5 March 2014 Legislative News Update
5 March 2014 Legislative News Update
- Budget Season Has Arrived
★★★ BUDGET SEASON HAS ARRIVEDDetails of the Defense Department’s fiscal 2015 budget request were released this week. The $495.6 billion for the base budget is about $400 million less than was allocated in fiscal 2014. This amount does not include the approximately $79.4 billion requested for the Overseas Contingency Operation (OCO) fund. The Pentagon is requesting $199 billion for operations and maintenance funding — a $4 billion increase over the enacted fiscal 2014 level and $91 billion for procurement accounts, down from $94 billion in fiscal 2014, with the Army and Navy bearing the brunt of the reductions. Robert F. Hale, the Pentagon’s Comptroller told reporters yesterday that balance is the main goal DOD is trying to reach with this budget. “We're trying to balance readiness, our technological capability and our size, capacity and capability, and throughout we'll be talking about things we don't particularly want to do, but we have to in order, in our view, to achieve a balanced budget.”Let’s go over some of those details WE don’t particularly want them to do:Pay – For the second year in a row, the budget would only provide a 1 percent pay raise for servicemembers. That is 0.8 percent below the private sector wage growth. TRICARE – There is some old and some new contained in the budget. Again this year, the administration wants to implement an enrollment fee for TRICARE For Life (TFL) beneficiaries but would grandfather beneficiaries in the program prior to enactment. If Congress agrees, the TFL enrollment fees would be phased in over a 4-year period and will be based on a percentage of the beneficiary’s military gross retired pay up to an annual fee ceiling with indexing to retiree COLA after FY 2018. There will be a separate fee ceiling specifically for general/flag officers. Here is a table outlining the proposed changes:Proposed TRICARE-for-Life Annual Family (Two Individuals) Enrollment Fees*Retired PayFY 2014FY 2015FY 2016FY 2017FY 2018FY 2019Percentage of Gross Retired PayN/A0.50%1.00%1.50%2.00%2.00%Ceiling$0$150$300$450$600$614GO/Flag Ofcr Ceiling$0$200$400$600$800$818*Individual fees are 50 percent of family fees (e.g., 1 percent of GRP in FY 2017 and after). Ceilings indexed to retiree COLA after FY 2018The budget request is also proposing a consolidated TRICARE health plan to replace the TRICARE Prime, Standard, and Extra health insurance-like plans. Here are the details:§ There will be no change for active duty members. They would still maintain priority access to health care without any cost sharing and would still require authorization for civilian care. § Medically retired members and their families and survivors of those who died on active duty would be treated the same as active duty family members with no participation fee and lower cost shares.§ For retirees (not medically retired), their families, and survivors of retirees (except survivors of those who died on active duty), the proposed Consolidated TRICARE Health Plan Participation Fee (inflated annually by cost of living adjustment (COLA) percentage) would be $286 for individuals/$572 for families effective Jan. 1 2016. Participants would pay an annual participation fee or would forfeit coverage for the plan year.§ Cost shares will depend on beneficiary category and care venue and are designed to minimize overutilization of costly care venues, such as emergency departments. Cost shares would be the lowest in MTFs, higher in the network, and highest out of network, which will facilitate the effective use of military clinics and hospitals and thereby improve the efficiency of our fixed facility cost structure.§ Catastrophic Caps would increase but the participation fee would no longer count towards the cap.§ Pharmacy Co-pays - The budget also proposes to once again increase co-pays for pharmaceuticals (excludes active duty service members). DoD officials acknowledge that the fiscal 2013 National Defense Authorization Act included increases to the TRICARE pharmacy co-pay structure but apparently, it was not enough. “The Department believes additional adjustments are necessary to fully incentivize the use of mail order and generic drugs. The proposed pharmacy changes in the FY 2015 budget are phased-in over a 10-year period, and prescriptions will continue to be filled at no cost to beneficiaries at MTFs. In addition, the proposal requires that all prescriptions for long-term maintenance medications (e.g., blood pressure, cholesterol) must be filled through the MTFs or the TRICARE mail order pharmacy. Housing Allowances - The budget proposes to gradually slow annual BAH increases until rates cover 95 percent of housing rental and utility costs on average and would eliminate reimbursement of renters insurance.