[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                         [H.A.S.C. No. 112-23] 

                                HEARING

                                   ON

                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2012

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

               SUBCOMMITTEE ON MILITARY PERSONNEL HEARING

                                   ON

                    MILITARY HEALTH SYSTEM OVERVIEW

                       AND DEFENSE HEALTH PROGRAM

                    COST EFFICIENCIES: A BENEFICIARY

                              PERSPECTIVE

                               __________

                              HEARING HELD
                             MARCH 16, 2011


                                     
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                   SUBCOMMITTEE ON MILITARY PERSONNEL

                  JOE WILSON, South Carolina, Chairman
WALTER B. JONES, North Carolina      SUSAN A. DAVIS, California
MIKE COFFMAN, Colorado               ROBERT A. BRADY, Pennsylvania
TOM ROONEY, Florida                  MADELEINE Z. BORDALLO, Guam
JOE HECK, Nevada                     DAVE LOEBSACK, Iowa
ALLEN B. WEST, Florida               NIKI TSONGAS, Massachusetts
AUSTIN SCOTT, Georgia                CHELLIE PINGREE, Maine
VICKY HARTZLER, Missouri
               Jeanette James, Professional Staff Member
                 Debra Wada, Professional Staff Member
                      James Weiss, Staff Assistant















                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2011

                                                                   Page

Hearing:

Wednesday, March 16, 2011, Military Health System Overview and 
  Defense Health Program Cost Efficiencies: A Beneficiary 
  Perspective....................................................     1

Appendix:

Wednesday, March 16, 2011........................................    29
                              ----------                              

                       WEDNESDAY, MARCH 16, 2011
    MILITARY HEALTH SYSTEM OVERVIEW AND DEFENSE HEALTH PROGRAM COST 
                EFFICIENCIES: A BENEFICIARY PERSPECTIVE
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Davis, Hon. Susan A., a Representative from California, Ranking 
  Member, Subcommittee on Military Personnel.....................     2
Wilson, Hon. Joe, a Representative from South Carolina, Chairman, 
  Subcommittee on Military Personnel.............................     1

                               WITNESSES

Barnes, MCPO Joseph L., USN (Ret.), National Executive Director, 
  Fleet Reserve Association......................................     4
Cooke, Mary H., Vice President, Johns Hopkins U.S. Family Health 
  Plan, Chair, U.S. Family Health Plan Alliance..................     9
Hanson, CAPT Marshall, USNR (Ret.), Director Of Government 
  Relations, Reserve Officers Association........................     9
Holleman, Deirdre Parke, Executive Director, The Retired Enlisted 
  Association....................................................     7
Jones, Richard A. ``Rick,'' Director of Government Relations, 
  National Association for Uniformed Services....................     5
Moakler, Kathleen B., Director of Government Relations, National 
  Military Family Association....................................     8
Strobridge, Col. Steven P., USAF (Ret.), Director of Government 
  Relations, Military Officers Association of America............     3

                                APPENDIX

Prepared Statements:

    Barnes, MCPO Joseph L........................................    41
    Cooke, Mary H................................................    89
    Davis, Hon. Susan A..........................................    34
    Hanson, CAPT Marshall........................................    78
    Holleman, Deirdre Parke......................................    59
    Jones, Richard A. ``Rick''...................................    49
    Moakler, Kathleen B..........................................    65
    Strobridge, Col. Steven P....................................    36
    Wilson, Hon. Joe.............................................    33

Documents Submitted for the Record:

    The Association of the United States Navy Statement..........    99
    The Combined Statement of the Air Force Association; Air 
      Force Women Officers Associated; Army Aviation Association 
      of America; Association of Military Surgeons of the United 
      States; Association of the U.S. Army; Commissioned Officers 
      Association of the U.S. Public Health Service, Inc.; Chief 
      Warrant & Warrant Officers Association of the U.S. Coast 
      Guard; Enlisted Association of the National Guard of the 
      United States; Iraq & Afghanistan Veterans of America; 
      National Guard Association of the United States; Society of 
      Medical Consultants to the Armed Forces; U.S. Army Warrant 
      Officers Association; and U.S. Coast Guard Chief Petty 
      Officers Association.......................................   113
    The Military Coalition Statement.............................   117
    The Veterans of Foreign Wars of the United States Statement..   143
Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
    MILITARY HEALTH SYSTEM OVERVIEW AND DEFENSE HEALTH PROGRAM COST 
                EFFICIENCIES: A BENEFICIARY PERSPECTIVE

