Military members, retirees and veterans have a few more reasons to be wary of politicians who say their top priority is to cut federal spending.
The Congressional Budget Office on Wednesday released a report of more than 100 options for reducing budget deficits as House and Senate conferees strive to negotiate a new debt-cutting deal by mid December.
More than a few of the CBO options would roll back compensation for categories of veterans or to raise TRICARE fees for military retirees.
The report includes options on many segments of society dependent on federal payments, from Social Security recipients to drug manufacturers.
For select veterans’ programs, CBO makes some hard-edged points that lawmakers bent on cutting spending might find compelling, if not persuasive. Here are some of those ideas.
Cap military pay raises
From 2000 through 2010, Congress approved basic pay raises that averaged a half percentage point above private-sector wage growth. The military could save $25 billion from 2015 to 2023 by capping raises yearly at .5 percent below civilian wage growth. CBO predicts only a “minor” effect on force retention.
Evidence in favor indicates cash compensation for enlisted members now exceeds wages of 90 percent of civilian counterparts. CBO says officer compensation exceeds 86 percent of private sector peers.
The case against capping raises is that recruiting and retention goals could be compromised, CBO says, and smaller raises also dampen other elements of military compensation, including retirement annuities.
Raise TRICARE fees
CBO floats two options to have military retirees pay more for health care. One is to have retirees, spouses and survivors age 65 and older pay the first $550 of costs not covered by Medicare and then 50 percent of the next $4,950. CBO says this would slow TRICARE costs by $31 billion from 2015 to 2023 and save Medicare dollars as older beneficiaries seek fewer health services.
The drawback is some users might not seek needed preventive care or manage their chronic conditions as closely as they do now.
The second option targets “working age” retirees and families enrolled in TRICARE Prime by raising fees, deductibles and co-pays. The Prime changes for retirees could save from $2 billion to $11 billion by 2023, depending on final details.
Concurrent receipt
Until 2003, military retirees who drew tax-free compensation from the Department of Veterans Affairs for service-connected disabilities saw retirement pay reduced by an equal amount.
Congress phased out this ban on “concurrent receipt” over several years for retirees with disability ratings of 50 percent or higher. Last year 420,000 retirees received $7 billion in concurrent receipt payments.
Lifting this ban, CBO suggests, encouraged many more retirees to seek a VA disability rating. In 2005, only 33 percent who served 20 or more years received VA disability pay. By 2012, that number had climbed to 45 percent.
CBO says $108 billion could be saved from 2015 to 2023 if the ban on concurrent receipt were restored. They “would still receive higher after-tax payments than would retirees who are not disabled,” CBO noted.
That CBO floated such an option could dampen hope among military retirees with disabilities rated 40 percent and less that Congress someday will lift the concurrent receipt ban for them, too.
Narrow eligibility for VA compensation
The law requires VA to define “service-connected” ailments broadly. Last year, CBO says, VA paid 520,000 veterans a total of $2.9 billion “for seven medical conditions that … are generally neither caused nor aggravated by military service.”
VA could save $20 billion from 2015 to 2023 if it stopped compensating veterans for chronic obstructive pulmonary disease; arteriosclerotic heart disease; hemorrhoids; uterine fibroids; multiple sclerosis; Crohn’s disease and osteoarthritis.
The argument in support is that VA disability pay should be more comparable to civilian systems, which “do not typically compensate individuals for all medical problems” that develop during employment.
The opposing argument is that military service “imposes extraordinary risks” and hardships, which justify current pay and benefit.
Tighten VA “IU” benefits
VA will supplement regular disability compensation for veterans not rated 100 percent disabled if they are deemed “unable to engage in substantial work,” CBO explains.
The “individual unemployability” benefit is paid today to 300,000 veterans, boosting monthly incomes by an average of $1,800 a month.
A third of those veterans, however, are over 65, the age by which many American workers are retired and drawing full Social Security benefits. CBO said VA could save $15 billion by 2023 if it stopped those payments to older veterans.
These are not recommendations, CBO says, only options.
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