DOD eyes changes in health care benefits

Some of the 9.2 million beneficiaries of the Military Health System (MHS) may face an increase in out-of-pocket expenses for health care based on proposals being considered by the Bush administration, top Defense Department officials said at the opening session of the annual MHS conference in Washington.

Dr. William Winkenwerder, assistant secretary of Defense for health affairs, did not provide any specific details on proposals for increased co-payments or other changes in health benefits for MHS beneficiaries, which includes active duty and retired military employees, pending release of the administration’s 2007 budget and the Quadrennial Defense Review report due Feb. 6.

However, Winkenwerder indicated that an increase is in the offing because of the rapidly increasing costs for MHS and the DOD Tricare health insurance program, which covers DOD employees and their families. He said there is also a growing disparity between health coverage offered by private employers and DOD, a fact that at least five states take advantage of by requiring military retirees employed in the private sector to use Tricare, not commercial insurance plans.

Winkenwerder said that for years DOD has not increased, but rather decreased the price of health care to MHS beneficiaries, an increasingly expensive proposition. He said the DOD health care budget – which includes battlefield care and the operation of DOD hospitals, clinics and Tricare – has doubled from $19 billion in 2001 to $38 billion today, or 12 percent of the DOD budget.

Left unchecked, the DOD health care bill will jump to $64 billion by 2015, Winkenwerder predicted. Streamlining MHS headquarters operations and reducing the MHS infrastructure has cut some costs from the DOD health care bill, but DOD has to take additional steps to save money “to ensure the financial foundation of Tricare,” which allows MHS beneficiaries to use the services of some 200,000 primarily civilian doctors worldwide.

Dr. David Chu, under secretary of Defense for personnel and readiness, said military retirees younger than 65 and still in the workforce might be targets under the administration’s proposals. Chu said at the conference that the rise in Defense health care costs “comes from retirees under 65 who transfer their health care costs from the private sector to Tricare.”

Winkenwerder said he expected opposition to any change in military health benefits, but said he would work with groups representing retirees.


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