RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines

MILITARY COMPENSATION REVIEW UPDATE September 14, 2008

Posted by Service Officer on September 14th, 2008

The new report of the Quadrennial Review of Military Compensation (QRMC) proposes a number of changes in military pay and benefits. Under the law, the Defense Department must conduct a QRMC every four years. MOAA previously addressed concerns about the QRMC’s proposed changes in the military retirement system (refer to “Purposes and Pitfalls of Retirement Reform” at www.moaa.org/lac/lac_asiseeit/lac_asiseeit_2008/lac_asiseeit_080813.htm). Now they have provided an assessment of the QRMC health care recommendations. The Military Officers Association of America (MOAA) is in agreement with proposals to stress preventive care by removing copays and deductibles for procedures and medications that are intended to guard against health problems, including colonoscopies, mammograms, and medications intended to control chronic conditions such as diabetes. Similarly, they think the QRMC is on the right track in outlining a variety of initiatives to improve recruiting and retention of the full spectrum of military medical professions and expand contract, reimbursement, and other options to attract the needed level of civilian providers to meet the military community’s needs. But they have a pretty big hiccup on QRMC proposals to:

 

• Increase and means-test Tricare fees for retirees under 65

• Double retail pharmacy copays

• Establish an annual enrollment fee for Tricare Standard

• Establish an accrual accounting system to pay for health care for retirees under 65

The QRMC would establish an annual enrollment fee for Tricare Standard and set the fee at 15% of the Medicare Part B premium for single members. The enrollment fee for single retirees in Tricare Prime would be set at 40% of the Part B premium. The premium would be doubled for retirees with spouses or families. While those amounts would start out at lower levels than the Pentagon and others have proposed, it would represent a fundamental change in the philosophy of military benefits.

• First – Part B premiums by law represent at least 25% of the cost of delivering care to the elderly and disabled. MOAA doesn’t believe that standard is a proper one for establishing fees for people between ages 38 and 64.

• Second – Part B premiums can rise dramatically based on the family’s adjusted gross income as reported to the IRS. MOAA has a problem with that kind of means-testing of federal benefits in any event, but at least there’s some case to be made for it in social insurance programs like Medicare that apply to all Americans, regardless of their contributions to the country. But they draw the line at means-testing military compensation and benefit programs that are earned by a career of service and are supposed to be provided by the Defense Department as part of the employer’s compensation package.

Less than 1% of the health coverage plans offered by any other American employers vary with income. The U.S. president pays the same for his health care as the lowest-grade federal civilian. It makes no sense to MOAA to say that some military retirees who complete 20 to 30 years of arduous service somehow deserve a cut in their military health benefits if they inherit some money from a parent or if their spouse lands an outstanding job. Further, MOAA doesn’t support an enrollment fee of any kind for Tricare Standard or Tricare for Life (TFL). Tricare Prime has an enrollment fee because it guarantees access to care for those who enroll. There’s no such guarantee for Tricare Standard or TFL, and many military beneficiaries encounter difficulties finding providers who will accept Tricare – which doctors see as the lowest-paying insurance program in America.

Finally, hard experience has shown that establishing a health care accrual accounting system for retirees under 65 may be an accountant’s dream, but it’s a beneficiary’s nightmare. The accrual funding system established in 2001 for beneficiaries over 65 has proven to be a significant hindrance in making needed adjustments because of strict congressional budget rules for any benefit program governed by accrual accounting. That means benefit adjustments can be made relatively easily for retirees under 65, but making improvements for those over 65 is nearly impossible. That’s also the reason that it’s like pulling teeth to make even minor adjustments on concurrent receipt or the Survivor Benefit Plan, both of which are covered by accrual accounting systems. The last thing we need, given the many problems that we know exist in the Tricare system, is another budgetary roadblock in getting them fixed. [Source: MOAA Leg Up 5 Sep 08 ++]

Every four years, DoD is required by law to conduct a review of military compensation. As previously reported in the AUG Volume II of the 10th Quadrennial Review of Military Compensation (QRMC), testing a complex four-part retirement plan for the military on several thousand volunteers is recommended. But the final QRMC report makes other eyebrow-raising suggestions. Other than the Tricare recommendation addressed in Update 4these suggestions include:

• Paying federal impact aid money — now earmarked for local public schools near military bases — directly to military families as cash vouchers to attend alternative schools, including private or parochial schools;

• Prioritizing access to military child-care centers based on service needs instead of traditional waiting lists; (Children of servicemembers who are deployed or have critical skills would be given preference.); and

• Encouraging national and regional supermarket chains to offer discounts to servicemembers, particularly those who live far from a base commissary.

Retired Air Force Brig. Gen. Jan “Denny” Eakle (director of the 10th QRMC) said in an interview, “We were allowed very broad latitude to think about anything that would enable us to better expend the valuable dollars we invest today in our compensation system. We really wanted to see what we could do, both for military members and taxpayers, if unconstrained by thoughts like ‘What’s the political climate on this?’ As a result, she said, some recommendations are very controversial and we know it. We knew it when we put it on paper. But we thought we had an obligation to give the department our best insight into what we thought might have promise. They’ve got to go study it now and figure out, in the political climate, if it is doable.” Elaborating on the other QRMC recommendations she noted:

• Dispersing impact aid money directly to families is important for allowing “them to choose where their children go to school.” Poorly performing school districts near some military bases, she explained, “make it very difficult for us to encourage people with school-age children to accept assignments to those places.” What are the political consequences of sending federal dollars, now earmarked for public schools, to military parents so children can attend parochial or private schools? “Remember this is the QRMC’s recommendation to the department.” What defense policy makers do with it, she suggested, is their concern, not hers.

• Giving children of deployed servicemembers and those with high-demand skills first crack at on-base child care also is sure to be controversial with families used to a first-come, first-served arrangement. But she suggested it is time child-care dollars are used to enhance service priorities. Besides, she said, another QRMC recommendation is to begin a child-care voucher system — taking money now earmarked for military child development centers and giving families cash to help them afford other child-care arrangements, perhaps nearer to their homes.

• Eakle didn’t dispute the notion that encouraging commercial grocers to offer military discounts could be seen as a first step toward eliminating the prized commissary system. Her intent, however, only is to ensure that active duty servicemembers and reservists living far from commissaries can enjoy grocery shopping discounts, too. “I’m a military retiree who has access to a commissary. But I will tell you, the concept of having discounts in lieu of driving to the commissary will have a lot of appeal to retirees and to military members who are not near a commissary. Think about reservists. So we’re not suggesting that we close the commissaries; we’re suggesting that this be an alternative that perhaps we pursue.”

The freedom she was afforded to propose any ideas that would enhance the value of military compensation, both to servicemembers and taxpayers, is “one reason why this report will ultimately be viewed as rather different from previous reports,” Eakle said. The 10th QRMC report can be viewed online at www.defenselink.mil/news/ qrmcreport.pdf . [Source: MOAA News Exchange Tom Philpott article 10 Sep 08 ++]

Leave a Reply

You must be logged in to post a comment.