Military Retirees Would Pay More for TRICARE Under White House Budget Proposal

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All retired service members would pay an annual TRICARE enrollment fee under a new, simplified version of the military’s main health care program outlined in President Obama’s fiscal 2017 budget.

TRICARE would consist of two options under the proposal, instead of the several different choices available to beneficiaries now. Enrollees could choose a lower-cost plan called TRICARE Select, similar to an HMO, and centered on military treatment facilities, or TRICARE Choice, a more expensive plan that would operate like a PPO. Retired enrollees in both plans would pay participation fees, which is not the case now for beneficiaries with TRICARE Standard coverage, or those military retirees age 65 or older who have TRICARE-for-Life.

Enrollees who choose not to pay an annual participation fee would forfeit their TRICARE coverage for that year under the White House proposal. The changes would not affect active-duty service members.

The proposed participation fees for TRICARE Select beneficiaries in 2018, based on Defense estimates, would be $350 for individuals and $700 for families. Under the Choice option, the Pentagon budget estimated $450 for the individual fee, and $900 for families. Right now, for example, TRICARE Prime retirees pay $282.60 annually for individual coverage, and $565.20 per year for family coverage through Sept. 30, 2016.

Under the new system, co-pays would depend on which plan beneficiaries enrolled in, and where they obtained their prescription drugs. Military treatment facilities would not charge co-pays.

The fiscal 2017 budget also recommends creating an enrollment fee for TRICARE-for-Life beneficiaries, which would be tied to retired recipients’ income – a proposal that has cropped up in previous Obama Defense budgets.

Fees and drug co-payments would be indexed at the National Health Expenditures per capita.

The Select/Choice options under the fiscal 2017 proposal are reminiscent of the Pentagon’s previous attempts to streamline TRICARE, and save money by requiring beneficiaries to pay more for their health care. When TRICARE took effect in 1996, a working age retiree’s costs were approximately 27 percent of the total health care price tag, according to Defense. Today, the beneficiary’s share is less than 9 percent. “While health care costs have doubled or tripled over this time frame, a family’s out-of-pocket expenses, including enrollment fees, deductible and cost shares, have grown by only 30 to 40 percent,” the Defense budget said. Military pay and benefits, including TRICARE costs, amount to 34 percent of the overall Defense base budget in fiscal 2016.

The Pentagon framed the changes as part of a larger reform effort to improve TRICARE while also reining in costs. “Simply revising the cost-sharing structure of TRICARE will not meet beneficiaries’ concerns or resolve access to care issues,” said the fiscal 2017 Defense budget. “Instead, the department must commit to institutional health care reform and implement targeted solutions to solve the variety of issues facing its beneficiaries.”

Congress has resisted the Obama administration’s more aggressive TRICARE proposals so far, opting instead for more modest increases in TRICARE enrollment fees and prescription drug co-payments. But Defense is hoping that lawmakers’ willingness to overhaul the military retirement system in 2015 will translate into more significant reforms to TRICARE this budget season.

For a more detailed look at the Pentagon’s TRICARE reform proposals, click here and scroll down to the section “Take Care of Our People.”

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