Another Innuendo Over a CBO Report: TRICARE For Life—Update

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By DORIAN DE WIND

In my article “Another Innuendo Over a CBO Report: TRICARE For Life,” I pointed to a message from a “BG Bob Clements, USAF Ret (P38 Bob)” that is making the rounds through the internet, claiming:

Seems as though our President Elect has placed a priority on cutting [TRICARE For Life] out of the budget as a means to provide funding for those things he promised during the campaign…Just another move to slight those of us who dedicated much of our adult lives to the defense of our country.

Subsequent to my post, it has been pointed out, and correctly so, that the Veterans Affairs Department takes care—or is supposed to take care—of veterans’ health and other matters and that the Pentagon (DoD) takes care of active duty and retired military personnel.

General Shinseki, as the new head of VA under Obama, has promised to totally overhaul the way the present VA treats veterans. “Through their service our veterans have sacrificed greatly…They are clients, not customers, whose best interests are our sole reason for existence,” he told the Senate Veterans Affairs Committee during confirmation hearings.

     

These words from the new VA head, as those in the original post, are quoted not because the VA will have anything to do with TRICARE For Life, but because they are part of the overall Obama administration philosophy on our military: active duty, retired and veterans.

Those who doubt Obama’s commitment to our military and veterans, and those who say that Obama “has placed a priority on cutting [TRICARE For Life] out of the budget as a means to provide funding for those things he promised during the campaign,” I would refer them to [2] Obama’s Senatorial web site, where they will find, among several other commitments to our military and veterans:

Military Funding

    Senator Obama backs efforts to expand TRICARE eligibility and reduce TRICARE premiums so that our nation’s service members, Guard members, reservists, and their families can have improved access to health care

The following is the text of “Option 96,” “Introduce Minimum Out-of-Pocket Requirements Under TRICARE For Life”

TRICARE For Life (TFL) was introduced in 2002 as a supplement to Medicare for military retirees and their family members who are eligible for Medicare. The program pays nearly all medical costs not covered by Medicare and requires few out-of-pocket fees. Because the Department of Defense (DoD) is a passive payer in the program—it neither manages care nor provides incentives for the cost-conscious use of services—it has virtually no means of controlling the program’s costs. In 2008, DoD spent about $8 billion on TFL-eligible beneficiaries in addition to amounts spent for those individuals by Medicare. This option would help reduce the costs of TFL, as well as costs for Medicare, by introducing minimum out-of-pocket requirements for beneficiaries. Under this option, TFL would not cover any of the first $525 of an enrollee’s cost-sharing liabilities for calendar year 2011 and would limit coverage to 50 percent of the next $4,725 in Medicare cost sharing that the beneficiary incurred. (Because all further cost sharing would be covered by TFL, enrollees could not pay more than $2,888 in cost sharing in that year.

Those dollar limits would be indexed to growth in average Medicare costs for later years.) The true out-of-pocket provisions in Medicare’s prescription drug program, or Part D, are an example of how this option could work in practice. Under that program, any amounts paid by Medicare or by any other insurer are not included when calculating whether a beneficiary has reached the level of eligibility for catastrophic coverage. Currently, military treatment facilities (MTFs) do not charge eligible individuals copayments for medical services or pharmaceuticals. In order to reduce beneficiaries’ incentive to switch to MTFs and avoid the minimum out-of-pocket requirements that are central to this option, DoD would need to establish procedures for collecting payments from TFL beneficiaries seeking care from MTFs. If the savings that would accrue from reduced spending for Medicare were included, the introduction of cost sharing under this option would reduce the federal spending devoted to TFL beneficiaries by about $14 billion through 2014 and by about $40 billion through 2019.

 Approximately 22 percent of those savings would come from a reduced demand for medical services rather than from a transfer of spending from the government to military retirees and their families. An advantage of this option is that greater cost sharing would increase TFL beneficiaries’ awareness of the cost of health care and promote a corresponding restraint in their use of medical services. Research has generally shown that introducing modest cost sharing can substantially reduce medical expenditures without causing measurable increases in adverse health outcomes. Among its disadvantages, this option could discourage some patients (particularly low-income patients) from seeking preventive medical care or from managing their chronic conditions under close medical supervision, which might negatively affect their health.

Nowhere in this “Option” do I see any recommendations to “eliminate” TRICARE For Life.

While any moves to reduce the benefits under TRICARE For Life or to increase the out-of-pocket expenses for retired military and their families should be strongly opposed by everyone (including yours truly), it should be done based on facts and not on innuendo and fear-mongering.

I have not seen President Obama’s position on this issue yet, but certainly I have not heard him say that he will make it “a priority on cutting it out of the budget as a means to provide funding for those things he promised during the campaign.”

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