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                        Subcommittee on Military Personnel,
                         Washington, DC, Wednesday, March 16, 2011.
    The subcommittee met, pursuant to call, at 8:00 a.m. in 
room 2212, Rayburn House Office Building, Hon. Joe Wilson 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. JOE WILSON, A REPRESENTATIVE FROM 
  SOUTH CAROLINA, CHAIRMAN, SUBCOMMITTEE ON MILITARY PERSONNEL

    Mr. Wilson. Good morning, ladies and gentlemen. Thank you 
for being here this morning. I would like to welcome everyone 
to the Military Personnel Subcommittee hearing.
    Today we will be hearing from the veterans service 
organizations on behalf of the issue of ``Military Health 
System Overview and Defense Health Program Cost Efficiencies,'' 
and this is the beneficiary perspective.
    This morning, the subcommittee meets to hear the testimony 
on the Military Health System and the Department of Defense's 
proposed cost-saving initiatives from the beneficiary 
perspective.
    I understand this is an unusually early time--actually, 
7:00 a.m. standard time, but thank goodness we have moved 
ahead--for the Military Personnel Subcommittee to hold a 
hearing. And I appreciate everyone's willingness to be here 
this morning to discuss this important subject.
    For several years, the Department of Defense has raised 
concerns about the rising cost of health care and the challenge 
of maintaining the viability of the Military Health System over 
the long term. We must seek reasonable solutions for ensuring 
the availability of world-class health care, not only for our 
returning wounded, and injured, and their families, and 
veterans, but to future generations of brave young men and 
women who answer the call to serve our Nation.
    The Department of Defense has proposed several measures 
aimed at reducing the cost of providing health care to our 
servicemembers, and their families, and veterans. The plan is a 
more comprehensive approach than previous cost-cutting efforts. 
That being said, these proposals will affect not only 
beneficiaries, they will affect the people who support military 
health care, such as local pharmacists, hospital employees, and 
contractors.
    We are joined today by an outstanding panel consisting of 
representatives of several dedicated military service 
organizations and a representative of organizations that 
support the Military Health System.
    I look forward to hearing your views on the Department of 
Defense proposals. What do you support? What do you oppose? And 
do you recommend alternatives to the proposals that we may 
consider?
    Before I introduce our panel, let me offer Congresswoman 
Davis an opportunity to make her opening remarks.
    [The prepared statement of Mr. Wilson can be found in the 
Appendix on page 33.]

    STATEMENT OF HON. SUSAN A. DAVIS, A REPRESENTATIVE FROM 
 CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON MILITARY PERSONNEL

