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Military Health Care Reform Included in Obama’s Budget

Higher fees and new fees would be phased in over five years.

President Obama proposed  military health care reforms on Wednesday in his 2014 budget, including higher fees and new enrollment fees for some TRICARE plans.

New fees and deductibles would be “phased in over a five year period” and would be indexed to increases in the retiree cost-of-living adjustment, according to an overview of the proposal from the Pentagon. The White House also wants to implement enrollment fees for TRICARE-for-Life beneficiaries, who are aged 65 and older. The changes would affect retirees who are in TRICARE.

For TRICARE Standard and Extra plans—Defense’s fee-for-service options—program enrollment fees for fiscal 2014 would be set at $70 for individuals and $140 for families, under Obama’s proposed budget. Deductibles would rise to $160 for individuals and $320 for families, up from $150 and $300 for fiscal 2013, respectively, the department said.

TRICARE Prime—similar to a health maintenance organization or HMO plan—would include an increase in the current annual fee, from $539 to $548, and would charge a percentage of gross retired pay, under the White House proposal.  In fiscal 2014, that number would be set at 2.95 percent of gross retired pay, rising to 4 percent in fiscal 2018. The fee ceiling for most TRICARE Prime enrollees in fiscal 2014 would be $750, with flag officers facing a $900 ceiling, both up from $539 in fiscal 2013.

The budget also proposes increasing co-pays for pharmaceutical drugs, except for active-duty service members, and raising the co-pay for a TRICARE Prime non-mental health office visit for retirees and families from $12 to $16.

Congress modestly increased the prescription drug co-pays for some TRICARE beneficiaries in the fiscal 2013 Defense Authorization Act, but not as much as the administration would have liked.  That law also caps pharmacy co-pays beginning in 2014 so that such fees are in line with the annual retiree cost-of-living adjustment.

Survivors of military members who died on active duty and medically retired members would be excluded from the new cost increases.

“Despite these changes, DoD will continue to offer the most comprehensive health benefit, at lower cost to those it serves than most health plans in the nation,” the budget proposal said.

The rising cost of TRICARE has become a major policy concern, with the program now consuming $53 billion, or 10 percent of the Pentagon’s non-war budget. Last year, Sens. Frank Lautenberg D-N.J and Marco Rubio R-Fla. proposed the Military Health Care Protection Act to bring greater predictability to TRICARE cost increases for users.

Requiring TRICARE beneficiaries to pay more for their health care is a politically sensitive topic. No one wants to be seen as breaking faith with troops, their families or retirees, and military service organizations are a powerful lobby in Washington.

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