Sen. Tom Coburn (R-Okla.) wants to cut taxpayer funding for non-military elements of the Defense Department, starting with making retired, uninjured service members pay more for what he described as “extremely low-cost health care for life” for themselves, their wives and dependents under the Tricare Prime system.
For military retirees eligible for Medicare, he also wants to raise the co-payments that they are charged to be in Tricare for life, the second payer for health care after Medicare. In addition, he wants to increase low fees that Tricare beneficiaries pay for pharmaceuticals purchased at their local drugstores.
Former defense secretary Robert M. Gates proposed raising Tricare Prime enrollment fees for single retirees from $230 a year to $260 a year and fees for retiree families from $460 a year to $520 a year. Coburn wants the fees to be much higher and more in line with private-sector health plans.
Part of his concern is fairness, first for uninjured veterans who, for example, served in Iraq and/or Afghanistan but “leave the military without serving 20 years [and] are not entitled to any of these health-care benefits.” They represent some 70 percent of those serving, according to Pentagon officials.
Another comparison he makes is to other federal government workers whose plans are not as cheap. A medical doctor, Coburn told reporters last Monday: “Nobody in the country, as a single person working 20 years for the government, should be able to get health care for $250 a year. Nobody was ever promised that, and nobody should be able to do that.”
Instead, he wants to increase the enrollment fee for single retirees to “approximately $2,000 per year and $3,500 for a family.” At the same time he would limit out-of-pocket expenses at $7,500 for those retirees with families. He thinks these changes could save $11.5 billion a year.
His Tricare for life would require retirees to pay up to $550 for half the initial cost not covered by Medicare and then up to $3,025, after which all costs would be paid by Tricare. This change could save $4.3 billion a year.
Coburn wants to reduce the $8 billion annual government share of the cost of drugs that Tricare beneficiaries purchase from their local private retail pharmacies rather than buying them at lower cost by mail order or at military base facilities. Where the price is now $3 for a 30-day supply of a generic drug and $9 for a brand-name from private pharmacies, Coburn would raise that to$15 for generic and $25 for brand names and save some $2.6 billion a year.
Coburn told reporters he has no doubt about the reaction to his Tricare ideas.
“There’s no question,” he said, “. . . retired military, they won’t like what I’ve done. But the fact is is nobody’s going to like what we’ve done, because everybody gets a pinch — everybody. ”
Beyond health care, Coburn has several other proposals that will rattle the Pentagon. He wants to eliminate most of the $1.3 billion-a-year subsidy that supports the Defense Commissary system of 252 grocery stores on military bases worldwide. Prices at commissaries are much lower than at civilian supermarkets; they are listed at cost plus a 5 percent surcharge. That money goes to offset costs of new commissaries or to repair and maintain old ones. It does not pay for salaries and benefits of the roughly 18,000 people who work at the commissaries.
Coburn supports a Congressional Budget Office proposal that would reduce the taxpayer subsidy over five years and see a gradual raise in prices so commissaries could become self-sufficient. The increase in cost, according to the CBO, would amount to $400 per service family per year and save the government about $900 million annually.
He also wants to close down the Congressionally Directed Medical Research Program, which for more than 20 years has added around $200 million a year primarily for breast, lung and prostate cancer projects that have to be managed primarily by contractors. Coburn’s option is to “transfer funding for cancer research that affects the general population back to [the National Institutes of Health] and reduce the administrative costs of administering this research for savings.”
By: Walter Pincus, The Washington Post, July 24, 2011
Republicans would like you to believe that our deficit problem is primarily a spending problem and that responsibility for that problematic spending is primarily a Democratic responsibility. But the second claim is as misleading as the first. Republicans have also been known to promote wasteful government spending, particularly when it goes towards an industry with which they happen to be cozy. For a vivid illustration of this, look no further than a new Politico article about House Majority Leader Eric Cantor and his position on a key deficit reduction proposal.
The proposal in question would lower the cost of what the federal government currently pays to provide low-income seniors with prescription drugs. For years, the government purchased drugs for these seniors directly through Medicaid, taking advantage of the low prices drug companies must, by law, provide when selling drugs for the people in that program. But that changed in 2006, with the creation of Medicare drug benefit. At that point, the government delegated the purchasing of drugs for low-income seniors to private firms. And the firms haven’t been able to negotiate equally deep discounts, partly because of restrictions on their ability to limit drug availability.
According to the Congressional Budget Office, restoring the “Medicaid discount” for low-income seniors could save more than $100 billion over the course of a decade, depending on the structure of the proposal. And, at one point, many health care reformers had hoped to include that proposal as part of what became the Affordable Care Act. The administration and leaders of the Senate Finance Committee agreed not to include the proposal in the final legislation, as part of their infamous deal with the drug industry lobby. But that was a one-time deal, at least in theory, and congressional negotiators are looking seriously at enacting the proposal now.
The problem is lawmakers like Cantor, who oppose the idea. According to the Politico story, written by Matt Dobias, Cantor is making the same argument that the drug industry lobby does: That the proposal would amount to a form of government price controls, retarding economic growth and discouraging innovation.
The latter point is highly dubious: The reduction would bring reimbursement levels for these drugs very close to what they were a few years ago. Many experts, including the CBO, think the likely impact on research and development would be negligible. (Harvard economists Richard Frank and Joseph Newhouse addressed this issue at some length in Health Affairs a few years ago.)
As for the former suggestion, it’s true that any net reduction in government spending could reduce economic growth, at least at this particular moment. That’s why it’s not a good idea to be madly slashing government spending right now — and why, perhaps, congressional negotiators should delay implementation of this cut, like the others, so that it would take effect after the economy has more fully recovered.
But Cantor’s anxiety over the economic ramifications of spending cuts seems strangely selective. He hasn’t raised similar concerns about cuts to food stamps, Medicaid, and similar programs that would likely have a more devastating impact, both on the economy as a whole and the people who depend upon them for support.
Then again, food stamp recipients didn’t donate $168,000 to Cantor’s reelection campaign in the last cycle. The drug industry did.
By: Jonathan Cohn, The New Republic, July 15, 2011