    Mrs. Davis. Thank you, Mr. Chairman.
    And let me also welcome our beneficiary representatives 
today: Colonel Steve Strobridge, Mr. Joseph Barnes, Rick Jones, 
Deirdre Parke Holleman--can't see everybody--and Kathy Moakler, 
Marshall Hanson. I also wanted to welcome Mary Cooke, who is 
representing the U.S. Family Health Plan. Thank you for being 
here.
    As you all know, yesterday, the subcommittee heard from 
Under Secretary of Defense for Personnel and Readiness Dr. 
Stanley, Assistant Secretary of Defense for Health Affairs Dr. 
Woodson, and the Surgeons General on their views on the status 
of the military health-care system and their efforts to improve 
the care being provided to our service men and women, retirees, 
survivors, and their families.
    Today, we will hear firsthand from the folks who really 
make the most difference here, from those who are the 
beneficiaries of the system, and the experience that they are 
having with the military health-care system and their thoughts 
on the health-care proposals put forth by the Department of 
Defense.
    As you all know, our country is facing difficult economic 
times, and we are now faced with making some hard decisions 
that could impact the lives of those who are currently serving 
and those who have served. I know that our beneficiary 
representatives here today understand the challenges that we 
face, as several have previously made sacrifices when they 
served in uniform or are family members of those serving or who 
have served.
    We need to work together to find a way forward that will 
continue to ensure the very, very best quality of care for 
those serving, especially those in harm's way, and to ensure 
that the benefit being provided remains sustainable into the 
future. I look forward to a productive dialogue this morning on 
your thoughts on how we can move forward.
    Thank you, Mr. Chairman.
    [The prepared statement of Mrs. Davis can be found in the 
Appendix on page 34.]
    Mr. Wilson. Thank you, Ms. Davis.
    We have seven witnesses today, which is a large panel. As 
such, I would respectfully remind the witnesses that we desire 
that you summarize, to the greatest extent possible, the high 
points of your written testimony to 2 minutes. I assure you 
that the written comments and statements will be made part of 
the hearing record.
    In addition, I ask unanimous consent to issue the following 
statements into the record: The statement from The Military 
Coalition; the statement from the Association of the United 
States Navy; the statement of the Veterans of Foreign Wars of 
the United States; and the statement representing the views of 
the Air Force Association, Air Force Women Officers Associated, 
Army Aviation Association of America, Association of the United 
States Army, Commissioned Officers Association of the U.S. 
Public Health Service, Incorporated, Chief Warrant and Warrant 
Officers Association of the U.S. Coast Guard, Enlisted 
Association of the National Guard of the United States, Iraq 
and Afghanistan Veterans of America, National Guard Association 
of the United States, Society of Medical Consultants to the 
Armed Forces, the U.S. Army Warrant Officers Association, and 
the U.S. Coast Guard Chief Petty Officers Association.
    Without objection, so ordered.
    [The information referred to can be found in the Appendix 
on pages 99, 113, 117, and 143.]
    Mr. Wilson. Let us welcome the panel: Mr. Steve Strobridge, 
director of government relations, Military Officers Association 
of America; Mr. Joe Barnes, the national executive director of 
the Fleet Reserve Association; and returning we have Mr. Rick 
Jones, director of government relations of the National 
Association for Uniformed Services; Mrs. Deirdre Holleman, 
executive director of the Retired Enlisted Association; Mrs. 
Kathy Moakler, director of government relations for the 
National Military Family Association; Mr. Marshall Hanson, 
director of government relations for the Reserve Officers 
Association; Ms. Mary Cooke, vice president, Johns Hopkins U.S. 
Family Health Plan, and chair of the U.S. Family Health Plan 
Alliance.
    As we begin today, we will be hearing from each of the 
witnesses, and then the members of the subcommittee will be 
asking their questions. And we will each, beginning with me, be 
subject to a 5-minute rule. And we have someone who is 
impartial, above repute: Jeanette James is going to be the 
timekeeper and scorekeeper.
    So, with that, we will begin right away with Mr. 
Strobridge.

 STATEMENT OF COL. STEVEN P. STROBRIDGE, USAF (RET.), DIRECTOR 
   OF GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF 
                            AMERICA

    Mr. Strobridge. Thank you, Mr. Chairman.
    Mr. Chairman and Ranking Member Davis, members of the 
subcommittee, I am here representing MOAA [the Military 
Officers Association of America], but 13 other military 
associations have asked to add their names to our statement. 
And I have submitted the statement for the record, as indicated 
by the chairman.
    MOAA has not taken the position that fees should never 
rise, but that Congress should establish principles in that 
regard to explicitly recognize that the bulk of what military 
people pay for their health care is paid upfront in service and 
sacrifice. We are encouraged that the new DOD [Department of 
Defense] proposal does a far better job of acknowledging that 
than did those of several years ago.
    Our principal objection is to DOD's plan to index future 
TRICARE Prime increases to some undetermined health-care index 
that they project to rise at 6.2 percent per year.
    In our view, the main problem is that current law leaves 
much of the fee-setting to DOD's discretion. DOD went years 
proposing no changes, making beneficiaries believe that there 
wouldn't be any. Then a new Secretary proposed tripling fees, 
which upset beneficiaries and implied that they had not earned 
their health care through their service.
    We have statutory guidelines for setting and adjusting 
basic pay, retired pay, survivor benefits, and most other 
military compensation elements. We believe strongly that the 
law should specify several principles on military health care:
    First, it should acknowledge, if only as a sense of 
Congress, that the military retirement and health-care package 
is the primary offset for the extraordinary demands and 
sacrifices inherent in a multi-decade service career.
    Second, it should acknowledge that those decades of service 
and sacrifice constitute a very large prepaid premium for their 
health care and retirement over and above what they pay in 
cash.
    Finally, it should explicitly acknowledge that 
extraordinary upfront premium in the adjustment process, by 
limiting the percentage growth in TRICARE fees in any year to 
the percentage growth in military retired pay.
    In the meantime, MOAA and The Military Coalition pledge our 
support to work with DOD and the subcommittee to find other 
ways to hold down military health cost growth. We believe much 
more can be done to encourage voluntary use of the mail-order 
pharmacy system, reduce costs of chronic conditions, reduce 
system duplication, and cut contracting and procurement costs, 
to name a few.
    Thank you very much for the time.
    [The prepared statement of Mr. Strobridge can be found in 
the Appendix on page 36.]
    Mr. Wilson. Thank you very much.
    Mr. Barnes.

