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Increases in Tricare Costs: Background and Options for Congress

In its FY2007, 2008, and 2009 budget submissions, the Department of Defense (DOD) proposed increases in Tricare enrollment fees, deductibles, and pharmacy copayments for retired beneficiaries not yet eligible for Medicare. The raises were justified by DOD as necessary to constrain the growth of health care spending as a proportion of the overall defense budget in the next decade. Many beneficiaries argued that the proposed hikes were unfair and unnecessary. The proposed increases found favor in neither chamber and Congress passed legislation to prohibit such increases. The FY2007 Defense Authorization Act (P.L. 109-364) prohibited increases in premiums, deductibles and co-payments prior to September 30, 2007. For FY2008, the Administration based its budget submission on the assumption of fee increases but the FY2008 National Defense Authorization Act (P.L. 110-181) extended the prohibition of increases in co-payments and enrollment fee until October 2008. For FY2009, the Administration's budget submission assumed fee increases linked to recommendations made by the Task Force on the Future of Military Health Care. However, both House and Senate versions (H.R. 5658/S. 3001) of the defense authorization bill contain provisions to prohibit fee increases in 2009. In July 2008, the Tenth Quadrennial Review of Military Compensation recommended new fees linked to Medicare Part B premiums. This report will be updated as necessary.

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