A hearing held last week before the House Armed Services Subcommittee on Military Personnel focused on the future of the military health care system.  As expected, proposed increases in TRICARE fees and deductibles took center stage.

Subcommittee Chairwoman Rep. Susan Davis, D-Calif., started the discussion as she made her opening statement, “The Department's 2009 budget submission marks the third straight year that the department has proposed their "Sustain the Benefit" program.  In basic terms, Sustain the Benefit proposes to raise beneficiaries' co-payments, deductibles, and enrollment fees to both offset and avoid costs.  The increase in fees will result in modest sums returned to the department.  Beneficiaries will be discouraged from seeking care, both necessary and unnecessary, again due to higher co-payments for visits.”

Rep. Davis continued, “the department's own budget materials clearly state that they intend to realize savings by raising the cost of TRICARE so much that family members and retirees will seek health insurance coverage outside the DOD system because it will be cheaper.  These steps are likely to reduce costs over the short-term; people are simply less likely to seek the same amount of care they receive today.  However, what are the long-term implications of these actions?  What will the costs be if beneficiaries wait too long to seek care and the underlying conditions worsen or becomes untreatable?”

She concluded her opening statement by saying, “Now is not the time to exacerbate existing long-term problems or create new ones with programs that provide only short-term relief.”

The top Republican on the subcommittee agreed.  Rep. John McHugh, R-N.Y., said, “this is the third year in a row we're discussing significant increases to the cost of the beneficiaries of the TRICARE system and quite frankly, I remain concerned as I have in the past that the place we start, particularly in time of war, in trying to put the health care system on a better path is on the backs of the beneficiaries.”

“I'm not sure that, that's either the most effective or certainly the most equitable way to approach it.  In fact, I'm pretty convinced it’s not”, he concluded.

Testifying in defense of the proposed increases was Dr. Gail Wilensky, Co-Chair of the Defense Department’s Task Force on the Future of Military Health Care. 

Dr. Wilensky said that of the 12 recommendations made by the task force, only two deal with changes in fees.

One change proposes to modify the pharmacy benefit to use more cost efficient care, said Dr. Wilensky.  “In the two areas where we have suggested changes with regard to fees, one has to do with modifying the pharmacy benefit to use more cost-effective care.  We have suggested different types of tiering in co-payments to use so that there is more of an incentive to use preferred meds and also the more cost-effective points of service.”

The other recommendation is the highly controversial proposal to raise fees for under-65 retirees.  “We have primarily focused on the under-65 retirees, the majority of them, but not all of them, are working.  And that is to phase in over a 4-year period, changes and enrollment fees and deductibles that go back to the cost-sharing arrangements that existed when the Congress introduced the TRICARE program in the mid-1990s”, testified Dr. Wilensky.

She added, “Even more importantly than going back to what that was, is how you go forward.  And that is to continue indexing the relationship between what is paid by the beneficiary and what is paid by the military, so that this relationship, which is approximately 91 to 9 on the part of the military versus the beneficiary, is maintained going forward.  Changes need to occur in a predictable way, small changes in each year rather than attempting to make large changes in any type of a make-up arrangement.”

AUSA has stated repeatedly that we are opposed to any increases in the TRICARE program.  We are relieved that members of the Military Personnel Subcommittee agree.

 

Budget and Appropriations Process 101

Congress completed Step Two of the budget and appropriations process last week after the House and Senate adopted budget resolutions for fiscal 2009.  The Congressional Budget Resolution dictates how much Congress is allowed to spend across different functions of government and reflects the priorities of House and Senate members.  It does not require the President’s signature.  Step One was the submission of the President’s budget request to Congress.
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Step Three will begin after Congress returns from a two-week recess.  That’s when the appropriations process begins.  The House and Senate Appropriations Committees will decide funding levels for the multiple federal programs within the overall allocation set by the Budget Resolution.  Each appropriations bill must be signed by the President. 

House Armed Services Committee Chairman Rep. Ike Skelton, D-Mo., expressed his support of the budget resolution and said that it supports defense.

In a statement he said, “I am pleased to support the Fiscal Year 2009 House Budget Resolution, which provides $537.8 billion for national defense.  This funding level reflects both the President's request and the recommendation of the House Armed Services Committee.”

The statement continued, “The House Budget Resolution prioritizes resources to restore military readiness that has been worn down by repeated deployments and more than six years of war.  Especially important are the Budget Resolution's instructions that take care of people by rejecting TRICARE fee increases, providing funding to continue addressing problems such as those identified at Walter Reed Army Medical Center, and calling for enhanced pay and benefits to improve the quality of life of our troops and their families.”

As we have learned in the past several years, failure to pass the appropriations bills separately results in a continuing resolution.  Under a continuing resolution, departments are only funded at the previous year's levels and are not allowed to start new projects.

Rep. John Murtha, D-Pa., Chairman of the House Appropriations Defense Subcommittee said in a hearing last week that while lawmakers are eager to bolster Pentagon spending for fiscal 2009, they may have to wait until a new president takes office in January to do so.

“I don’t know if we will get a [Defense] bill this year,” said Rep. Murtha.  “I don't know if the bill will be signed into law this year, just because of the political situation.”

He later told reporters that the Democratic-controlled Congress may wait until President Bush leaves offices to provide more money for Defense and the Iraq War rather than back the President’s current requests.  In that event, he said, lawmakers would have to pass a continuing resolution to keep money flowing to Defense.

“A CR is the worst thing we could do” for the Defense Department, Rep. Murtha said during the hearing.  He said the resolution would “tie the hands” of lawmakers working to add or cut money from various programs.

He added that a delay would especially be troubling in fiscal 2009 since now is the time for Congress to speed up development of key military developmental programs because as the war comes to a close Pentagon spending will likely be slashed to pay for domestic priorities.


Economic Stimulus Payments: Information for Recipients of Veterans' Benefits

The Internal Revenue Service has issued instructions to ensure recipients of Veterans’ benefits such as disability, pension or survivor’s benefits receive an economic stimulus payment.

A release on the IRS website states that they and the Department of Treasury will be working closely with the Department of Veterans’ Affairs along with beneficiary organizations to ensure that all eligible individuals know what to do to receive a stimulus payment.

Normally, certain veterans’ payments are not subject to income tax.  However, the economic stimulus law passed in February contains a special provision allowing recipients of certain veterans’ benefits to count those benefits toward the qualifying income requirement of $3,000 and thereby qualify for the stimulus payment.

For eligible veterans who do not normally file a tax return, the IRS has prepared a 10-page informational package that includes instructions, a sample Form 1040A and a blank Form 1040A.  The informational package can be found at http://www.irs.gov/newsroom/article/0,,id=179203,00.html. 

 

Note
Congress is in recess.  The Newsletter will resume on 7 April 2008.