A few, however, were more restrained, and the Air
Force Association was among those counseling caution.
While noting that "some of the provisions seem
attractive-on the surface," AFA's Oct. 17 statement
warned, "We are not yet certain that this [program]
will actually live up to the claims made for it. The
association will continue to research, monitor, and
be an active participant in any health care reform
initiative, but we are still a long way from recommending
to our members that this new program is the answer
for all of our health care needs."
One thing is beyond dispute: It was an extraordinary
confluence of political and social forces that caused
Congress to take the step that no lawmaker or service
association was bold enough to predict months earlier.
Two central figures were Sen. John Warner (R-Va.),
the chairman of the Senate Armed Services Committee,
and Rep. Steve Buyer (R-Ind.), chairman of the House
Armed Services military personnel subcommittee. They
had the support of Republican Congressional leaders
and, in the end, strong bipartisan support, which they
used to bring forth a program that intends to not only
end age discrimination in military health care but
to shield benefits for the elderly and Medicare-eligible
disabled from future defense spending showdowns.
No Longer a "Nice to Have"
The legislation enhances the benefits of these two
groups and redesignates them as an "entitlement,"
meaning that annual federal funding becomes mandatory, not
discretionary.
It also shifts away from the defense budget and into
the new Department of Defense Medicare-Eligible Retiree
Health Care Fund as much as $200 billion in unfunded
obligations associated with these new benefits. The
fund will be administered by the Treasury Department.
The intent of all these moves is to permit the nation's
784,000 military retirees, 391,000 spouses, and 214,000
survivors to gain access to better and more comprehensive
health care coverage. It will come through one of two
routes:
Tricare Prime, the military's managed care health plan.
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What About Tricare Senior Prime?
It still unclear how the new program will affect those
beneficiaries already enrolled in Tricare Senior Prime at
select test sites. Defense officials will study their
options in the months ahead.
The Senior Prime enrollees already pay Part B premiums in
return for access to military managed care, but so far,
Medicare hasn't acknowledged an obligation to reimburse
the military for some of the cost of caring for enrolled
seniors. Military hospitals haven't been able to show
Medicare officials that they are exceeding previous levels
of effort in treating elderly beneficiaries, a condition
for reimbursement.
Defense officials hope to renegotiate the deal with the
Health Care Financing Administration, which overseas
Medicare. They will argue that HCFA can only gain from more
efficient use of in-service facilities. To give that
approach a chance, Congress voted to extend the Senior
Prime demonstration through at least December 2001. If HCFA
doesn't agree to a more favorable deal on reimbursements,
Tricare Prime enrollees likely will just be transitioned
to the Tricare for Life plan.
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Tricare Standard, DoD's fee-for-service insurance
plan once known as CHAMPUS.
At present, the size of DoD's network of uniformed
and civilian health care providers limits the number
of retirees who are enrolled in Tricare Prime. That
limitation is expected to continue, and as a result,
expectations are that most Medicare-eligibles will
come to use Tricare Standard as a second payer (behind
Medicare) of their health costs.
It has been billed as a backup or supplement to Medicare
with no exclusions for pre-existing conditions and
no enrollment fees, premiums, deductibles, or co-payments.
In principle, this is what service retirees have long sought.
Plans call for Tricare Standard to pick up many of
the costs, fees, and deductible amounts that Medicare
will not cover. These include the routine 20 percent
co-payment on medical bills and the large deductible
required for hospitalization.
Tricare for Life was approved as part of the Fiscal
2001 National Defense Authorization Act and thus is
enshrined in law. This has caused some experts to conclude
that a fundamental and irreversible change has taken place.
For example, Paul Arcari, director of government relations
for The Retired Officers Association, said that, if
all goes as expected, beneficiaries, starting next October,
"can safely drop their supplemental insurance policies.
" Such a step would save the average 65-and-older retiree
several hundreds of dollars a year.
AFA said it was urging members not to cancel any current
Medicare supplement insurance they now hold because "to
do so could be financially devastating" if the program
were to be delayed or altered.
Concerns About Tricare
Yet to be seen, said skeptics, is how effectively
Tricare functions as a second payer. They noted that
Tricare has become notorious for slow payment, a fact
that has infuriated doctors and caused many of them
to flee the system. Moreover, the skeptics also wondered
how Tricare companies will be able to pay 100 percent
of costs not covered by Medicare and turn a profit
at the same time.
"We do not know how this program will work, and
so far as we can determine, neither does anyone else," AFA
said. "We will continue to ask questions and stay
on top of the program every step of the way."
Experts said that, under the new plan, Tricare Standard
would not become a true wrap-around Medicare supplemental
plan, covering every possible expense not covered by
Medicare. The intent, rather, is to guarantee beneficiaries
65 and older, at minimum, the same level of coverage
they enjoyed before turning 65. The new law extends
Tricare Standard into old age so that a person's shift
to Medicare doesn't result in reduced benefits.
