Estimate gives modest savings to TRICARE reform

The first estimates of the savings realized from the House's plan to reform TRICARE come in around $7 billion.


The House Armed Services Committee’s attempt to simplify and shift costs in the military health care system may end up saving the government some money in the long run. The question is will it save enough?

Reforms to the TRICARE system could end up saving $500 million in fiscal 2017 and almost $7 billion over the next five years, states a May 4 study from the Center for Strategic and International Studies.

The numbers are the first estimates on provisions nestled in the 2017 House version of the defense authorization bill, the details of which were released last week.

The savings are more than what the Obama administration’s proposed TRICARE reform plan estimated it could save when it was released in February.

Still, the savings only take a small chunk out of the $52 billion the Defense Department spends a year on military health care.

Lawmakers are trying to tamp down the rising costs of TRICARE, which insures about 10 million people.

“The cost of providing that care has increased rapidly as a share of the defense budget over the past decade, out-pacing growth in the economy, growth in per capita health care spending in the United States and growth in funding for DoD’s base budget,” a 2012 Congressional Budget Office report states.

The cost of providing health care to service members and their families rose 130 percent from 2000 to 2012, the report states.

A CBO report released May 4 shines further light onto the type of savings the government could realize from the reforms.

The report states the changes to TRICARE will only take about $12 million out of direct spending —mandatory spending not in appropriations bills — over the next 10 years.

Some lawmakers have already pointed out that the reforms will only slightly slow the bleeding of rising costs.

“We are probably not saving the kind of money that might be necessary going forward so that we are certain people are getting the very best care, but at the same time [creating] savings going forward,” said Rep. Susan Davis (D-Calif.), House Armed Services Military Personnel Subcommittee ranking member. “One we start letting [health care costs] rise too much over the personnel costs overall we are going to be in trouble.”

The defense authorization bill proposes saving money on the insurance system by imposing enrollment fees and fixed dollar copayments for family members of active duty service members and retirees.

“The goal is to see the changes in structure and function be rolled out and evolve in the next two to four years,” said Chairman Joe Heck (R-Nev.) of the House Armed Services Military Personnel Subcommittee, during the markup of the authorization bill last week. “Potential increases in enrollment fees and deductibles will be put into place because we will have increased access and increase the product.”

The bill could add between $180 and $425 a year for individuals and $360 to $850 a year for families.

Some critics of the provisions think that way of creating government savings is just passing the cost on to the soldiers and their families.

“That [cost] probably sounds minimal compared to what a lot of civilians pay,” said Karen Ruedisueli, deputy director of government relations at the National Military Family Association. “But you have to keep in mind a couple of things. One is that they would be introducing these fees at the same time that the new retirement system is rolling out.”

Ruedisueli said service members will be encouraged to invest in that to get a match from the government.

In addition, the government is cutting Basic Allowance for Housing and has not been able to tie military pay raises to the Employment Cost Index for at least three years, she said.

To put things in perspective, a new enlisted soldier is paid $1,567 a month.

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