Health care hikes for retirees in Pentagon budget proposal

The Pentagon’s 2017 budget calls for changes to the Defense Department’s health benefit that would require all working-age retirees to pay annual enrollment fees regardless of which Tricare program they use or forfeit their health care for a year, according to Pentagon budget documents.

The budget calls for reorganizing the current system into two Tricare programs, with cost-savings for patients who use military hospitals and higher fees for those who choose civilian care.

The $48.8 billion health budget request, which includes $33.5 billion for health care programs, would revamp Tricare’s structure into two plans: Tricare Select, a health maintenance organization-type program similar to Tricare Prime that is limited to areas around military hospitals and clinics; and Tricare Choice, a Tricare Extra and Standard hybrid that covers care by civilian doctors with incentives to seek network care.

The new system would require all military retirees and their family members to pay annual participation fees, regardless of which program they choose. Currently, this group of beneficiaries pays cost-shares but no annual enrollment fees to use Tricare Standard. According to budget documents, the changes are designed to entice more beneficiaries to use military hospitals and clinics by continuing to offer care at these facilities at no cost to patients and curb the rising costs to DoD of private care.

In the past several years, the Pentagon has proposed changes to the Tricare health benefit to include program consolidation but much of the reform has been focused on increasing co-payments and cost-shares for beneficiaries.

Health officials say this year’s proposal will help curb health care costs but also will improve performance, especially at military treatment facilities.

“Simply revising the cost-sharing structure of Tricare will not meet beneficiaries' concerns or resolve access to care issues. Instead, the department must commit to institutional health care reform,” Pentagon officials wrote in the fiscal 2017 budget request overview.

Under the new plans, co-payments would depend on beneficiary category and place of care.

Military retirees and family members who are not Medicare eligible — those referred to as "working-age retirees — would see the biggest changes.

They would be required to choose between the MTF-based Tricare Select and Tricare Choice civilian care program, paying an annual participation fee of $350 for an individual or $700 for a family for Tricare Select, or $450 for an individual or $900 for a family under Tricare. Visits to military hospitals or clinics for retirees would continue to be offered at no cost but beneficiaries would pay $20 for a primary care visit in-network with a referral or $25 co-payment for primary care at a network doctor without a referral.

They also would pay $30 or $35 for a specialty care visit, depending on whether they had a referral. A visit to a network emergency room would cost $75 for those in Select and $90 for those in Choice.

Active-duty troops and their families would not be required to pay annual fees for health care. They would also be able to continue using military hospitals or clinics for free, and those in Select would have no network co-payment with a referral. For those in Choice, they would pay a $15 co-payment for primary care at a network physician, $25 for specialty care or $25 for urgent care visits. An ambulance ride would cost $15 and a network emergency room visit would require a $50 co-payment.

All Choice beneficiaries would still be able to see out-of-network providers, with active-duty families paying cost shares of 20 percent of the Tricare allowable charge and retirees and their family members paying 25 percent.

Also new this year, and similar to civilian health plans, Tricare would implement open-season enrollment for working age retirees — all would be required to enroll and pay the annual participation fee or forfeit coverage for the plan year.

The budget also proposes increases to catastrophic caps for beneficiaries. Active-duty families would see theirs rise to $1,500 for network care, up from $1,000, while retirees would see theirs increase from $3,000 to $4,000. Participation fees would not count toward the caps.

Medically retired members and their families, as well as survivors of those who died on active duty would be treated the same as active-duty family members, with no participation fees and lower cost shares.

The budget also proposes significant changes for future users of Tricare for Life, the military health system’s wrap-around program to Medicare. Users would begin paying an enrollment fee for the program based on a percentage of gross retired pay — 0.5 percent in 2017 — and capped at $150 a year for a family and $200 for retired flag and general officers.

By 2021, TFL enrollees would pay a fee amounting to 2 percent of gross retired pay, up to a maximum of $632. Retired flag officers would pay up to $842 by 2021.

One proposal that would touch all Tricare users would be future hikes in co-pays for generic prescriptions purchased through retail pharmacies and increases in brand name drugs, both at retail pharmacies and by mail.

Prescriptions would continue to be filled free at military treatment facilities and generic drugs also would be available at no charge through Tricare's mail-order system until 2020, when a 90-day generic prescription cost would rise to $11.

Generics would cost $10 at a retail pharmacy in 2017 and would remain at that level through fiscal 2019, when they would rise to $11.

Brand name medications at retail and mail order would cost $28 and would rise incrementally through 2026, when they could be higher than $45 per prescription.

According to Pentagon estimates, the average active-duty family of three averages $13,965 in medical costs per year, with the military bearing $13,778 of the expense while the family picks up $189, or about 1.4 percent.

Under the new plan, active-duty families would pay an average $30 more a year, or roughly 1.6 percent of their overall health costs.

A working-age retiree's family of three accrues $16,982 in medical costs per year, according to DoD, and pays $1,360, or 8 percent of the cost. Under the plan, they would pay an average of $1,768, or 10.5 percent, of their estimated annual costs.

DoD officials say that when Tricare was implemented in 1996, retirees paid 27 percent of their total health care expenses. With them now paying less than 9 percent of their costs, the DoD health budget is unsustainable, officials argue.

“The internal savings initiatives and modest congressional fee increases are helpful but are not enough to curb the projected increase in health care costs, for the department,” officials wrote in the budget documents.

In the past three years, DoD has proposed various iterations of Tricare consolidation and new fees designed change beneficiary behavior and trim costs. Congress has largely rejected the Pentagon's reform proposals and currently is reviewing the entire military health system to determine what changes should be made.

In early 2015, the Military Compensation and Retirement Modernization Commission proposed moving all beneficiaries who are not on active-duty to private health care plans.

Article from Military Times