WASHINGTON Jan 16 The most effective way to
control the rising expense of the military healthcare system is
to boost cost-sharing among retirees, the Congressional Budget
Office said on Thursday, endorsing an unpopular step Congress
has repeatedly rejected.
The non-partisan CBO said the Defense Department spent some
$52 billion in 2012 for its TRICARE healthcare program, which
covers about 1.8 million troops and their 2.6 million family
members, plus 5.2 million military retirees and their families.
That's nearly 10 percent of the Pentagon's $530 billion
budget base budget for 2012 and about $5,400 per person.
The budget office, in a 42-page report, said policymakers
had considered several initiatives to control costs, including
better management of chronic diseases, more effective
administration of the healthcare system and increasing
cost-sharing among military retirees.
"Only the last of those approaches has the potential to
generate significant savings for DoD (Department of Defense),"
the report said. "The other two could generate modest savings,
but they would not address the primary drivers of healthcare
The Pentagon has asked Congress to increase TRICARE fees for
retirees in its budget submissions in recent years, but the move
is politically unpopular and lawmakers have rejected nearly all
of the proposed increases.
The CBO looked at three ways for increasing cost-sharing for
retirees, many of whom leave the military after 20 years of
service and begin receiving benefits while they are still in
their working years between the ages of 40 and 65.
The options looked at increasing fees or limiting service to
so-called working-age retirees, as well as modest fees for
retirees over age 65.
The budget office estimated the federal government could
reduce its deficit by $20 billion to $60 billion over the next
decade by increasing cost-sharing among military retirees.
Military healthcare costs have become an increasing problem
for the Pentagon over the past decade or so, outpacing the
growth of the economy, per capita U.S. healthcare spending and
the growth in funding for the defense budget.
"Between 2000 and 2012, funding for military healthcare
increased by 130 percent, over and above the effects of overall
inflation in the economy," the report said.
The report identified two main reasons for the rising costs:
a decision by lawmakers to expand TRICARE benefits for military
retirees and financial incentives that encourage working-age
retirees to remain in the system because it is cheaper than
alternatives they can get from their new employers.
The medical cost of the wars in Afghanistan and Iraq are
sometimes cited as a possible cause of rising healthcare
spending, but the CBO said the conflicts had a "small effect"
compared to the other reasons.