   STATEMENT OF MCPO JOSEPH L. BARNES, USN (RET.), NATIONAL 
         EXECUTIVE DIRECTOR, FLEET RESERVE ASSOCIATION

    Mr. Barnes. Mr. Chairman, Ranking Member Davis, and members 
of the subcommittee, thank you for the opportunity to appear 
before you today.
    Military service isn't like any other career or occupation, 
and associated with this and requirements associated with 
maintaining readiness are fulfilling commitments to provide 
health care and other benefits for career personnel after 
retirement.
    FRA's [the Fleet Reserve Association's] reaction to drastic 
health-care fee-increase proposals from 2006 to 2008 included 
support for legislation that would shift oversight of these 
matters from DOD to Congress and support for a Senate bill in 
the 110th Congress prohibiting fee adjustments from exceeding 
the annual Consumer Price Index associated with retired-pay 
COLAs [cost-of-living allowances].
    DOD's 2012 TRICARE Prime fee adjustments plan is more 
reasonable than past proposals. However, initial adjustments 
are only part of the plan, and our association is very 
concerned about the yet-to-be-determined baseline index for 
inflation in 2013 and beyond.
    FRA supports the elimination of co-pays for generic drugs 
via home delivery and notes that survivors and medically 
retired personnel are not impacted by the plan. There are also 
no Active Duty fee increases, no changes to TRICARE Standard, 
and no additional TRICARE for Life fees.
    FRA agrees with GAO [the Government Accountability Office] 
that management efficiencies and cost-saving initiatives can 
significantly offset higher health-care costs. And our members 
ask that Congress find a permanent ``doc fix'' to pending cuts 
in Medicare physician reimbursement rates, which is essential 
to ensuring access to care for all beneficiaries, including 
those under TRICARE for Life.
    Thank you again for the opportunity to present our views.
    [The prepared statement of Mr. Barnes can be found in the 
Appendix on page 41.]
    Mr. Wilson. Thank you very much.
    Mr. Jones.

STATEMENT OF RICHARD A. ``RICK'' JONES, DIRECTOR OF GOVERNMENT 
     RELATIONS, NATIONAL ASSOCIATION FOR UNIFORMED SERVICES

