Important Tricare Info

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Task force: Raise retiree TRICARE fees, require enrollment
12/26/2007
By Tom Philpot
The Task Force on the Future of Military Health Care says the Bush administration should propose and Congress should approve higher TRICARE fees, deductibles and co-payments for retirees to slow program cost growth and to be fairer to American taxpayers.

In a lengthy report delivered Thursday to Defense leaders and to Congress, the task force endorses even steeper increases in retiree out-of-pocket costs than pushed by the Bush administration over the past two years. But fee increases would be phased in over four years instead of two.

The task force, co-chaired by Air Force Gen. John D.W. Corley, commander of Air Combat Command, and economist Dr. Gail R. Wilensky, goes much farther in calling for sweeping changes to the business of military health care. Even on the matter of retiree cost shares it is more aggressive, proposing phased adoption of a $120 annual enrollment fee for TRICARE Standard, the traditional fee-for-service health insurance, and for TRICARE for Life, the prized wrap-around insurance to Medicare for service elderly.

The task force also wants retirees under 65 restricted from shifting between using TRICARE Prime, the managed-care program, and TRICARE Standard except during designated annual open seasons.

The task force concluded that TRICARE fees and co-pays, frozen since they were set in 1996, have allowed a steady slide in the relative costs paid by working-age military retirees, a pattern “so out of step with overall trends in the U.S. health care system that (it is) unfair to U.S. taxpayers.”

Retiree costs shared have fallen from 11 percent to 4 percent. Yet premiums for employer-provided health insurance in the private sector, and out-of-pocket health costs for federal civilian employees, have held fairly steady, enough to cover 25 percent of overall program costs.

The proposed fee hikes are aimed at retirees and their dependents, and not active-duty members, reservists or their families. The task force also endorses indexing of fees to ensure they keep pace with health costs. Pharmacy co-pays under the TRICARE retail network, now $3 to $22, would be raised to a range of $15 to $45. Select mail order drugs would be free — to encourage use of this cheaper point-of-service. Here are more details:

Under-65 retiree cost shares
Higher TRICARE fees, deductibles and co-payments would apply both to TRICARE Prime and Standard.

Prime enrollment fees — $460 a year for families and $230 for individuals — would be raised over four years, but tiered based on gross retired pay amounts. A retiree receiving less than $20,000 in retired pay would pay $570 the first year for Prime family coverage. That enrollment fee would slide to $900 a year by 2011. Prime enrollees with retired pay of between $20,000 and $40,000 would pay $640 in 2008 and $1,190 by 2011. Retirees drawing more than $40,000, most of them officers, would pay $780 to enroll their family in Prime the first year and $1,750 by 2011.

The average of these fees, roughly $1,100, would still be “generous,” the task force said, when compared to premiums of $1,820 to $4,620 paid by federal civilians in 2007 to be covered under comparable health plan options.

“Tiering” of fees is uncommon but seems appropriate for the military, the task force said. But this would be “half proportional” tiering. For example, if there is a 100 percent disparity in retired pay, the difference in enrollment fee would be only 50 percent. The retired pay ranges used should be indexed themselves to health cost inflation so that more retirees aren’t pushed by cost-of-living adjustments into higher tiers, the report said.

Prime co-payments, including $12 for outpatient visits, would more than double, again to restore cost shares to 1996 levels. This change should be delayed two years to give retirees and contractors time to prepare.

Catastrophic cap
The current yearly cap of $3,000 on out-of-pocket costs for retirees with dependents would be lowered to $2,500. However, the task force recommends that enrollment fees not count toward meeting the cap. The idea is to deny higher paid retirees an advantage because of their higher enrollment fees. The cap should be reviewed every five years for possible adjustment.

TRICARE standard costs
Under-65 retirees would begin paying $120 a year to enroll in TRICARE Standard. This fee would rise annually to match the percentage rise in civilian-provided care to beneficiaries. The $120 fee would have to be paid even to use military pharmacy benefits.

Deductibles for Standard users would double to an average of $600 a year for families and to $300 for individuals, up from $300 and $150. But Standard deductible amounts, as with Prime enrollment fees, would be tiered based on level of retired pay (under $20,000, etc.). Deductibles would not be raised annually but reviewed for possible hikes every five years.

Even with these changes, the task force said, Standard would remain a “clearly generous” option. Federal civilians, it said, pay annual fees of $2,000 to $3,500 for like “preferred provider organization (PPO) plans.”

Seven of 14 task force members are civilian pay experts. The other seven are star-rank active or retired officers. Besides Corley, they include: retired Army Maj. Gen. Nancy Adams, former commander of Tripler Army Medical Center; Rear Adm. Dr. John M. Mateczun, commander of health care delivery in the National Capitol Region; retired Air Force Gen. Richard B. Myers, former joint chiefs chairman; Lt. Gen. Dr. James G. Roudebush, Air Force surgeon general; Navy Rear Adm. David J. Smith, surgeon to the Joint Staff; and retired Army Reserve Maj. Gen. Robert W. Smith III, who serves on the Reserve Officers Association executive committee.

A report footnote explains that one task force member opposed a TRICARE-for- Life enrollment fee, arguing that TFL users already pay Medicare Part B premiums, and the benefit of a fee wouldn’t justify its imposition. The lone dissenter on this issue was not named.

Proposed TRICARE fees
The Task Force on the Future of Military Health Care is recommending a series of health care fee increases for retirees. Generally, the tiered fees are linked the rate of annual retirement pay.
Enrollment fees for TRICARE Prime Families

Annual retired pay
Year Under $20,000 $20,000-$39, 999 $40,000 and above2008$570$640$7802009$680$830$1,1102010$790$1,010$1,4302011$900$1,190$1,750Note: Current Prime Enrollment fee is $460. Actual fees beyond 2008 would be higher due to annual indexing to keep pace with health care cost growth.Enrollment fees for TRICARE Standard Family

Annual retired pay
Year Under $20,000 $20,000-$39, 999 $40,000 and above2008$30$30$302009$60$60$602010$90$90$902011$120$120$120Note: TRICARE Standard users currently pay no enrollment fee. Proposed annual fees after 2008 would be higher than shown due to annual indexing based on TRICARE cost growth.Deductibles fees for TRICARE Standard Family

Annual retired pay
Year Under $20,000 $20,000-$39, 999 $40,000 and above2008$350$390$4702009$390$470$6302010$440$560$8002011$490$650$960Note: The family deductible for TRICARE Standard is $300 a year. Proposed deductibles after 2008 actually would be higher than shown 2008 due to annual indexing tied changes in TRICARE cost growth.Mail Pharmacy Co-payment Structure

Current PlanTask Force Plan

Retail NetworkMailRetail NetworkMail

30 days90 days30 days90 daysTier 1:Preferred$3$3$15$0Tier 2:Other$9$9$25$15Tier 3:Nonformulary$22$22$45$45Note: Task force also calls for a new Tier 4 for “special category medications,” very expensive drugs that would have a higher co-payment and be limited to a particular point of service.

We have room for but one flag, the
American flag.. We have room for but one
language here, and that is the English
language.. and we have room for but one
sole loyalty and that is a loyalty to
the American people."

Theodore Roosevelt 1907
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"ARMY STRONG"
SFC Larry Dearborn USA-RET
PO Box 114
Richmond, ME 04357
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