“In areas where average rates increase, DoD will slow the growth of that increase until the target is reached. The actual percentage will vary by area, because it would be unfair to those who live in high rental cost areas to make this change on a strict percentage basis. Rather, service members in the same pay grade but living in different areas should see the same dollar amount of out-of-pocket cost. This is done so the individual member will know the amount they will contribute toward housing and can make informed trades in their own budgets. The rate protection feature will also remain in effect. In other words, no one who is currently living in a particular area will see their BAH decrease. If the survey data in an area indicates that the BAH rate should decrease; only members moving into the area will receive the lower rate, which already happens under the current rules. We expect that the out-of-pocket target of 6 percent will take several years to achieve because the Department is just slowing the growth of future increases.”Commissaries – The proposal would reduce by $1 billion, over a 3-year period, the subsidy paid by the government to the commissaries. According to the budget, the department proposes applying the successful post and base exchange business model to the commissaries. The plan includes expanding the variety of products sold in stores, reducing transportation costs, and raising prices to cover the cost of operating commissaries. The Department will not direct any commissary to close. In the end, patron usage of the commissaries will determine the savings and their competitive advantage.Military Families – The base budget includes $7.9 billion for military family support programs. “The request reflects a reduction from the FY 2014 enacted level, driven primarily by three factors: (1) the slowdown in the recapitalization of DoD schools to improve execution; (2) reductions in commissary subsidies, consistent with the Department’s compensation reform proposal, and (3) one-time increases in the FY 2014 enacted bill, which were not carried forward in the FY 2015 request, the request states. Warfighter and Family Services - Includes funding for Family Support Centers, Armed Forces Exchanges, transition assistance, and for non-medical counseling support services for Active Duty, National Guard, and Reserve members and their families. Funding decrease for these services results from the planned drawdown and projected reductions in military end strength.Department of Defense Education Activity (DoDEA) Schools - Includes funding to support the education of 86,175 students in 182 schools (54,588 students in 119 schools in 12 countries and 31,587 students in 63 schools in 7 states, Puerto Rico, and Guam). The DoDEA reductions to infrastructure investments, accounting for nearly 90 percent of the overall reduction in FY 2015, allow for additional force structure changes, a slowdown in the recapitalization of DoD schools to improve execution, and increased efforts to repair instead of replace schools where more economically prudent.Spouse Employment - Provides funding for the Spouse Employment and Career Opportunities Program, which includes funding tuition assistance for eligible military spouses through the My Career Advancement Accounts program, employment counseling, and assistance to all military spouses to obtain employment and career opportunities through the Military Spouse Employment Partnership.Click here to see the budget request in its entirety as well as specific details on the proposed TRICARE consolidation plan. After reviewing the details of the budget request, AUSA President Gen. Gordon R. Sullivan, USA, Ret., said, “The decisions we see in this defense budget request are being driven by sequestration which hurts all of our Armed Forces - active, Guard, and Reserve. We need to redouble our efforts to stop sequestration before the entire defense structure crumbles. The budget reflects the folly of sequestration in its funding of a Total Army that is too small to protect the nation in very uncertain times.”Not to sound repetitive, but it is important to remember that the budget release is only the first step in a very long and drawn out process. The Administration can propose anything it wants. It is Congress that we must continue to influence! Influence not only with shooting down the distasteful proposals contained in the budget request but also finding a way to work together to end sequestration. It is imperative that you let your elected officials know where you stand on this. Go to our website, www.ausa.org, click on the “Contact Congress” button, enter your zip code and then click on the AUSA-suggested letter “Preserve Military and Veteran Benefits” and “End Sequestration Permanently”.