Untouchable! Vets’ $52 Billion Health Care Plan

Rep. Jack Kingston, a Georgia Republican, leaned forward in his seat at a Wednesday armed services appropriations hearing and practically begged the Pentagon’s top health care official for tips on how to explain a proposed hike in military retiree health care fees to constituents and the news media back home.

“There is this pressure for free health care for life for veterans,” explained Kingston, who represents many veterans in his Savannah area district. Jonathan Woodson, the assistant secretary of defense for health affairs, replied that “Congress never meant for the health care benefit” for 5.3 million military retirees and their family members “to be entirely free.”

The exchange illustrates  how difficult it is for legislators on Capitol Hill to make even minor changes to military budgets that have come to be seen as largely untouchable – even a small adjustment to a copayment requirement in a health insurance program that has turned out to be a sweet deal for military pensioners.

Members of the military can retire after 20 years with a full pension and heavily subsidized health care for life. It is one of the chief drivers of rapidly rising military health care spending, which has tripled in the past decade to more than $52 billion a year.

It’s not the only factor driving higher military health spending, to be sure. The system also provides care for the health needs of the military’s 3.8 million active duty personnel and family members. After ten years of war, that health care system is beset with a host of problems ranging from the special needs of tens of thousands of severely wounded veterans of Iraq and Afghanistan; to the 20,000 traumatic brain injuries incurred every year; to the uncounted tens of thousands more suffering from post traumatic stress disorder.

In addition, the military, like the rest of society, is trying to figure out ways to slow down the rapidly rising cost of care for those it covers both in and out of the military. In one effort to combat that problem, the Obama administration in its 2012 budget calls for increasing retirees’ co-insurance, currently $230 a year for individuals and $460 for families, by 13 percent; indexing it for medical inflation; and lifting co-pays on doctor and hospital visits and drugs. This would mark the first increase in these charges since 1996, according to Woodson.

It’s an approach to holding down costs that has long been used by the private sector with little success. The amount of money raised through the higher co-pays is small, and it rarely leads people to stop using marginally effective or unnecessary care.

The proposal drew immediate fire from veterans groups, which in turn received support from members of both political parties. A House Armed Services subcommittee on military personnel two weeks ago postponed the fee increases for at least one year on TRICARE Prime, the health maintenance organization-like plan that is the largest military health care program. However, with the Pentagon under pressure to cut costs, moves are underway in Congress to restore the fee increase for next year, but index its annual increase to the cost-of-living, rather than medical inflation, which is far higher.

Still, even that is causing queasiness among legislators leery of crossing veterans, whose entitlements remain sacrosanct. They’re getting an earful from groups like the Veterans of Foreign Wars, whose chief spokesman, Joe Davis, told The Fiscal Times on Wednesday that “we don’t want any increases and we don’t want it tied to any outside factor, not COLA, not anything.

When asked how he could justify his position when  everyone else, including other government employees, had seen their health care co-pays and co-insurance rise in recent years, he replied: “How can you put military people and the rest of society on parity, especially after ten years of war. This is a health care benefit that people were promised by their recruiters. We paid for that benefit up front by 20 or more years in the military.”

The military is trying several other tactics to reduce its soaring health care costs. In recent years, it has funneled more of its retirees into coordinated care programs, which hopefully will better manage the costs of ex-soldiers and their family members with chronic diseases. They’ve also given special prices for people who use a mail order house for pharmaceuticals, which can substantially lower cost. The military already uses a preferred drug list, known as a formulary, which imposes significantly higher co-pays for drugs not on the list.

“We are proposing minor changes to out-of-pocket costs that are exceptionally modest, manageable and remain well below the inflation-adjusted out-of-pockets costs enjoyed in 1995, when TRICARE Prime was first introduced,” Woodson testified before the House Armed Services Appropriations subcommittee on health. The proposed increase amounts to $2.50 per month for single retirees and $5 a month for retiree families.

Caring for the rising number of seriously wounded soldiers from the wars in Afghanistan and Iraq is also driving military health care costs skyward, and will for years. The military now employs 4,280 staff in 29 “Warrior Transition Units” to care for the 10,011 wounded, ill or injured soldiers still in the military. More than 40,000 wounded soldiers have passed through the program since June 2007, with just 16,000 returning to their former units.

The military is also grappling with a rising tide of substance abuse cases, often related to chronic use of prescription pain medications initially given after being wounded. Lt. General Eric Schoomaker, the surgeon general of the army, told the subcommittee that immediate treatment of battlefield injuries with opium-derived drugs and other painkillers can reduce incidences of post-traumatic stress disorder by 50 percent.

But the army is now looking at alternatives for reducing use of the drugs for chronic pain, such as acupuncture, yoga, and biofeedback, Schoomaker said. However, it could wind up increasing the military health care bill. “There is a good evidence-based case” for these approaches,” he said. “But to be perfectly blunt, the reimbursement system is not adequate.”

Meanwhile, the army is also in the midst of a major five-year, $5 billion program to rebuild its far-flung hospital network, both on domestic bases and abroad. It has   asked for a 30 percent increase in its construction budget to $1.3 billion for next year.

Heading the list is the total reconstruction of the Landstuhl Medical Center in Germany, which has served as the way station for wounded soldiers from the Middle East but also serves the 170,000 U.S. military personnel and their families stationed in that country. The 122-bed project heads the wish-list for this year’s appropriation.While some critics seeking to pare military budgets have called for shutting down the German bases, which have housed 50,000 U.S. troops and their families since the end of World War II, the army is digging in for the long haul. “This is a very important time for rebuilding and replacing our facilities,” Schoomaker said about the hospital projects.