In other words: Tricare Standard, while it won't become
a different supplemental plan, no longer will disappear
when a beneficiary turns 65, as is the case today.
The use of Tricare Standard as second payer to Medicare
should have no impact on a patient's choice of physician,
Tricare officials said.
For many service elderly, Tricare for Life should
reduce annual health care costs to just Medicare Part
B premiums which, in 2000, ran $45.50 a month if the
insured had signed up at age 65. Seniors who decline
Part B enrollment when they first become eligible do
face a 10 percent penalty on premiums for each year
they delay past age 65.
So, for example, a 75-year-old retiree who now buys
Part B coverage delayed coverage for 10 years; when
the number of years is multiplied by 10 percent, it
means his or her premium will be 100 percent higher,
or $91 per month.
Arcari said about 84,000 Medicare-eligible beneficiaries
lack Part B coverage. Military associations have pressed
Congress for legislation to waive the late fee penalty
for military retirees.
It's "something we hope to address next year," said
Arcari, but Congressional committees with jurisdiction
over Medicare and its trust fund have opposed such
moves in the past, fearing the precedent it might set.
Arcari said military retirees living in the United
States should sign up for Part B "as soon as possible" and
then hope for a fix.
In 1999, Army Gen. Henry H. Shelton, Chairman of the
Joint Chiefs, began to raise expectations of major
health care reform for the year 2000 by acknowledging
broken promises of lifetime health care to retirees
and encouraging formation of an oversight panel on
military health care run by the Joint Staff.
Political pressure on the Pentagon included high-profile
lawsuits brought against the government by many military
retirees, including a group led by Air Force retiree
and lawyer Col. George "Bud" Day, a recipient
of the Medal of Honor.
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Beyond Tricare for Life
Besides establishing Tricare
for Life, the latest defense bill enhances
pharmacy benefits for the Medicare-eligible
retiree population.
Starting April 1, 2001, beneficiaries
will be able to use the military's National
Mail Order Pharmacy Program to buy a 90-day
supply of most drugs for $8 per prescription.
Seniors living near a military
installation can continue to use base pharmacies
at no charge. Besides the mail order plan,
they also will have access to Tricare's retail
pharmacy network, which requires 20 percent
co-payment on each prescription.
The roughly 800,000 Medicare-eligibles
who live far from bases won't be left out.
They will have access to the mail order program,
and in addition, Rep. Steve Buyer (R-Ind.)
pressed successfully for access to nonnetwork
pharmacies, too, with a 25 percent co-pay and
a $150 deductible.
Other provisions of the bill
will provide new benefits to younger beneficiaries.
Sharon Barnes, with The National Association
for Uniformed Services, said these include
a reduction in maximum out-of-pocket health
costs (the "catastrophic cap") from
$7,500 to $3,000 per year.
The new law will extend Tricare
Prime Remote coverage to families of 80,000
active duty members living more than 50 miles
away from a military treatment facility. It
ends Tricare Prime co-payments of $6 or $12
per visit for family members.
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Administration Defaults
By January 2000, however, it had become clear that
the Joint Chiefs had failed to persuade the Clinton
Administration to raise the topline on defense spending
to accommodate far-reaching and expensive health benefit
reform.
At that point, the Republican-led Congress assumed
leadership on the issue, but initial efforts by Warner
and Buyer were relatively modest in scope, entailing
primarily enhancements to the pharmacy benefit for
older retirees.
In May, Rep. Gene Taylor (D-Miss.) raised the ante
when he pushed through a defense bill amendment to
expand Tricare Senior Prime within five years from
its status as a 10-site test to a nationwide program.
Senior Prime reflects a concept known as Medicare Subvention.
The idea is to open military managed care to service
elderly if Medicare agrees to reimburse the military
for at least a portion of the care to elderly beneficiaries.
By June, an increasing number of disgruntled retirees
had rallied around a different piece of legislation-the
$9 billion-a-year "Keep Our Promise" bill
introduced by Rep. Ronnie Shows (D-Miss.) and Sen.
Tim Johnson (D-S.D.). The Shows-Johnson bill proposed
to open to all military retirees the menu of health
care options available to federal civilian employees
under the Federal Employees Health Benefits Program.
However, the Shows-Johnson bill would have had the
government pick up the full cost of premiums only for
the retirees who entered service before June 1956,
when Congress first passed a law limiting health care
access for retirees to "space available" care.
In response to the new initiative, Warner introduced
a new amendment that he and co-sponsor Sen. Tim Hutchinson
(R-Ark.) said would end "age discrimination in
military health care."
The plan (later named Tricare for Life) was to make
these changes permanent, but Congressional
Democrats said that the $40 billion cost, over 10
years, violated the budget resolution. They warned
Warner that his amendment, if approved, would trigger
a procedural challenge that could tie up the entire
defense bill.
Believing he lacked 60 votes to defeat such a challenge,
Warner opted to limit the program to two years, through
September 2003. He vowed to work with the Senate Budget
Committee to find a way to make the changes permanent
before the start date in October 2001. Without permanency,
he knew, retirees wouldn't feel comfortable dropping
their Medicare supplemental insurance.
