CBO Studies Removing Retirees from Tricare Prime

Barring working-age military retirees from TRICARE Prime would be the most cost-effective way of slowing the growth of Defense Department health care expenses that have jumped 130 percent from 2000-2012, according to a Congressional Budget Office analysis.

The non-partisan CBO explored various options to include changing the eligibility for TRICARE Prime which would produce the biggest savings in the Pentagon's health care budget -- nearly $90 billion over 10 years, the CBO report estimated.

The CBO analysis, released last week, was prepared at the request of Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee.

Current health care costs for DoD amount to about $52 billion annually, the CBO said, and only a formula involving increased cost-sharing for retirees who use TRICARE "has the potential to generate significant savings for DoD," the CBO said.

All other approaches, such as better management and eliminating waste, "would not address the primary drivers of health care costs for DoD," the CBO said.

The biggest savings would come from changes in current programs to "make working-age retirees and their families ineligible for TRICARE Prime, the most costly program for DoD, but allow them to continue using other TRICARE plans after paying an annual fee," the CBO said.

"Shifting current cost-sharing arrangements so that beneficiaries pay a greater percentage of their health care costs would reduce DoD's spending significantly, primarily by encouraging people to leave TRICARE in favor of other providers," the CBO said. "It also would encourage those who continued to participate in TRICARE to use fewer services."

The proposed TRICARE changes were expected to generate major opposition from veterans service organizations.

Joe Davis, a spokesman for the Veterans of Foreign Wars, questioned the CBO numbers but said the report following on other major program initiatives advocated by DoD indicated that "the Pentagon is opening up a new front in the war on retirees. This is a threat to the all-volunteer force," Davis said.

The VFW and other service organizations are currently battling cuts to the cost-of-living adjustment for working-age military retirees under the Bipartisan Budget Act of 2013 worked out by Ryan and Sen. Patty Murray, D-Wash.