afchic
08-01-2012, 11:31
So while the DoD is calling for retirees to pay more to support TRICARE, it is also asking Congress to allow them to move $708M from their healthcare budget for "higher" priorities. HMMMM, something is rotten in Denmark me thinks.
Pentagon Sends Conflicting Signals On Health Costs
By Robert Levinson
The Pentagon has asked to shift $708 million of health-care funds to other uses because cost growth has slowed and it doesn’t need the money. The request is at odds with the Pentagon’s previous comments about rising health-care costs.
Members of the House Armed Services Committee want to know why the Pentagon has previously sought higher fees from retirees for health care if costs are rising more slowly than anticipated and it seems to have more than enough to pay its medical bills.
If Pentagon health-care spending slows or drops, health-care companies including Humana Inc., TriWest Healthcare Alliance Corp., and Health Net Inc. could see revenue decline. These companies administer TRICARE, the system that provides health care for 9.7 million military personnel, retirees and their families in the U.S. The companies received $9.5 billion in defense contract spending in fiscal 2011 and ranked 13th, 14th, and 15th among defense contractors in the BGOV200 Federal Industry Leaders 2012 list.
In a July 24 letter to Secretary of Defense Leon Panetta, Representative Joe Wilson, Republican of South Carolina and chairman of the House Armed Services Subcommittee on Personnel, expressed concern over the Pentagon’s request to reprogram the $708 million to “higher priorities.”
Wilson questioned the Defense Department’s request to raise fees on retirees when the cost of their care was decreasing and said “the reprogramming rationale raises serious questions about the department’s ability to accurately forecast future healthcare costs.” Wilson’s letter was signed by 23 other members of the House from both parties.
Wilson also disclosed details of the Pentagon’s latest cost figures. His letter said the Pentagon had a $500 million surplus in health-care funding in fiscal 2011. The letter cited Defense Department figures indicating that costs for private sector care rose only 0.6 percent for active duty personnel in the first six months of fiscal 2012 and that private sector costs for all other beneficiaries dropped 2.7 percent during the same period.
Federal agencies must get the approval of the relevant congressional oversight committees for some shifts of money from their original purpose.
The Pentagon saw health care differently not long ago.
In its budget request for fiscal 2013, the military asked for authority to raise a variety of fees for military retirees to reduce its health-care bill. In its version of the fiscal 2013 Defense Authorization Act, the House rejected increases in most of these costs.
In January, Panetta explained the request for increased fees, saying “we decided that to help control growth of health care costs, we are recommending increases in health care fees, co-pays and deductibles for retirees.”
Former Secretary of Defense Robert Gates put health-care costs in much starker terms in May of 2010, stating “health-care costs are eating the Defense Department alive.”
The Pentagon wasn’t alone in its previous view that military health-care costs were rising too fast.
In a July 11 report, the Congressional Budget Office (CBO) estimated that the military would need $4 billion more than the $47 billion it was asking for in the fiscal 2013 budget for health-care bill. According to the CBO, private sector costs rose at 3.2 percent per user per year from 2006 through 2011.
If costs are growing more slowly or falling in some cases, the Pentagon’s estimate of $47 billion for fiscal 2013 may be closer to the mark than the CBO’s.
Robert Levinson is an analyst for Bloomberg Government. The views expressed are his own.
Pentagon Sends Conflicting Signals On Health Costs
By Robert Levinson
The Pentagon has asked to shift $708 million of health-care funds to other uses because cost growth has slowed and it doesn’t need the money. The request is at odds with the Pentagon’s previous comments about rising health-care costs.
Members of the House Armed Services Committee want to know why the Pentagon has previously sought higher fees from retirees for health care if costs are rising more slowly than anticipated and it seems to have more than enough to pay its medical bills.
If Pentagon health-care spending slows or drops, health-care companies including Humana Inc., TriWest Healthcare Alliance Corp., and Health Net Inc. could see revenue decline. These companies administer TRICARE, the system that provides health care for 9.7 million military personnel, retirees and their families in the U.S. The companies received $9.5 billion in defense contract spending in fiscal 2011 and ranked 13th, 14th, and 15th among defense contractors in the BGOV200 Federal Industry Leaders 2012 list.
In a July 24 letter to Secretary of Defense Leon Panetta, Representative Joe Wilson, Republican of South Carolina and chairman of the House Armed Services Subcommittee on Personnel, expressed concern over the Pentagon’s request to reprogram the $708 million to “higher priorities.”
Wilson questioned the Defense Department’s request to raise fees on retirees when the cost of their care was decreasing and said “the reprogramming rationale raises serious questions about the department’s ability to accurately forecast future healthcare costs.” Wilson’s letter was signed by 23 other members of the House from both parties.
Wilson also disclosed details of the Pentagon’s latest cost figures. His letter said the Pentagon had a $500 million surplus in health-care funding in fiscal 2011. The letter cited Defense Department figures indicating that costs for private sector care rose only 0.6 percent for active duty personnel in the first six months of fiscal 2012 and that private sector costs for all other beneficiaries dropped 2.7 percent during the same period.
Federal agencies must get the approval of the relevant congressional oversight committees for some shifts of money from their original purpose.
The Pentagon saw health care differently not long ago.
In its budget request for fiscal 2013, the military asked for authority to raise a variety of fees for military retirees to reduce its health-care bill. In its version of the fiscal 2013 Defense Authorization Act, the House rejected increases in most of these costs.
In January, Panetta explained the request for increased fees, saying “we decided that to help control growth of health care costs, we are recommending increases in health care fees, co-pays and deductibles for retirees.”
Former Secretary of Defense Robert Gates put health-care costs in much starker terms in May of 2010, stating “health-care costs are eating the Defense Department alive.”
The Pentagon wasn’t alone in its previous view that military health-care costs were rising too fast.
In a July 11 report, the Congressional Budget Office (CBO) estimated that the military would need $4 billion more than the $47 billion it was asking for in the fiscal 2013 budget for health-care bill. According to the CBO, private sector costs rose at 3.2 percent per user per year from 2006 through 2011.
If costs are growing more slowly or falling in some cases, the Pentagon’s estimate of $47 billion for fiscal 2013 may be closer to the mark than the CBO’s.
Robert Levinson is an analyst for Bloomberg Government. The views expressed are his own.