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Reforming the Military Health Care System

Posted By Baker Spring On November 11, 2011 @ 11:00 am In Featured | Comments Disabled

A number of military and veterans groups are expressing concern over a letter that Senator John McCain (R–AZ) has sent to members of the congressional Joint Select Committee on Deficit Reduction suggesting they adopt earlier proposals from a March report of the Congressional Budget Office (CBO) for scaling back military health care benefits and increasing fees.

These groups are right to be concerned, but Senator McCain’s underlying views about the growing costs of the military health care system cannot be ignored. The costs are growing too quickly.

The CBO proposals include prohibiting military retirees from participating in the TRICARE Prime program and increasing applicable fees. In all, the CBO proposals are estimated to save the Department of Defense over $100 billion over 10 years. Senator McCain wants these resources to go toward improving readiness.

Senator McCain’s concerns about the possibility that the military is weakening in terms of readiness are well founded. Defense budgets that are too small—and the toll imposed on the force by the operations in Afghanistan and Iraq—are significant. He is also right that reforming the military health care system can be a source of funds for improving readiness. The military and veterans groups are miscalculating if they assume that the status quo can be preserved.

Senator McCain, however, is wrong to look to the CBO’s approach for reforming the military health care system. Attempting to preserve the basic structure of the military health care system and achieve savings by reducing benefits and increasing fees within that structure will not be fair to military service members, retirees, and their dependents. A better approach is to look to systemic reforms of the military health care program.

On a gradual basis, military health care coverage programs under TRICARE should be converted from the existing defined-benefit structure to a defined-contribution structure. Under this approach, a portion of the reductions in benefits can be offset by increasing the level of basic pay provided to the troops. Additionally, military service members, retirees, and their dependents may be provided tax advantages they carry with them for the rest of their lives.

This systemic approach means avoiding “less of the same” under TRICARE for the military community, which for them quickly becomes a proposition of “all pain and no gain.” The alternative approach unavoidably imposes some pain, but it also provides opportunities to the military community for very valuable gains.


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