Pentagon Wants To Raise Some Retirees Health Fees

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Pentagon Wants To Raise Some Retirees Health Fees

By Elisabeth Bumiller

WASHINGTON -- Defense Secretary Leon E. Panetta has warned that runaway personnel costs at the Pentagon are "unsustainable," and on Monday he tried to put a big brake on the spending: Over the next five years the Defense Department plans to nearly quadruple the health insurance fees paid by many working-age military retirees.


The proposed cuts come as the Pentagon is under pressure to shrink its budget after a decade of war. Next year's military budget is to be $525 billion, down $6 billion from this year. The Pentagon projects that a large part of the savings -- some $4 billion -- will come from raising health insurance fees.

Initially, the Pentagon proposes that the annual family health insurance fee for current and future military retirees making more than $45,179 in annual retirement pay -- typical for middle-ranking officers who retire after two decades of service -- be increased to $600 from $520 in the 2013 fiscal year. The Pentagon proposes that the fee be stepped up every year until it reaches $2,048 in 2017.

There would be smaller fee increases for those who earn less in military retirement pay.

The fees are for Tricare Prime, the most beneficent of the Pentagon’s generous health care programs, and by Monday afternoon an influential military retiree group was already denouncing the increases.

"We're going to fight them," said Michael Hayden, a retired Air Force colonel and a lobbyist for the Military Officers Association of America. Mr. Hayden said his group particularly objected to the Pentagon’s proposal for a tiered system in which those who earned more paid more.

"The more successful you become while in service, the less benefit you earn," Mr. Hayden said.

But the Pentagon, which spends $50 billion a year on health care, said that it was fair to charge the best-paid retirees more, particularly when many pursue second careers after leaving the military. (Of 4.5 million military retirees and their families, about three quarters are estimated to have access to health insurance through a civilian employer or group. But more than two million of them stay on Tricare, which has long had fees substantially lower than those of private employers.)

Even with the Tricare increases, said Robert F. Hale, the Pentagon comptroller, "it would still be quite generous compared to typical private-sector plans."

The fee increases would not apply to survivors of service members who died while on active duty, or to service members who retired for medical reasons.

The budget had only limited cuts to the F-35 Joint Strike Fighter stealth jet, one of the most expensive weapons programs in history, although there will be larger cuts over time. Next year the Pentagon plans to buy 29 of the advanced fighter jets, two fewer than this year, with a projected savings of only $75 million.

The Pentagon is also projecting billions of dollars in savings as the wars in Iraq and Afghanistan have wound down, although those costs are outside the regular military budget and are tallied as supplemental funds to be approved separately by Congress. Next year the Pentagon is seeking $88.5 billion for the costs of the wars, compared with $115 billion for the current year.

The costs include nearly $3 billion for Iraq, even though all American troops came home from Iraq late last year. The money for 2013 is to be spent on the Office of Security Cooperation, which has a small number of forces to protect Americans at the fortresslike embassy in Baghdad.

The Pentagon proposes to cut nearly in half American spending on training and equipping the Afghan National Security Forces, down to $5.7 billion this year from $11.2 billion last year. Mr. Hale said in a briefing on Monday that the United States had already spent heavily on equipment for the Afghan forces and had met many of their needs. "Don't take that reduction as any sign of a reduction in our commitment," he said.

Although Mr. Panetta said recently that the United States and its allies in the war were considering reducing the Afghan forces for budget reasons, Mr. Hale said he was continuing to budget on the assumption that the Afghan security forces would still grow to their target of 352,000. Right now they number a little more than 300,000.



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