE coverage, about a third of whom are retirees under age 65 and their families according to advocacy groups.