    Mr. Jones. Chairman Wilson, members of the subcommittee, 
thank you very much for the opportunity to present testimony 
this morning.
    The National Association for Uniformed Services asks 
Congress to hold the line. Our association is not alone in this 
request to hold the line. We do not speak for them, but we are 
pleased to stand with the millions of veterans who form the 
American Legion, the Veterans of Foreign Wars, the AMVETS 
[American Veterans], the Air Force Sergeants Association, 
Jewish War Veterans, to name a number of major associations 
representing the men and women who actually served in the Armed 
Forces and who also reject the Pentagon plan.
    Our country has asked a great deal from these former 
troops. They have responded, kept the faith, kept our strong 
defense. We are better today for it.
    At first look, the plan for TRICARE increases may indeed 
seem modest, as the Department has described. However, it is 
clear the plan is a nose under the tent, a Trojan horse 
designed to divide Congress and divide military associations' 
voices and to start a rollout for substantial increases in 
TRICARE fees and co-pays. Defense Comptroller Robert Hale 
called the Pentagon plan a slow start. And then he said, ``It 
is a way to get Congress and the military associations in 
agreement, and then we can roll out the rest of it.''
    To achieve their plan, the Pentagon officials began with a 
public affairs attack that suggested that a pre-war fee, a cost 
for military health care at $19 billion, and a rise currently 
to $52 billion was the fault of retirees.
    Gentlemen, we are at war. The cost of military health care 
will always increase during war. It has never been mentioned by 
the Pentagon. It is always the retirees. And it always will be 
costly unless we leave our troops on the field, which American 
veterans and those generations we hope to come later will never 
do while they breathe American air. Again, the blame for the 
dramatic rise in military health-care costs is the war, not the 
retiree.
    Our members tell us it is hard to imagine really anything 
that can be so callously said and directed at their members as 
to hear of the stories in the national media that depict the 
cost of retiree benefits as being responsible for threatening 
available funding for our national security.
    This benefit is a benefit that has been earned. It is for 
honorable military service. And for those who don't understand 
it, these benefits were earned the hard way. They are part of a 
moral contract. They are different from private-sector, regular 
Federal health-care plans. They are provided in return for a 
career in military service.
    And for those outside this room who wish to compare 
military fees to other government programs and who do not 
understand the risk inherent in military service, allow me to 
point out that there is a stark difference between running in 
Reeboks or Rockports to catch a carpool and running in combat 
or desert boots to catch cover--protective cover.
    The National Association for Uniformed Services is 
certainly not comfortable with defense leadership actually 
suggesting to the public that the price we pay for health care 
is more than the value our Nation received from those who 
served more than 20 years, all to start slowly and to gain a 
nose under the tent.
    Certainly, there are a number of lower-priority programs 
that can be reduced. If cuts are needed to tighten the budget, 
there are things big and small that can be done. Our members 
understand this, yet they see resources fly out of the Federal 
Government for the Professional Golf Association, for a museum 
for the groundhog Punxsutawney Phil, for the cowboy museum, for 
other projects really too numerous to list. Money was even 
directed to the Grammy Association, an association of 
millionaire record producers, artists, and the like.
    As we see $120 billion stolen by fraudsters in various 
medical and social programs, we wondered why they point to an 
earned benefit. Incredibly, there are additional questionable 
priorities. What signal, for instance, is being sent when our 
government directs our Nation's hospitals to pay the medical-
care costs for treating illegal aliens? Does illegal-alien 
health care trump the health-care benefit provided by those who 
give a lifetime protecting American freedom?
    We have faith in our leaders, but we are not blind. Before 
we begin whacking our military earned benefits, let us make 
certain that we use our best wisdom and select our most 
important programs over our lesser important ones. And let us 
not forget: We are at war.
    And it should be pointed out that many of our military 
retirees are on fixed incomes. Many cannot afford even the 
modest, so-called modest, 13-percent increase in monthly 
expense. Lifetime health care is an earned benefit. And please 
consider, our members have not received a COLA over the past 2 
years.
    Mr. Chairman, we thank you very much for your time and 
thank you very much for the opportunity to bring our view to 
your panel.
    [The prepared statement of Mr. Jones can be found in the 
Appendix on page 49.]
    Mr. Wilson. Thank you, Mr. Jones.
    Mrs. Deirdre Holleman.

 STATEMENT OF DEIRDRE PARKE HOLLEMAN, EXECUTIVE DIRECTOR, THE 
                  RETIRED ENLISTED ASSOCIATION

    Mrs. Holleman. Good morning, Chairman Wilson, Ranking 
Member Davis, and distinguished members of the subcommittee. On 
behalf of TREA [The Retired Enlisted Association], I, too, 
would like to thank you for the chance to quickly speak about 
these critical issues.
    Your question is concerning the Administration's proposed 
defense health cost efficiencies. It is clear from both the 
testimony yesterday and already today that we all acknowledge 
that the primary mission of the Military Health System is 
readiness, and the cost of that mission must be paid by the 
entire Nation. It should not be the responsibility of those who 
have served a career in the military.
    Obviously, the present proposals are not as appalling as 
previous ideas, and for that, we are grateful. That does not 
mean, however, that we support all the proposals.
    It is not clear to TREA or others which medical inflation 
index DOD is planning to use, but it is completely clear that, 
at least for now, DOD is using a compounding figure of 6.2 
percent. In a short amount of time, that figure will 
dramatically eat into a retiree's earned retirement package. It 
would completely destroy the present purpose of the COLA for 
the retirement pay.
    TREA is completely opposed to this part of the proposal. 
And we feel no assurance that, if this change is made, more 
costs would not be added or more groups would not be included 
after Governor Baldacci finishes his study.
    As you can tell from my written testimony, TREA was 
planning to focus on the need to keep the U.S. Family Health 
Plan running in its present structure. However, since you have 
invited a representative of that fine program, let me simply 
state that we know how hard it is to get up and running any 
effective program. USFHP [the U.S. Family Health Plan] does a 
wonderful job for its beneficiaries. We should be very careful 
not to dislodge its smooth functioning.
    While of course we are focused on the new budget proposals, 
I do not wish to miss the chance of mentioning the continuing 
need to focus on our goal of a seamless transition for our 
wounded warriors transferring from DOD health care to VA 
[Department of Veterans Affairs] health care.
    In particular, at this moment, both departments should be 
urged to coordinate their Wounded Warrior caretakers program. 
Presently, the ending of DOD's program and the starting of the 
VA's program do not mesh. This really needs to be corrected.
    Thank you very much for your attention. I look forward to 
trying to answer any of your questions.
    [The prepared statement of Mrs. Holleman can be found in 
the Appendix on page 59.]
    Mr. Wilson. Thank you, Mrs. Holleman.
    And I would like to point out, there appears to be a 
technical problem with the microphones, and so everyone needs 
to get a bit closer, beginning with Mrs. Kathy Moakler.