In late September, Buyer, chairman of the House military
personnel subcommittee, decided not only to embrace
Warner's plan but also improve on it. Buyer unveiled
what he called a Warner-Buyer proposal to make Tricare
for Life permanent. He would remove Warner's two-year
sunset provision and order the program funded as an
entitlement paid for through a special trust fund run
by Treasury.
Earlier, both Warner and the Joint Chiefs had floated
the idea; Warner was expected to pursue it in 2001.
Warner: Risk Too High
Irritated by this unexpected late-inning development,
an angry Warner declared that Buyer's attempt to deliver
Medicare-eligibles from the uncertainty of a two-year
program was well-intended but would put at risk both
Tricare for Life and the defense bill itself. He had
seen nothing that might ease his worry about the procedural
challenge; he didn't have 60 votes.
By Sept. 21, Warner was convinced that he had killed
the idea and was eager to say why. He said, "I've
got but a few days, before the Senate and the House
stop for the year, to get through a conference report
covering the entire military and $300-plus billion.
I cannot risk the Senate stopping that bill on a point
of order."
Buyer and Spence, Warner's opposite number on the
House side, continued to press a late-hour shift to
permanent legislation. Buyer said the turning point
came during an Oct. 4 House Armed Services Committee
hearing attended by Shelton and the four service chiefs.
"What I wanted to do was break the dynamic of
this debate, that the reason we can't take care of
the military retirees is because we have other very
important needs," Buyer said. "So I asked
the chiefs, 'If I were no longer pitting military retirees'
health care against other priorities, would you agree
to that?' Obviously they all said, 'Yes.' "
With the chiefs' endorsement, Buyer said, he won over
House Speaker J. Dennis Hastert (R-Ill.). Hastert,
in turn, persuaded Trent Lott (R-Miss), Senate majority
leader.
The House on Oct. 11 approved the defense bill, with
its Tricare for Life provisions, in an overwhelming
vote. On the next evening, the Senate did the same,
but not before disposing of a challenge from Sen. Bob
Kerrey (D-Neb.).
Kerrey, a Medal of Honor recipient, warned colleagues
that the plan would exceed spending targets by $6 billion
a year, "in a bill that has never been debated,
in a program that's never been discussed."
Kerrey's challenge was supported by several senators
including Sen. Phil Gramm (R-Tex.). Gramm at one point
charged that Congress was "taking money away from
poor young people and giving it to old people who are
rich."
The health care trust fund will operate just like
one established in 1986 to handle military retired
pay. The existing cost of health care obligations will
be picked up by the Treasury as an "unfunded liability." Each
year, DoD will make payments into the new fund to cover
future benefits of persons coming on active duty. No
one yet has a reliable estimate of that annual payment,
but it won't be small.
Topline Must Rise
"The topline for defense spending still must
be increased in order to accomplish this," Buyer
said.
Starting in October 2001, DoD's managed care capacity
at military treatment facilities will determine the
level of access that Medicare-eligibles have to Tricare
Prime. If enrollment is full, or if they live far from
a military base, retired 65-and-older beneficiaries
would be expected to find a civilian provider, use
their Medicare benefits as the first payer, and then
turn to Tricare Standard for payment of costs not covered
by Medicare.
Arcari characterized the entire health care packet
as "an extraordinary accomplishment." A Tricare
official, however, noted that it also poses a major
challenge.
"This," he said, "will affect everything
that military medicine does-claims, appointments, contracts,
the way dollars flow, our relationship with [the Health
Care Financing Administration], access standards for
hospitals and clinics. People are just waking up to
this realization. They are overjoyed that the broken
promise is going to be renewed, but it [proper implementation]
is going to take a Manhattan Project level of effort."
Meanwhile, military associations remain committed
to the Shows-Johnson bill, which would open the Federal
Employees Health Benefits Program to military retirees.
As FEHBP premiums rise, however, retirees are expected
to find superior value in the Tricare for Life program.
Arcari asked, "Why would you pay $2,000 a year
for family coverage when you can use Tricare for Life
at no cost" other than Medicare Part B premiums?
Tricare officials said they already are working up
a robust communication plan to reach beneficiaries
with full details of Tricare for Life as soon as possible.
If all goes as planned, elderly military retirees,
for the first time in many years, will get the care
they need without worrying about huge bills.
"Once and for all, we are taking care of our
military retirees by giving them Tricare for Life and
by improving their prescription drug benefit," said
Rep. Sue Myrick (R-N.C.), in a statement preceding
the Oct. 11 House vote on the issue. "Our military
retirees were promised lifetime health care coverage
when they answered the call of duty, and it's about
time that we fulfilled our promise."
Tom Philpott, the editor of "Military Update," lives
in the Washington area. His most recent article for Air
Force Magazine, "It's
Showdown Time on Tricare," was published in
the April 2000 issue.
