TRICARE will experience vast changes in 2013, twofold. The White House proposed $16 billion in cuts while many retirees and their families living more than 40 miles from a military treatment center will lose access to TRICARE Prime as early as April as the TRICARE West Region transitions its management contractor from TriWest Healthcare Alliance to United Healthcare Military & Veterans (UHC M&V). This means beneficiaries would be expected to shift to TRICARE Standard, a fee-for-service option that will increase out-of-pocket costs or commute long distances to reach a Prime care facility.
In the coming weeks Congress will attempt to compromise on decreasing Department of Defense spending to avoid the impending January 2 sequestration that would cut $55 billion out of the 2013 defense budget. These cuts would affect healthcare, pay-raises and retirement benefits.
The Congressional Budget Office (COB) report released a report in November that targets cost-saving options by raising fees for TRICARE recipients. Military retirees and their families would face higher out-of-pocket fees for deductibles and co-pays, including higher enrollment fees. The initiative here is that higher fees for beneficiaries mean less government spending.
In October, the costs for enrolling in TRICARE Prime for those retirees who are not yet eligible for Medicare increased by nearly 15% over the previous 1995-2011 fixed charges for individual service members and their families.
There are ten million people eligible for healthcare benefits provided through TRICARE and TRICARE for Life (TFL, a supplementary healthcare program for those retirees and their dependents who are eligible for Medicare).
According to the COB, over the next ten years the cost per capita covered by TRICARE will increase far greater than inflation as military retirees become increasingly more dependent on TRICARE as their primary source of healthcare for their families; therefore making it essential for Congress to combat costs by raising enrollment fees, deductibles and co-pays and other aspects of the benefits, such as prescription drugs.
While prescriptions would remain free if filled on post and co-pays for generic brands filled at retail pharmacies would remain at $5, the change would increase the $12 co-pay at retail to $26 for brand named drugs that are classified as military formulary (those drugs that are approved under the plan).
The co-pays would increase $2 each year until 2016 when it reaches $34. After 2016, the costs would be adjusted yearly based on medical inflation costs.
Increasing out-of-pocket prescription costs for military families and retirees may be an incentive to purchase mail-order and generic prescription drugs, which the Defense Department estimates would save $5.5 billion from 2013 through 2017.
Among the concerns over the elimination of TRICARE Prime in some western states, the Senate voted that the Pentagon be required to report on how they intend to make available affordable care for those beneficiaries who will be affected.
Congress is expected to pass final language in the National Defense Authorization Act for fiscal year 2013 later this month (December) that will identify specific changes and costs to the military healthcare program and to those 30,000 TRICARE Prime beneficiaries affected by the transition process that cuts administration overhead and shifts more of the health costs to beneficiaries.
Eventually, there may be 170,000 Prime enrollees across all three regions that will be required to drive longer distances to see a Prime care provider or change to the Standard care option and pay greater costs.
Over decades, noncash benefits such as healthcare has been a draw of military services as a career path, but with these changes, it is left to wonder, how the decreasing government cost-sharing of these increasingly critical benefits will affect the recruiting of essential service members.
• Cost shares are 20 percent for active-duty family members and 25 percent for retirees and other eligible beneficiaries.
• Annual deductibles for outpatient care are $50 for an individual and $100 for a family for active-duty members in paygrades E-4 and below, and $150 for an individual and $300 for a family for all others.
• The annual catastrophic cap — the maximum health care costs a beneficiary must pay in any one fiscal year — is $1,000 for active-duty families and $3,000 for retirees.
The move to eliminate Prime service areas away from military installations has been in the works since 2007, when the Defense Department released a draft of its new Tricare contract proposal. But a series of contract disputes delayed the launch of the new initiative.