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In light of soaring health and benefit costs for members of the armed forces, a committee created to offer reforms is calling for big changes. Hari Sreenivasan examines the recommendations with Alphonso Maldon, chair of the Military Compensation and Retirement Modernization Commission.
Everyone routinely thanks veterans for their service.
But now an independent commission has new recommendations on how they should be compensated.
Hari Sreenivasan has the story.
Over the past 15 years, health care and retirement benefit costs for members of the armed forces has nearly doubled. So far, efforts to rein in costs have stalled, as members of Congress and veteran groups have pushed back.
Today, a congressional-chartered commission charged with recommending reforms released their report. They call for overhauling the health insurance system for military families and retirees and modifying the pension benefits for soldiers.
To walk us through some of those recommendations, I am joined now by the commission's chairman, Alphonso Maldon.
Thanks for joining us.
So, first, I want to ask, how important is it for the military to carry out some of these reforms? What's wrong with the way things are now?
ALPHONSO MALDON, Chairman, Military Compensation and Retirement Modernization Commission: Our retirement system today, we have — the vast majority of our military really doesn't benefit from the traditional retirement, military retirement.
And we have made recommendations, this commission has made a recommendation that we can actually offer more benefits or increased benefit to the — to those service members. And we can best do that by a recommendation that we have made, which is actually a blended retirement system, which actually — and the blended retirement system that we are recommending is one that will leverage the benefits, the recruiting benefits of a government-sponsored thrift savings plan and the retention benefits of the traditional military retirement system.
And we add an additional continuation pay at the 12-year mark. And so then we — by doing that, we're able to provide more benefits to more service members, which will extend the benefit that is to about 17 percent now to up to about 75 percent of the force.
So, if you're actually shifting some of those costs, if you are going to put it into these thrift plans, where do the savings come from?
The savings come from, one, we have savings that will come from the accrual. You accrue a cost, dollars today, current dollars over future dollars, and we take advantage of that savings.
Also, in the recommendation that we are — we have made, when a service member actually decides that they're going to retire at 20 years, we're offering them additional options where they can take a lump sum of pay. If they take that lump sum and — out early, that means that we can take advantage of that and those accrual savings.
So that's part of the savings that we get there.
OK. All right. Let's talk a little bit…Sorry, let's talk a little bit about the health care recommendations that you have, too. That's a big portion of it. You want to try to shift military families out of the Tricare system that they're using now into a little bit more of an open marketplace. Why?
Why is because, right now, we think that there's — Tricare really has — often, it has really caused some confusion for people and some dissatisfaction because there are beneficiaries trying to access care, and that the process is so lengthy, it's so frustrating for people to actually have to obtain that specialty care that they need.
And so it has caused concerns in that regard. And so what we're recommending is that there be a — we would actually replace Tricare with a selection, a menu of commercial insurance plans, so that the beneficiaries of active-duty service members, reserve component members and retirees that are non-Medicare-eligible could actually benefit from that, because it gives them more choice, more access.
So one of the concerns that veterans groups have is, if you do increase, while better choice or more choices is good, if you shift towards more of a public model, these military families are going to have to pay higher premiums compared to what they pay today.
That's not the case with this, because, number one, exactly what the family members of active-duty service members are paying today, there is no additional cost in that regard, because the government provides a basic allowance for health care that each family member, that each service member will get.
That money will be there to defray those out-of-pocket costs.
So, I want to ask, with these changes to both health care and retirement, if you're grandfathering the entire existing military and their families in, when are we actually going to materialize these savings?
Well, the only ones that you're grandfathering — this is two different things here.
You're grandfathering on the retirement side of it. You're grandfathering those current — the people that are currently serving in the military today, and you're grandfathering those that have already retired. That's just only the retirement pay that's being grandfathered.
And do you think you have a better chance of getting this through Congress now?
It's my hope that we will be able to get it through. I think Congress has sent clear signals that they're very interested in wanting to get some things done here.
And they have waited for quite some time, almost two years, to get this, so I think that there's a great chance we can get it done.
All right, Alphonso Maldon, thanks so much for joining us.
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