WASHINGTON — The White House has rejected a proposal to largely replace the military’s TRICARE health care system, but has agreed to further study a proposal that would let service members participate in retirement savings plans like a 401(k).
Following recommendations from the Pentagon, the administration is prepared to largely support 10 recommendations, either wholly or in concept, made by the Military Compensation and Retirement Modernization Commission, mainly for less sweeping changes and improvements affecting child care, education, travel and other benefits.
The panel released a report in late January laying out 15 recommendations that it estimated would generate more than $20 billion in savings over four years. The TRICARE and retirement changes were the most dramatic and would have triggered the bulk of the savings.
Six of the 10 proposals getting some initial support will require legislative changes. Four other recommendations, including the retirement plan, will get additional review and a decision could be made on those by July.
The TRICARE recommendation was the only one the White House rejected, and officials knew all along that it would face an uphill battle on Capitol Hill, where lawmakers vigorously protect military benefits and have so far resisted major changes.
Under TRICARE, service members receive free health care and use military treatment facilities. The proposal would have largely replaced that system and would have given families the ability to choose from a wider menu of insurance plans, similar to those used by federal employees.
By rejecting the TRICARE plan, the administration forgoes a major portion of the cost savings predicted by the commission. Pentagon leaders have complained for years that the cost of military benefits has been growing exponentially and is taking a larger bite out of the budget. The growth, they have said repeatedly, is not sustainable and changes will have to be made.
Officials concluded that while they support more improvements to the current military health care system, replacing TRICARE was too complex an undertaking to quickly assess. And they said such a dramatic shift could present financial risks to military families and cause budget problems for the Defense Department. Other more modest changes to the military health care system were included in the administration’s 2016 budget proposal, and officials are continuing to study the issue
The officials described the administration plans on condition of anonymity because they were not authorized to discuss them publicly ahead of the official announcement.
The retirement benefit change would mirror what has occurred in the federal government and private industry. It would allow military members to continue to get their defined pension benefit, but they could also enroll in a thrift savings plan, like a 401(k), that would include some matching contributions from the government.
Early Thursday morning the House Armed Services Committee approved a nearly $612 billion defense policy bill that includes a similar retirement change provision that would take effect in 2017.
Officials have argued that the change would allow troops to receive a least some retirement pay even if they don’t stay on for 20 years, the minimum length of service required to receive a pension.
Advocates of changing the health care system have long argued that military families often have limited health care choices, particularly in more remote locations. And they say families could benefit from more choices as they seek out physicians and services.
Changes largely backed at least in part by the administration include giving military leaders the authority to use funding to add child care facilities and staff where needed; improve survivor benefits for military spouses; improve tuition assistance and financial planning education, and create long-term standards for certain military medical capabilities to insure they won’t degrade as the wars ebb.
In addition to the retirement benefit, other proposals requiring additional study involve some family health benefits, reservists’ duty status and a plan that would merge the office and some management activities for base commissaries and exchanges that could bring some property savings over time.
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