The military’s health care spending has increased by more than 100% in the past 14 years — outpacing inflation. What if the military only covered active members and not family members and retirees? That’s an idea some analysts floated at an event held by the Brookings Institution last month. Such people could get health plans through the Affordable Care Act’s exchanges, and the military’s overall health spending would decrease, the analysts suggested.
Most Brookings event participants agreed on one key point: The military has the responsibility to provide health care coverage to active service members and their families in order to maintain recruitment and retention.
However, they differed on whether the military should still be responsible for such coverage once service members retire and have access to health coverage elsewhere — such as through employers or the ACA.
In a keynote speech at the Brookings event, Jonathan Woodson, assistant secretary of defense for health affairs at the Department of Defense, said that the “military health system is in a transformative period after 13 plus years of war. We have performed well, but we need to position ourselves to be stronger, better and more relevant to the future.”
The Military Health System — and the Need for Reform
While the military has made some “significant changes” to slow health care spending growth, the “budget restraint will continue. More needs to be done,” Robert Hale, former undersecretary of defense at DOD, argued during the event.
The military health system provides health care for 9.6 million active duty and retired military members, including 1.3 million active-duty service members.
Woodson noted that the system includes:
- 54 hospitals;
- More than 350 medical clinics; and
- 380,000 providers.
Since 2000, the military health budget has increased by 130%, reaching $52 billion. That increase, according to a Congressional Budget Office report, is largely attributable to expanded benefits over the past decade.
During the Brookings event, Carla Tighe Murray, a senior analyst at CBO, said that 2.1 million individuals enrolled in one such new program, Tricare For Life, which provides care for military retirees who are eligible for Medicare and their families. She noted that the program “essentially reduces the out-of-pocket costs for military retirees and their families, almost to zero,” adding, “Basically, Medicare pays, then Medicare Part B pays, and then Tricare pays the remainder of those costs.”
Meanwhile, active-duty service members’ families who are enrolled in the military’s HMO program — called Tricare Prime — do not pay annual fees or contribute any cost-sharing to visit a doctor. Military retirees pay about $555 annually for Tricare Prime coverage for themselves and their families, plus fees ranging from $12 to 20% of the cost of care.
Murray said out-of-pocket costs through Tricare are “significantly below what other options are … for civilians, either through the private insurance market or through employment-based insurance.”
“So you see more people joining and those people who join tend to use the system more,” which contributes to the overall spending rate, Murray said. She added that “[t]hose who are in Tricare tend to use about 50% more health care services than people using civilian HMO plans of comparable age.”
Rising Costs Bolster Argument for Shifting Military Families, Retirees to the Exchanges …
“It’s a little radical, but should we be thinking about how some of the military system might transition some of their people to the [ACA] exchanges, especially in sparsely populated areas of the country?” Alice Rivlin — a senior fellow in economic studies at Brookings and former director of both the CBO and Office of Management and Budget — asked during the Brookings event.
The “case for the special supply of [health] services is strong for the active duty” but is “much weaker” for their families, Henry Aaron — a senior fellow at Brookings and past assistant secretary for planning and evaluation at the former Department of Health, Education and Welfare — argued. “That suggests the possible appeal of the option [Rivlin] mentioned, which is to help them have fair, well-financed access to the general health care system.”
John Mayer, a military health and energy analyst at Booz Allen Hamilton, seemed to concur, arguing that having a program that allows military retirees to “go in and get free health care, and do it as often as they want seems to be a burden that the American public shouldn’t have to bear.”
… But Is the Idea Realistic?
Observers say that moving family members and military retirees out of the health system would not necessarily be an idea openly embraced by lawmakers and stakeholders.
Following the Brookings event, retired Navy Captain Kathy Beasley, with the Military Officers Association of America, said, “I think there were some excellent people on this panel … with some nuggets to think about, especially when it comes to working on things together, between the military health system and the civilian health system.” However, Beasley added, “But some of this stuff … I just think some of them really don’t understand the military health system.”
In February, the Military Compensation and Retirement Modernization Commission — an independent panel tasked by Congress with reviewing military pay and benefits — is expected to issue a report that will review military health care coverage, as well as other military benefits.
The report likely will shine some light on how serious of a problem growing health care costs is for the military — and it could give more weight to the argument for switching military retirees and depends to the exchanges.
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