Military health and retirement benefits take a hit in lawmakers’ proposals

Leading members of the Senate Armed Services Committee are pushing for changes to military members' health and annuity benefits as a way to cut government spending.

Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., last week submitted recommendations to the deficit reduction super committee in support of the Obama administration's cost-saving proposal released last month. The plan would mandate annual fees under TRICARE-for-Life, which pays beneficiaries' out-of-pocket Medicare costs. Fees would start at $200 in 2012 and increase annually to align with those paid by all TRICARE enrollees.

The proposal also would eliminate pharmacy co-payments for generic mail-order drugs while shifting retail co-pays from a dollar figure to a percentage. The change would affect military families and retirees, but would not apply to active-duty service members. The administration also recommended the creation of a panel to look at reforming military retirement benefits.

Levin expressed support for the rollout of TRICARE-for-Life fees, but noted that any future increase should be tied to changes in cost-of-living adjustments. Retirees in TRICARE Prime saw a slight fee increase on Oct. 1 based on that same benchmark. He also recommended that any new panel expand its scope to study basic pay, allowances, special and incentive payments, health care and the tax treatment of military pay. Any changes to military retirement should exclude current service members, he added.

In his letter, McCain agreed with Levin's recommendations, but added that the commission should consider excluding working-age military retirees from participating in TRICARE Prime, which offers the lowest out-of-pocket expenses of any Defense Department health plan. Retirees and their families would be eligible for TRICARE Standard or Extra, while active-duty personnel would continue to be enrolled automatically in TRICARE Prime. The Congressional Budget Office found that this measure could save $111 billion over 10 years, McCain wrote.

Members of the House and Senate Veterans' Affairs Committees did not recommend specific cuts, instead drawing the commission's attention to cost-saving measures affecting veterans that Congress has considered in the past.

Veterans of Foreign Wars on Tuesday called on its members to fight proposed changes to military pay and benefits.

"The 'people programs' inside the Departments of Defense and Veterans Affairs are expensive because it takes people to fight our wars, and with less than one percent of our citizens currently in uniform, any degradation of these hard fought-for programs will break faith with those who sacrifice the most, and will place the continued viability of the all-volunteer military in serious jeopardy," said VFW Commander-in-Chief Richard L. DeNoyer.

The Military Officers Association of America expressed disappointment in the recommendations, saying they "strongly disagree" with proposed changes to TRICARE and other military compensation programs.

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