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Pentagon Struggles to Find Solution to Soaring Health Costs

Even as the Defense Department’s budget grew at historic rates during the height of the wars in Iraq and Afghanistan, Pentagon officials began to voice concerns that the military’s rising health care costs would threaten other spending priorities.

Since 2006, Pentagon officials have offered several modest proposals to raise health care fees for some of the 9.6 million beneficiaries of the military’s Tricare health care system. Nearly every effort, however, has been dead on arrival on Capitol Hill, where lawmakers from both parties have worked fervently to keep those fees flat.

The costs to Tricare beneficiaries have remained largely unchanged since the program’s creation in 1996. Military retirees, for instance, contribute less than 11 percent of their total health care costs, compared to an average of 27 percent in 1996.

The cost to the Defense Department, however, has risen exponentially — from $19 billion in 2001 to a projected $49 billion this year.

The department achieved a small victory during negotiations on the fiscal 2013 budget, when lawmakers agreed in the annual Pentagon policy measure (PL 112-239) to increase some pharmacy copayments.

But Congress again shot down many proposals aimed at curbing health care costs in the fiscal 2014 defense authorization law (PL 113-66), including an increase in premiums paid by military retirees and the creation of an enrollment fee for certain Tricare programs.

The rejected proposals amount to a squandered cost-saving opportunity for the Defense Department, which estimated that new and higher Tricare fees — combined with slower growth in military pay, which Congress did ultimately support — would save $12.8 billion over the next five years.

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