   STATEMENT OF KATHLEEN B. MOAKLER, DIRECTOR OF GOVERNMENT 
        RELATIONS, NATIONAL MILITARY FAMILY ASSOCIATION

    Mrs. Moakler. Thank you, Mr. Wilson.
    The National Military Family Association appreciates the 
opportunity to speak with you about military families and a 
benefit that they consistently rate as important: military 
health care.
    We agree that DOD's proposed increase of Prime enrollment 
fees for working-age military retirees and their families is 
fair. Our association has concerns, however, with using a 
civilian-based index in determining these fees after 2012. And 
we have always supported the use of the cost-of-living 
allowance as an index for increasing fees.
    While we agree that it can drive efficiencies through 
changing behavior, we do have some concerns with the proposed 
increase in co-pays for retail medications and the impact this 
increase will have on beneficiaries who have no choice but to 
rely on the retail pharmacy for urgent, non-maintenance 
medications. We should not penalize a military family when 
their child needs an antibiotic for pneumonia and they have no 
other option than the retail pharmacy.
    Family readiness calls for access to quality health care 
and mental health services. Military families may be 
encountering access challenges and provider shortages as we 
look ahead to the prospect of decreasing Medicare reimbursement 
fees, new contract renegotiations with the T-3 [Third 
Generation of TRICARE] contract, and the uncertainties faced by 
providers in regards to health-care reform.
    We are pleased with the many resources that have been 
provided for families for non-medical counseling. We are 
concerned about a shortage of behavioral health providers in 
the MTFs [military treatment facilities] and the network. While 
we know that the services are addressing this with new 
programs, we are troubled by the increases in servicemember 
suicides and also by the increase in suicide and suicide 
attempts by military family members. Our written statement goes 
into greater detail about these issues.
    Thank you for letting us be on the panel today.
    [The prepared statement of Mrs. Moakler can be found in the 
Appendix on page 65.]
    Mr. Wilson. Thank you, Mrs. Moakler.
    And, at this time, Mr. Marshall Hanson.

