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DoD Seeks Funds for Seniors' Health Care Commitment

By Douglas J. Gillert
American Forces Press Service

WASHINGTON, Feb. 4, 1999 – The Defense Department wants to make sure all people eligible for health benefits get the care they need, including those over age 65, a senior health official said here Feb. 2.

Speaking at the 1999 TRICARE Conference, Mary Gerwin said DoD is committed to providing health care to all eligible retired service members and their families, but it has to find a way to fund the care. She said the group represents the fastest growing segment of the DoD beneficiary population, and DoD is looking at several options for their health care.

"The number of retirees is growing disproportionately to active duty," said Gerwin, a senior adviser to DoD health chief Dr. Sue Bailey and former staff director of the Senate Committee on Aging. She said there are 1.3 million military retirees over age 65 today and the number will rise to 1.6 million by 2005. Since 1994, over-65 retirees have increased 5 percent while the active duty population has decreased 12 percent, she said.

Federal statutes prohibit staffing military hospitals to treat patients 65 and older, who also are eligible for Medicare benefits. Military treatment facilities can only provide over- 65s with space-available health care. Even as the over-65 population is rising, however, space-available care has been shrinking due to base closures and reduced clinic and hospital capacity.

Compounding cost issues, most retirees living close to military facilities depend on space-available care and don't have separate health insurance, Gerwin said. "They benefit from the free prescription drugs, even when they don't use the military treatment facility for their primary care," she said. Medicare doesn't cover outpatient drugs.

The department currently is looking at several ways to deliver care to its elderly population. These include a three-year demonstration of Medicare Subvention in six geographical locations; Medicare will reimburse participating military hospitals that enroll over-65 patients in TRICARE Senior Prime. About 22,000 seniors enrolled to take part in the test.

"We will be able to use Medicare reimbursement to leverage and expand care we deliver to over-65s," Gerwin said. However, she said, some seniors may not want to enroll because the demonstration will last just three years. If DoD doesn't adopt the plan, retirees would have to pay higher premiums to rejoin Medicare Plan B.

Retirees also can enroll in Medicare health maintenance organizations rather than risk losing temporary military health benefits, she said. DoD has matched the benefits offered by Medicare HMOs. "Once we get them in, we're hooked for all their Medicare-based care," Gerwin said. "We have to be able to deliver these benefits" -- home care, for example.

DoD recently announced a second demonstration at eight sites. Up to 66,000 over-65 retirees and eligible family members will be allowed to enroll in the Federal Employees Health Benefits Plan. The Office of Personnel Management will negotiate with the plans and carriers, and enrollees will receive information this summer, Gerwin said.

Two other demonstrations beginning Jan. 1, 2000, will begin supplemental TRICARE coverage at two sites and will expand pharmacy benefits to retirees over 65 in selected areas, including use of a national mail order pharmacy.

Each of these programs comes at a cost, Gerwin said, with the FEHBP option being the most expensive at $1.4 billion to $1.6 billion a year. Estimated annual costs are up to $300 million for the pharmacy plan and $600 million for the TRICARE supplement, she said. The figures are based on estimates of participation rates and a cost analysis provided by CNA Corp., which has done other studies of DoD health care programs.

Gerwin said she doesn't think DoD can expect more money from Congress, but it would, instead, need "a major pull down in our system" to pay for something as costly as the federal employees plan. She said the costs of the pharmacy benefit could mean larger co-pays for name-brand drugs and higher charges to other beneficiaries. "Or Congress could just put us in the OPM budget."

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