Action in Congress

Dec. 1, 2005

Pay Raise In the Bag

The military is assured of getting a 3.1 percent pay raise in January, even if the Senate fails to pass a 2006 authorization bill, as seemed likely.

Authority for the pay raise actually cleared Congress in late 1999, when lawmakers approved the Fiscal 2000 defense authorization act. That law directed that annual military raises from 2001 through 2006 be set one-half percentage point above private sector wage growth, as measured by the government’s Employment Cost Index (ECI).

ECI data for shaping the 2006 pay raise show private sector wages rose 2.6 percent. With the statutory formula entitling the military to another half percent, the actual January raise would be 3.1 percent.

The Senate in recent years hasn’t even included a military pay raise in its authorization bill, recognizing that the 1999 statute will provide one.

The House passed its defense authorization bill last June, with a specific provision for a 3.1 percent military pay raise.

Their COLA Tastes Better

When it comes to this year’s pay raises, military retirees will do better than their active duty counterparts. The reason is a more general cost-of-living adjustment.

The Dec. 1 COLA for military and federal civilian retirees, their survivors, and Social Security recipients will be 4.1 percent, with the increase appearing in Jan. 1, 2006, paychecks.

Retiree COLAs are based on inflation, as measured by price changes for a market basket of goods and services from the third quarter of 2004 through the third quarter of 2005. In the past year, inflation outpaced private sector wage growth, leaving federal annuities to rise faster than military pay and allowances and federal civilian salaries.

Rising Health Care Costs …

The Pentagon’s top health official cautioned lawmakers to pay attention to a deepening cost crisis for military medicine.

William J. Winkenwerder Jr. told a House subcommittee that annual military health care spending has doubled in a mere four years, rising from $18 billion to more than $36 billion.

The increase stems largely from benefit enhancements for retirees and their families, he said.

Winkenwerder, assistant secretary of defense for health affairs, also blamed the rising costs to the government on a decade-long freeze on Tricare enrollment fees and co-payments, which otherwise would help offset DOD’s expense.

Plans call for the Defense Advisory Committee on Military Compensation to release a final report in April 2006. It is a review of efforts to modernize military pay and benefits, and it is expected to offer a blueprint for slowing the surge in health care spending.

… And Ways To Curb Them

The study is said to be pondering several ways to rein in health costs. They include:

  • Increases in enrollment fees and co-pays for Tricare’s Prime managed care option, with future adjustments based on inflation.
  • An increase in annual deductibles for users of Tricare Standard, the fee-for-service option.
  • A first-time annual enrollment fee for Tricare Standard.
  • New incentives for military retirees working in second careers to use employer-provided health benefits.
  • Offering tax-deferred health savings accounts to military beneficiaries.

Military pharmacy budgets have increased 500 percent since 2001 to more than $5 billion a year. By 2009, 75 percent of military health dollars will be spent on the cost of paying for retiree health care, not for active duty service members or their families, Winkenwerder said.

Tricare has become so attractive for military retirees in second careers that many more now use Tricare rather than employer-provided health insurance. Indeed, some employers now pay retirees cash incentives if they use their Tricare benefits rather than civilian work benefits.

“It’s our belief that this is not what the Congress had intended,” Winkenwerder said.

Reserve Health Benefits

Winkenwerder warned that Congress will only exacerbate the military health care budget crisis if it enacts a provision to open Tricare Reserve Select (TRS) to all drilling Reservists and National Guardsmen.

Congress last year passed the premium-based TRS to entice demobilizing Reserve and Guard personnel to extend their service obligations. That plan, Winkenwerder said, “hits the spot” in balancing the needs of reservists and needs of the nation.

Winkenwerder criticized as costly and unneeded a Senate-approved plan to open TRS to all drilling reservists, saying the projected cost ($3.8 billion over five years) is unacceptable, and the benefit will not encourage reservists to extend their service commitments.

He said 80 percent or more of current reserve forces have employer-provided health insurance.

TRS, a scaled-down version of Tricare Standard, is open only to members deactivated from post-9/11 deployments who agree to remain in drill status. By late October about 16,000 beneficiaries, including family members, were enrolled.

Senate Resumes Defense Work

The prospect of substantial benefit gains was revived in early November after Senate leaders resumed work on the long-stalled 2006 defense authorization bill.

