McHugh defends Tricare fee hikes

WASHINGTON — Army Secretary John M. McHugh Friday defended sharp increases in military health insurance premiums and denied a congressman’s suggestion the proposal might be aimed at pushing people out of the program.

Even with the proposed increases — which hit working-age retirees but not those serving now — the Tricare program is a better deal than soldiers would find in private plans, Mr. McHugh told the House Armed Services Committee.

Mr. McHugh, who tackled the same issue as the north country’s congressman until 2009, testified Friday on the Obama administration’s proposed Army budget for the fiscal year starting Oct. 1.

Fees for Tricare Prime would climb from $460 a year to $2,048 for some working-age retirees, said Rep. Austin Scott, R-Ga., citing the budget.

“That’s a significant increase to people that earned that benefit,” Mr. Scott said. In private industry, he said, such an increase might be geared toward pushing people out of an insurance program.

“Absolutely not,” Mr. McHugh responded. Even with the increase, he said, the program is “still very generous” compared with those offered by private employers.

Tricare fees have remained stable since the mid-1990s, but pressure has grown on the Defense Department in the past few years to boost them because of skyrocketing costs. Waiting any longer will only mean bigger increases later, Mr. McHugh warned.

So far, the Pentagon has limited the sharp increases to retirees younger than 65, along with higher drug co-pays to push beneficiaries to buy prescription drugs online rather than at pharmacies.

“This is not something we’re particularly happy to do,” Mr. McHugh said. He said officials decided the increases were essential to preserve the program.

Mr. McHugh has a long history with the issue. As a senior member of the House Armed Services Subcommittee on Personnel, he resisted the Pentagon’s calls to raise Tricare fees but eventually came to endorse higher co-pays on prescriptions bought at pharmacies, for instance.

The department’s budget woes have only grown, and Mr. McHugh and Army Chief of Staff Gen. Raymond Odierno warned Friday about the wide impact of deep, across-the-board cuts in military spending that may result from last year’s failure of a congressional “supercommittee” to agree to budget cuts and revenue increases. Those cuts would begin to take effect next year.

Those cuts, under a process called sequestration, “would result in us having to re-look fundamentally at how we do business,” Gen. Odierno said.

Mr. McHugh, echoing remarks by Defense Secretary Leon E. Panetta in recent days, said the department has made no hard plan for how to meet sequestration but that the cut could be as big as $134 billion over 10 years in the Army. Among the consequences, he said, would be the close-out costs from canceled contracts.

Democrats and Republicans on the committee agree that such cuts must be avoided.

“I just see total chaos on next Jan. 1 if this is not fixed,” said committee Chairman Howard P. “Buck” McKeon, R-Calif.

Rep. William L. Owens, D-Plattsburgh, a member of the committee, voted for the Budget Control Act that requires those cuts, but a spokesman, Sean Magers, said the congressman believes defense and Medicare should be spared the deepest reductions. Yet the White House has threatened to veto any effort to single out defense for being spared.