  STATEMENT OF CAPT MARSHALL HANSON, USNR (RET.), DIRECTOR OF 
       GOVERNMENT RELATIONS, RESERVE OFFICERS ASSOCIATION

    Mr. Hanson. The Reserve Officers Association would like to 
thank Chairman Wilson, Ranking Member Davis, and members of the 
committee for today's invitation.
    Being brief, ROA [the Reserve Officers Association] finds 
DOD's proposal of a fee increase of $60 a year for TRICARE 
Prime families, and half that for individuals, a modest rise 
and doesn't find the proposed increases for pharmacy co-
payments excessive. We hope that initial prescriptions at 
retail sites are exempted, though, permitting the beneficiary 
follow-up time to take advantage of mail-order savings.
    Where we hesitate is that DOD is suggesting an index for 
increasing TRICARE Prime fees in future years. While ROA would 
accept an index based on COLA, we also feel there is a need to 
explore other indices should a COLA basis not be accepted.
    The most important point of this hearing is to establish a 
process to involve Congress, the beneficiary associations, and 
DOD in determining acceptable rates. Unilateral decisions by 
the Pentagon worry ROA members.
    While ROA was once open to a cards-on-the-table approach to 
health-care discussions, we have grown hesitant by how the 
Pentagon implements programs. ROA is frustrated that DOD treats 
Reserve Component health care for drilling reservists as a 
health insurance program, even though Reserve Component members 
have mobilized over 800,000 times.
    And we are quite disappointed with the market-level 
premiums levied upon ``gray-area'' retirees. We hope that the 
committee will agree to a GAO review on premiums for TRICARE 
Retired Reserve the same way the HASC [House Armed Services 
Committee] prompted reductions in costs for TRICARE Reserve 
Select.
    Also, ROA asks that you look into DOD allowing TRS [TRICARE 
Reserve Select] beneficiaries who are discharged the option of 
being in the Continued Health-Care Benefit Plan. Selected 
reservists are the largest group in the United States not 
provided transitional COBRA [Consolidated Omnibus Budget 
Reconciliation Act] protections.
    Lastly, we need to work with your staff to ensure that all 
Guard and Reserve members coming off of Active Duty are 
permitted a TAMP [transition assistance management program] 
coverage. Some individuals are being told they are not covered.
    Thank you once again, and I am ready for questions.
    [The prepared statement of Mr. Hanson can be found in the 
Appendix on page 78.]
    Mr. Wilson. Thank you, Mr. Hanson.
    And we will now conclude with Ms. Mary Cooke.

STATEMENT OF MARY H. COOKE, VICE PRESIDENT, JOHNS HOPKINS U.S. 
  FAMILY HEALTH PLAN, CHAIR, U.S. FAMILY HEALTH PLAN ALLIANCE