A two-part amendment from Sen. Bill Nelson (D-Fla.) to improve the military’s Survivor Benefit Plan passed on Nov. 8 by a 93-5 vote. Certain military widows and a group of unemployable disabled retirees would benefit if the full authorization bill passes.

One part would move up by three years (to Oct. 1, 2005) the effective date of an SBP paid-up rule. Premiums would be considered paid up after 30 years or at age 70, whichever occurs later. Congress adopted the rule several years ago but delayed making it effective until October 2008.

Nelson’s amendment also would eliminate a dollar-for-dollar reduction in monthly SBP benefits for surviving spouses who accept tax-free VA Dependency and Indemnity Compensation. The compensation is payable if a service member or retiree’s death is service related.

The Senate also was considering an amendment to accelerate restoration of full retired pay to retirees with 20 or more years of service drawing VA compensation at the 100 percent level because they are deemed unemployable. These 28,000 IU retirees are seeing retired pay restored, but on a 10-year phase-in plan.

The House already has voted to accelerate concurrent receipt for these IU retirees so their retired pay is entirely restored by Oct. 1, 2009, rather than by Jan. 1, 2014. Rep. Harry Reid’s (D-Nev.) amendment, if adopted, would match that.

Fighting Avian Flu

Military personnel will be among the first Americans to receive a vaccine for bird-transmitted flu, Winkenwerder told the House subcommittee.

“We’re been concerned about, and working on the issue of preparedness and the ability to respond to, a pandemic avian influenza-type circumstance for well over a year,’’ he said.

Since the spring of 2004, he said, DOD has been sharing information on a potential avian flu epidemic with combatant commands to develop response plans.

The department also contracted to buy almost 2.5 million doses of Tamiflu for delivery starting in November.

The neuraminidase inhibitor can reduce the severity and duration of illness caused by seasonal influenza. Unfortunately, there is no commercially available vaccine yet known to protect humans from the H5N1 virus, the avian flu strain that has appeared in Asia and Europe.

Defense officials worked with federal health agencies to provide several million doses of any H5N1 vaccine to military personnel when available.

The Defense Department also is involved in worldwide surveillance for an avian flu, collecting samples through laboratories in Indonesia and Thailand. Both are “important sentinel surveillance sites” for an avian flu outbreak, Winkenwerder said.

Commission Delay

The Veterans’ Disability Benefits Commission, created by Congress to modernize veterans’ disability benefits, needs almost double the allotted time to finish its work.

Congress established the commission to conduct a comprehensive review of disability benefits for veterans and survivors. Lawmakers set a deadline for a report to the President and Congress. The commission was to get a report out within 17 months of the commission’s first meeting in May 2005.

Ray Wilburn, commission executive director, said a final report will be delayed until the fall of 2007, to allow the Institute of Medicine of the National Academies of Science and the Center for Naval Analyses time to conduct major studies. These studies are needed to inform and educate the commission on complex medical issues.

More Oppose PTSD Review

A Department of Veterans Affairs plan to review documentation for 72,000 veterans awarded post-traumatic stress disorder ratings of 100 percent disabled is taking more fire.

The Senate voted in September to block the VA from conducting its review of five years of PTSD cases until it can justify the effort for Congress. In October, House Democrats joined in criticizing the plan.

Jon A. Wooditch, acting VA inspector general, defended the review. He testified that from Fiscal 1999 through 2004, the number of PTSD cases grew by 80 percent, and PTSD benefits jumped 149 percent—from $1.7 billion to $4.3 billion.

The number of PTSD cases with 100 percent disabled ratings rose fourfold, from 34,568 in Fiscal 1999 to 102,177 in 2004.

The IG reviewed a sampling of 2,100 case files and found a 25 percent error rate, which led to the proposed review. (See “Action in Congress: Senate Votes To Stop PTSD Review,” November, p. 28.)

“The 25 percent error rate is not an indicator of fraud,” Wooditch said. It reflects “noncompliance with [Veterans Benefits Administration] rules and regulations concerning required documentation to justify and support rating decisions.”

The review will allow VA to “identify instances where the documentation requirements were not complied with,” he said. Where the claimant can’t show entitlement to disability compensation, “appropriate due process action should be initiated to resolve the matter,” Wooditch said.

Reps. Tom Udall (D-N.M.) and Shelley Berkley (D-Nev.) said they want the review blocked, arguing that it aggravates the strain on veterans with PTSD. Udall called it a paperwork exercise for the VA but “jolting” to veterans.