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The Pentagon's proposal to cut health care spending by increasing the share of costs paid by some TRICARE beneficiaries is unlikely to achieve the large savings the agency projects, according to a recent report by the Government Accountability Office.

From 2000 to 2005, the report (GAO-07-647) noted, the Defense Department's health spending more than doubled, from $17.4 billion to $35.4 billion. It primarily went toward TRICARE, the program that provides health care to 9.2 million active duty personnel and others, including military retirees. The agency projects that health spending will continue to rise in coming years and will consume 12 percent of the Defense budget by 2015, up from 7.5 percent in 2005.

GAO reviewed the Pentagon's Sustain the Benefit Program, which the agency projects will generate $9.8 billion in savings over five years by increasing TRICARE enrollment fees and deductibles for retirees and dependents under age 65.

The report found that Defense's projections rely heavily on the assumption that the increased fees and deductibles will result in about 500,000 current beneficiaries leaving or choosing not to enroll in TRICARE. But this estimate is likely too high, GAO said, adding that many beneficiaries in this group, particularly older and sicker individuals, are unlikely to have lower-priced options available and would therefore be likely to continue using the program.

GAO projected that Defense's proposed fees and deductible increases would achieve $2.3 billion in savings over five years, absent from any beneficiaries leaving the program. "Neither GAO nor DoD can make a more accurate savings estimate, in part because DoD does not collect and compile certain data, such as the cost of other health insurance options," the report stated.

Defense also has projected $1.5 billion in savings by increasing retail pharmacy co-payments for all beneficiaries except active duty personnel. It based its estimates on a study that measured savings from increased pharmacy co-payments in non-Defense, employer-sponsored insurance programs.

"This study was not analogous to DoD's situation, which resulted in DoD overestimating the reduction in the number of prescriptions obtained from retail pharmacies, and thereby overestimating its savings," the report said.

Defense has attributed its increase in health care spending to medical care inflation and benefit enhancements required by law, including the TRICARE for Life program, which supplements Medicare coverage for TRICARE beneficiaries generally over age 65. Other factors include an increased number of enrollees in TRICARE as well as rising costs for reservists and their families affected by the war on terror, the report noted.

GAO recommended that Defense begin collecting and compiling information that could help identify the reasons why a beneficiary may or may not choose TRICARE. "Such data could include beneficiaries' access to and cost of other health insurance," the report said.

Defense officials agreed, but added that the report leaves the impression that savings from the proposed changes "may be as low as $2.3 billion." GAO should have made a stronger statement on the most likely effect or a range of the effect on savings, Defense argued.

COMMENTS

• You know, I missed this the first time around, and I don't know how I could have done that! This is a direct quote from the article - "GAO reviewed the Pentagon's Sustain the Benefit Program, which the agency projects will generate $9.8 billion in savings over five years by increasing TRICARE enrollment fees and deductibles for retirees and dependents under age 65." - I think it should be rewritten to say - GAO reviewed the Pentagon's Sustain the Benefit Program, which the agency projects will cost the retirees and dependents $9.8 billion dollars over five years due to the increase in TRICARE enrollment fees and deductibles. I wonder when our government will cease and desist from saying there is a savings when the reality is that their so-called savings is actually coming at the expense of those who have given a large part of their lives to EARNING what is subsequently being taken away with no thought whatsoever for the impact on the perceived honor and integrity of the government. Larry R. Doane Posted August 13, 2008 8:38 AM
• I was told before and after I retired from servering 22 years that I and my faimly would recieve free medical care for the rest of my life. Then came alone TriCare. Now you want me to pay more money for the benefit that I was promised. I feel that it was wrong from the start making us pay for this, it should be grantfathered. Kennith G. Chambers Sr. Posted June 11, 2007 10:28 AM
• Randy, you're being too logical. I had to move my brother into my home to take care of him because of the illness brought on by his tours in Viet Nam. They haven't honored the commitment to take care of him, and I'm glad to know it up front. I am paying for his medical treatment (out of my own pocket) so that he does not lose one or both of his legs. By the way, the VA did say that if he loses a limb, they will reconsider his compensation which is currently 28%. And no, not 20 not 30, but a number that doesn't exist and they can't account for or change. How's that for competence. I wish I could agree with another writer that thinks that things will go back to normal after the war......I HOPE THEY NEVER GO BACK TO THE VA NORMAL. My dog gets better care at the vet. And, don't try the line, you get what you pay for, because he does have to pay for his visits and medicine at the hospital 2 1/2 hours away. Did I mention PAD. He shouldn't be driving or flying. He hasn't worked for 5 or 6 years and he's only 58. He lives on less than 1000 a month (SS & VA). If I didn't let him live and eat for free, he would be out on the street. nolalive Posted June 6, 2007 12:45 PM