Retirees May Be Gates' Toughest Military Foe

WASHINGTON (May 11) -- In three and a half years as secretary of defense, Robert Gates has successfully challenged the bureaucracies of the Army, Air Force and Navy, along with their powerful friends in industry and on Capitol Hill. But now he may be taking on the toughest branch of the defense establishment: retirees and their health insurance.

Gates canceled the Army's "Future Combat System," a multibillion-dollar program linked to thousands of civilian jobs. He prodded the Air Force to end production of a coveted fighter aircraft, the F-22 Raptor, and he got the Navy to turn away from a futuristic destroyer, the DDG-1000 -- both with important supporters in politically pivotal states.

On May 8, though, Gates called on veterans, and military retirees in particular, to pay a larger share of the cost of their health insurance. The retirees are known for their relentless advocacy and unbroken record of success on Capitol Hill.

"I'll be astounded if he's successful," said Gail Wilensky, an economist and former president of the Defense Health Board, a Pentagon advisory group on health care issues. Retirees and their advocates are "too strong, and the Congress is, shall we say, less so," she told AOL News.

No one disputes that the nation's veterans have made tremendous sacrifices and deserve generous benefits, Wilensky said. Her task force took care to recommend that troops on active duty and their families continue to receive full health care coverage at no cost, she added.

But with health care costs rising and the nation at war, it's reasonable to ask that those who've completed their service share in the increasing cost of their health care, she said.

"The majority of costs reside with retirees," Dr. William Winkenwerder, a former director of the Defense Department's health system, told AOL News. "And not unlike the Medicare program or other government pension and benefit programs, people are now faced with issue of having to ask these populations to contribute more. ... It's not an easy matter."

Military retirees under age 65 pay an average of $460 annually for health insurance, a figure unchanged since 1995. The bargain rates have induced thousands of retirees, who typically leave the service in their 50s, to retain their military coverage rather than bear the cost of more expensive and often less generous insurance plans provided by their new civilian employers.

While the rates have been frozen, the Pentagon's health care costs have skyrocketed. Those expenses "are eating the Defense Department alive," Gates observed May 8, "rising from $19 billion a decade ago to roughly $50 billion." Unless it can shift some of those increases to retirees through higher premiums, the Pentagon soon will be unable to afford new weapons and equipment that are needed, he warned.

Three years ago, Wilensky co-chaired a Pentagon task force that urged Congress to boost the average premium to $1,100, spreading the increase over several years to lessen its impact.

"Americans everywhere are paying high costs for health care," the task force report noted. "While military retirees deserve a more generous benefit because of their sacrifices and years of service, relatively modest increases in out-of-pocket costs will not only help stabilize the system and make it more accountable, but will also be looked upon as being appropriate by the American taxpayer."

Congress, however, would have none of it, as veterans and their advocates deluged lawmakers with e-mails and letters opposing any increase and warned of severe consequences at the polls for any member supporting higher premiums.

The retirees argue that low-cost health insurance is a benefit they earned, often with blood shed on the battlefield. Those over 65, many of whom were recruited in an era when the armed services promised free care for life to those who stayed in uniform for 20 years or more, have been particularly active in opposition to any premium increases.

Even before Gates' speech, the Military Coalition, which coordinates the lobbying efforts of 34 veterans' groups, had posted a warning on its website against any attempts to tamper with either Tricare, the health insurance plan for active duty troops and military retirees, or the benefits provided to all veterans through the Department of Veterans Affairs.

"All retired service members earned equal health care coverage by virtue of their service," the coalition asserted. The Defense Department "should make all efforts to provide the most efficient use of allocated resources and cut waste prior to imposing any additional or increased fees on eligible beneficiaries. We believe the authority for DoD to increase or impose fees should be under the scrutiny of Congress as the overseer of the military."

The retiree lobby is "a very tough, aggressive group," Wilensky observed. "You're either their friend to the end or you're not."

The influence of the big health care lobbies in the civilian sector -- the American Medical Association, hospital and nursing home associations -- pales alongside that of the military retirees, she said.

"The system is now totally unaffordable," agreed Winslow Wheeler, a former Senate staffer who now heads the Straus Military Reform Project at the Center for Defense Information.

While successfully battling proposals to increase premiums, the veterans' groups have pushed Congress to provide increasingly generous benefits, including "concurrent receipt," which allows service retirees to combine their pensions with disability benefits paid by the Department of Veterans Affairs.

The most expensive of those new benefits is Tricare for Life, which supplements the Medicare benefits available to military retirees over 65.

When Congress passed the program in 1999, the Congressional Budget Office provided cost estimates "that made everybody gag," Wheeler recalled to AOL News. "They reacted by saying it couldn't be that much. And it turned out that CBO was wrong -- they only caught about half the cost."