GOP Candidate Says Military Retirees Must Pay More for Health Care

Lindsey Graham, the Republican senator from South Carolina and GOP presidential candidate, said military retirees will eventually have to pay more for their health care.

In a speech Wednesday at the Atlantic Council in Washington, D.C., Graham, a member of the Senate Armed Services Committee, said the fee structure under the military health care program known as Tricare hasn't changed with any significance in two decades.

"The retired Tricare community is going to have to increase over time the amount they pay to make it sustainable," he said. "About 5 percent of the money to pay Tricare bills comes from the patient population. In the private sector, it's about 20 [percent]. So over time, we're going to have to ask Tricare retirees to contribute more to make Tricare more sustainable."

The cost of the military's health care system almost tripled to $52 billion in 2012 from $19 billion in 2001. Former Defense Secretary Robert Gates in 2009 famously warned Congress that "health care is eating the department alive." 

Troop advocates argue overall defense spending soared with the U.S.-led wars in Iraq and Afghanistan, and that personnel costs as a percentage of the defense budget remained flat at about a third of the spending plan.

The U.S. Defense Department's proposed budget for fiscal 2016, beginning Oct. 1, would consolidate the three Tricare options for military families and reservists into a single plan with slightly higher deductibles and co-pays. It would also increase pharmacy co-pays and add an annual enrollment fee for Medicare-eligible retirees in Tricare for Life.

The spending plan is still being debated on Capitol Hill. While many lawmakers agreed with an independent commission to reform the decades-old military retirement system by creating a 401(k)-like plan for troops, they've been reluctant to do same to the health care benefit for military families and retirees.

The independent Military Compensation and Retirement Modernization Commission earlier this year proposed replacing the existing Tricare program with a choice of commercial health insurance options, though the overhaul wouldn't affect the Tricare for Life program for elderly retirees. The health care and retirement changes, as well as more than a dozen other of the panel's recommendations, were estimated to save the government $12 billion a year by 2040.

Graham heads the Senate Armed Services Committee's Personnel Subcommittee, which in May supported legislation that would offer all troops a 401(k)-like Thrift Savings Plan by 2017 with matching contributions of up to 5 percent and full vesting after two years. The defined-contribution plan was designed for the more than eight in 10 troops who leave before the 20-year mark and don't receive any retirement pay.

The so-called "blended" retirement system would also reduce the existing defined-benefit plan. Under the current system, most officers and enlisted personnel who serve 20 years receive annual retirement pay equal to half of their average basic pay over their last three years of service. The new plan would reduce that figure from 50 percent to 40 percent.

Graham defended the proposed changes during a question-and-answer session at Wednesday's event.

"I have been the author of reforms that have been somewhat unpopular but I think are necessary," he said. "All of us are living longer, so you can't retire after 20 years and get 50 percent of your pay for the rest of your life because that puts pressure on the budget."

"What we've done is said at 20 [years of service], you get 40 percent of your defined benefit but after two years in the military you can take 5 percent of your base pay, put it into an account, and the government will match it 5 percent, and you can have that money," he said. "Seventy-five percent of people who served in the military never get a dime because they leave before 20. Under this new program, you can take your contributions with you. I think we all owe that."

--Brendan McGarry can be reached at brendan.mcgarry@military.com