TRICARE fee structure needs overhaul, says Defense official

The Pentagon's top policy official on Thursday called for changes in the military's health benefits system for retirees, saying the current structure has become unsustainable in today's economic environment.

"If there was an infinite pot of money, that would be fine; the problem is, there isn't an infinite pot of money, and so those dollars are dollars we can't invest in the equipment that our military needs today and the capabilities they need to adapt to the future," said Michèle Flournoy, Defense undersecretary for policy, during remarks at a leadership breakfast sponsored by Government Executive in Washington.

Many military retirees who now work in the private sector are forgoing the health benefits offered by their companies and opting instead for the TRICARE system, in part because employers are offering incentives for them to do so in an effort to keep down their own health care costs. "We have the military carrying people who have a private sector alternative to heath care because we've got the incentive structure wrong," Flournoy said.

A former Defense Department official during the Clinton administration, Flournoy tackled several topics during Thursday's discussion at the National Press Club, ranging from outsourcing to cybersecurity to military pay and benefits, including TRICARE, which she referred to as a "third rail" issue. Flournoy's remarks on TRICARE echoed recent comments from the military's top brass as well as those from Defense Secretary Robert Gates in a May 8 speech in Kansas. In that address, Gates outlined a multibillion-dollar cost savings plan for the department, which would include a reduction in administrative overhead, acquisition reform, greater energy efficiency, and an overhaul of TRICARE premiums and co-pays, especially for retirees.

"Leaving aside the sacred obligation we have to America's wounded warriors, health care costs are eating the Defense Department alive, rising from $19 billion a decade ago to roughly $50 billion -- roughly the entire foreign affairs and assistance budget of the State Department," Gates said. He noted that premiums for TRICARE have not risen since the program was founded more than a decade ago.

Also on Thursday, Flournoy did not rule out reducing the number of high-ranking officers in the military as a way to streamline the department, saying Gates "is going to want to understand the allocation of flag officers and why we have who we have, and are there positions that are truly necessary?" Flag officer positions are congressionally authorized, so the Pentagon would need the blessing of Congress to tweak the number of those slots.

Flournoy said there is no target head count with respect to the structure of the Pentagon's civilian, military or contractor workforce, but she also emphasized Gates' overall commitment to belt-tightening. "Secretary Gates is not shy about making hard decisions," she said. "He is not shy about holding leaders in the building accountable. I think all of his components, all of his direct reports, have been put on notice [that] we're going to start this review for efficiency with ourselves."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.