Report from the Hill

After months of delay the Senate finally managed to pass its version of the FY2013 National Defense Authorization Act (NDAA) in early December of last year. This is something that should have happened before October 1.

The bill is crucial for military people because it authorizes most of the activities of the Department of Defense, including health care, commissaries and military pay. This year the Administration had proposed increases in TRICARE pharmacy fees and current law allows the Secretary of Defense almost unlimited discre- tion to raise pharmacy copays. There- fore, Congress had to either block the proposed increases or modify them if they didn’t want the DoD proposals to be put in place.

The Pentagon budget submission expressed intent to increase brand- name copays an additional $2 per year, generic copays by $1 a year, and non-formulary copays by $3-4 a year through FY2017. This became very important because, without going into too many details, the increased fees would allow DoD to reduce the amount of money it requested for its health care budget. And if Congress refused to go along with the DoD proposal, its rules would force it to approve higher spend- ing for DoD healthcare, which would have to be handled by higher taxes or cutting spending elsewhere and moving the money to the healthcare budget. Since Republicans in the House refuse to raise taxes, and since DoD didn’t want to cut any other programs in order to pay for higher healthcare costs, this became a major dilemma.

In June, the House took action to signif icantly reduce the copays and strictly limit the Secretary of Defense’s discretion to impose further increases in the following years.

Under the House version of the NDAA future annual increases would be capped at the percentage increase in military retired pay. That is, if there’s a 3% COLA for 2013, the retail brand- name copay increase for FY2014 couldn’t exceed 51 cents ($17 x .03). This cap is very important because, once established in law, Congress could choose to ignore any future, large Pentagon-proposed increases without being required to come up with any offsetting cuts.

To cap current and future copay hikes, the House decided to achieve the needed savings by establishing a 5-year pilot program under which beneficia- ries age 65 and older would be required o use TRICARE’s mail-order system for ref ills on maintenance medications, at least temporarily. Beneficiaries could opt out of the mail-order refill system after one year, if they choose.

While the copays under the Committee plan are still larger than AMS would like, and while we were reluctant to embrace mandatory mail- order refills, we believed this was the least bad option that was available.

As the Senate dealt with its version of the NDAA in December, three Sena- tors (Reed of Rhode Island, McCaskill of Missouri and Rubio of Florida) intro- duced an amendment to tie TRICARE fee increases to the cost of living adjust- ments for TRICARE beneficiaries. This was essentially the same thing that was in the House version of the NDAA. Unfortunately, the amendment failed which means the Senate NDAA does not address the TRICARE pharmacy issue, which causes it to go along with the DoD proposal.

This important issue must be worked out in conference committee and sent back to each body for final passage before it goes to the Presi- dent for his signature. AMS strongly supports the House language regarding TRICARE pharmacy increases and we will report on the results in our next issue.

The White House had also requested TRICARE healthcare fee increases in its budget proposal, which the Senate did remove from its final bill. Since the fees were also excluded from the House bill there will be no TRICARE fee increases in 2013, but it’s almost guaranteed that DoD will come back again and request them in next year’s budget.

The White House threatened to veto the Defense bill over three items it disagreed with: 1) the removal of the TRICARE fee increases (not the phar- macy increase, but TRICARE health- care); 2) a provision limiting transfer of detainees from Guantanamo Bay Cuba to prisons in the U.S.; and limitation on the amount of cuts that DoD will be allowed to make in the Air National Guard and funding for upgrades to the M-1 Abrams tank. However, very few people take the veto threat seriously.

In a speech on the floor of the Senate during consideration of the NDAA, Senator John McCain, perhaps the best known military retiree in Congress, said Congress should increase TRICARE fees and he urged his colleagues to support increase next year. AMS is stunned that McCain would be one of the chief crusaders for TRICARE fee increases and we urge residents of Arizona to contact McCain and let him know your thoughts about his support for increasing TRICARE fees.

One of the good things to happen in the NDAA was a 1.7% pay raise for active duty personnel. But with growing talk about the military being overpaid, we expect a battle over a pay raise next year.