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The Honolulu Advertiser
Posted on: Monday, October 31, 2005

Proposals to target healthcare

By Tom Philpott

Congress will worsen runaway military healthcare costs if it enacts a Senate-backed provision to open the new TRICARE Reserve Select program to all drilling Reserve and National Guard members, the Defense Department's top health official has warned.

In testimony before a House subcommittee, Dr. William Winkenwerder said military health costs have doubled in just the past four years, from $18 billion a year to more than $36 billion, largely because of enhancements in benefits for retirees and their families.

But Winkenwerder also blamed a decade-long freeze on TRICARE enrollment fees and co-payments, which he suggested the Defense Department will try to raise after consulting military leaders and Congress.

As assistant secretary of defense for health affairs, Winkenwerder is Defense Secretary Donald Rumsfeld's top policy adviser on medical readiness and managing healthcare delivery for 9 million beneficiaries.

By spring, the Defense Advisory Committee on Military Compensation, established by Rumsfeld, is expected to produce recommendations to slow military health spending, at least in part by having beneficiaries pick up a larger share of their medical costs.

Ideas being weighed include higher enrollment fees and co-pays for TRICARE Prime, the managed care option; higher deductibles for users of TRICARE Standard, the fee-for-service option; a first-time annual enrollment fee for TRICARE Standard; incentives for military retirees working in second careers to use employer-provided health benefits; tax-deferred health savings accounts to military beneficiaries.

At a briefing for the advisory committee last July, Dr. Sue Hosek, a benefits analyst, noted that the TRICARE Prime enrollment fee for family coverage is still $460 a year, the level set in 1996. As of 2004, she said, the typical civilian employer health plan cost workers almost $2,700 a year.

Winkenwerder told Congress that the military healthcare system's $36 billion budget will climb to $50 billion in four or five years. Military pharmacy budgets have increased by 500 percent since 2001, to more than $5 billion a year, he said.

By 2009, he added, 75 percent of military health dollars "will be spent on the cost of paying for retiree healthcare, and just 20 to 25 percent will be spent on active-duty service members and their families."

Defense officials have complained for several years about growth in personnel costs, particularly for healthcare, and retiree and survivor entitlements. With military associations and veteran groups lobbying lawmakers hard and effectively to fulfill long-standing promises or to eliminate benefit inequities, Congress continues to enact improvements.

Health costs nationally are rising, Winkenwerder said, but not nearly as fast as in the military.

He described the premium-based TRICARE Reserve Select program, which Congress passed last year to entice demobilizing Reserve and Guard personnel to extend their service obligations, as a plan that "hits the spot" in balancing the needs of reservists with the needs of the nation.