SMALLER BAH RAISES, HIGHER DRUG CO-PAYS GAIN STEAM
The Senate Appropriations Committee has approved a fiscal 2015 defense money bill that fully supports the Senate Armed Services Committee’s earlier embrace of key military compensation curbs sought by the Joint Chiefs of Staff.
Both committees have rejected proposals to restructure TRICARE dramatically by consolidating plan options and by raising fees. They also reject a $200 million hit to the annual subsidy for commissaries would could force some commissaries to cut hours of operation and a few even to close.
But Senate appropriators have shaped a funding bill that supports the armed services committee on three significant compensation changes:
Pay Cap: A second straight cap of 1 percent on the annual military pay raise. A 1.8 percent increase is needed this January to keep pace with private sector wage growth.
BAH Cap: A dampening for three years of yearly increases to Basic Allowance for Housing which is paid to a million service members living off base in the United States. The goal is to slow BAH adjustments until the allowances cover only 95 percent of local rental costs. Current BAH rates cover 100 percent of members’ local rental costs at stateside assignments. Current rates also cover average renter’s insurance, but that would end, just as the Joint Chiefs propose, if the Senate defense bill becomes law.
Higher Drug Co-Pays: Pharmacy co-payments would be increased for beneficiaries who have prescriptions filled at retail outlets, or choose to use brand name medicines instead of less costly generic drugs. This change largely would impact military retirees and their families.
The goal is to “fully incentivize” use of TRICARE mail order and also generic drugs to save on program costs. By changing behavior, and also by collecting higher fees, the Department of Defense estimates it would save $829 million in 2015. The Congressional Budget Office estimates savings of $4.4 billion over five years.
Prescriptions filled at base pharmacies would remain free. But the current $17 co-pay at retail outlets for a 30-day supply of a brand name drug on the military formulary would jump to $26 in January, and by $2 more annually over seven years to reach $40 by 2022 and then $45 by 2024.
Beneficiaries now face a co-pay of $44 to get non-formulary drugs at local pharmacies. Under the plan, non-formulary drugs could only be obtained through home delivery. And the co-pay for a three-month supply of mail order pills would climb from $43 to $51 in January and increase annually thereafter to reach $66 by 2017 and $90 by 2024.
Co-pays for brand name drugs on the formulary, if filled by mail, would double from $13 to $26 next year, and increase by $2 to $4 annually to reach $34 by 2019 and $45 by 2024. Generic drugs would continued to be available at no charge by mail order until 2019 when a co-pay would be set at $9 for a 90-day supply. The current $5 co-pay for generic drugs at retail would be increased by $1 a year, starting in 2015, and reach $14 in 2024.
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