    Ms. Cooke. Thank you.
    Mr. Chairman, Representative Davis, and distinguished 
members of the subcommittee, thank you for the opportunity to 
testify today on behalf of the Uniformed Services Family Health 
Plan. I am honored to be here today to share this opportunity 
with my colleagues from the military beneficiary associations 
who serve our Nation's heroes and their families so well. U.S. 
Family Health Plan is proud to share in this commitment.
    My brief statement will focus on the successful partnership 
between U.S. Family Health Plan and the Department of Defense 
and our concern that a proposal contained in the President's 
budget request, if enacted, would prohibit us from caring for 
many of our Nation's heroes and their families. The President's 
budget proposal would end the U.S. Family Health Plan's ability 
to care for those beneficiaries who need it the most and is 
designed to undermine this highly effective program.
    Thirty years ago, the Congress directed that our 
organization continue the tradition of providing health care to 
uniformed services beneficiaries, including those age 65 and 
over. With the introduction of the TRICARE program, new 
legislation made us a permanent part of the Military Health 
System, establishing the U.S. Family Health Plan as a fully at-
risk managed-care model designed to provide comprehensive 
health care while maintaining cost-neutrality.
    Today, the U.S. Family Health Plan provides the TRICARE 
Prime benefit to nearly 115,000 military beneficiaries in 16 
States and the District of Columbia. The six not-for-profit 
health-care organizations administering the U.S. Family Health 
Plan are Johns Hopkins, Martin's Point Health Care, Brighton 
Marine Health Center, St. Vincent's Catholic Medical Centers of 
New York, CHRISTUS Health, and Pacific Medical Centers. As a 
proud partner with the Military Health System, our objectives 
are aligned with the Department's stated goals, which include 
readiness, the patient's experience of care, population health, 
and controlling per-capita costs.
    U.S. Family Health Plan continues to be the highest-rated 
health plan in the Military Health System. This year's 
independently administered satisfaction survey found that 91 
percent of our members rated our program highly, as compared to 
only 62 percent of members in commercial managed-care plans.
    With regards to cost, by statute total payments for health-
care services to enrollees of the U.S. Family Health Plan 
cannot exceed an amount equal to what the government otherwise 
would have incurred had our enrollees received care from 
alternative sources, whether those sources be military 
treatment facilities, TRICARE, or Medicare.
    Because we are reimbursed on a capitated basis, our 
financial incentives are aligned with our longitudinal approach 
to population health--namely, to engage our members in living 
healthy lives and preventing chronic illnesses that both 
diminish quality of life and disproportionately contribute to 
escalating health-care costs.
    Given our high level of beneficiary satisfaction and our 
success in adopting innovative strategies to improve health 
outcomes, we were disturbed that the President's budget 
proposes to require all new members to disenroll from our 
program at age 65, just when they need the benefits of our 
program the most.
    The proposal does not save the government any money. It 
would merely shift the cost of care for our older beneficiaries 
from the Department to Medicare. In doing so, military 
beneficiaries and their families, who choose our plan in large 
part due to our integrated approach to population health, would 
lose access to our highly effective prevention and medical 
management programs.
    It appears, then, that the budget proposal and its 
destabilizing impact on the U.S. Family Health Plan is in 
conflict with the stated goals of the Military Health System. 
Perhaps most concerning is the fact that, over time, thousands 
of aging military beneficiaries who need our help in managing 
complicated medical conditions simply won't have access to it.
    We understand the challenges the Department and the 
Congress face in needing to reduce costs, but the elimination 
of innovative programs like the U.S. Family Health Plan is 
counter to the goal of reducing government health-care costs. 
Accordingly, we urge Congress to reject this proposal and 
protect military families' and retirees' access to the quality 
of care they like, need, and deserve.
    Thank you very much for the opportunity to be here today.
    [The prepared statement of Ms. Cooke can be found in the 
Appendix on page 89.]
    Mr. Wilson. Thank you very much.
    And now we will begin with the 5-minute rule. And Ms. James 
is very precise in this.
    And as we begin, I want to thank all of you. And I wish the 
American people could see the level of dedication of the 
veterans service organizations. You represent millions of 
members of families who have put their faith in you. And the 
organizations here today, the persons who provided the 
different organizations' provided statements are so helpful. 
And so, you are the persons who have the background, and you 
are the people who use the systems we are talking about. It is 
also significant that it does not cost the taxpayers any money, 
so you are the correct example of stewardship.
    Yesterday, we had an extraordinary hearing with Dr. 
Clifford Stanley and Dr. Jonathan Woodson. And Dr. Stanley is 
special to me. He is a graduate of South Carolina State 
University, one of the great universities of South Carolina. 
And so I really am frustrated that, with their capabilities, 
that the President has named a military health-care czar, the 
former Governor of Maine, John Baldacci.
    We don't need a health-care czar. We have veterans service 
organizations that can provide this information. And as 
stewards of the taxpayers--this is not the government's money; 
it is the taxpayers' money--$164,000, plus expenses, I think 
are being diverted from the military health-care system. It 
could be done without any expense. And I really think the first 
thing that the Governor should do is step down. He could then 
create a savings of almost $200,000 by way of efficiencies.
    With that, indeed, we have people here today. And this is 
going to be tough. Each of you have 30 seconds to tell us how 
you would provide for an efficiency, beginning, obviously, with 
Mr. Strobridge.
    Mr. Strobridge. Sir, I think there are a lot of 
opportunities for efficiencies.
    We have engaged with the Defense Department, to a pretty 
significant degree, on the mail-order pharmacy system. Despite 
what DOD has done so far, there has been really only a 
relatively modest shift.
    And what we have advised the Defense Department is they 
have probably gotten most of what they are going to get from 
people who are motivated by the money savings. Our surveys 
indicate people who aren't shifting so far are doing so because 
they are worried about one aspect or another, they are deterred 
from taking that step.
    And we have talked to the Department of Defense about 
giving people that information ahead of time. They haven't done 
that so far, but we have been trying to work with them to get 
the most frequently asked questions, get those answers to those 
people, which will reduce their inhibitions about calling to 
try it. Because once people try the mail-order system, they are 
pretty satisfied with it.
    We think that is a huge potential savings.
    Mr. Wilson. Thank you.
    Mr. Barnes. Mr. Chairman, I would echo Steve's comments 
with regard to the mail-order pharmacy.
    As I noted in our statement, we also note that GAO has 
identified several opportunities for significant savings, 
including command structure reorganization, which could save 
estimates of in excess of $260 million to over $400 million 
annually within the Department.
    There are also opportunities with regard to greater 
interaction and coordination with the Department of Veterans 
Affairs with regard to electronic medical records. The AHLTA 
[Armed Forces Health Longitudinal Technology Application] and 
VistA [Veterans Health Information Systems and Technology 
Architecture] systems do not interact, despite significant 
resources that have been committed to both departments to those 
programs over the years. It is kind of mind-boggling. FRA has 
questioned why the VistA system was not the basis for 
developing the AHLTA system given the fact that we need to take 
care of our wounded warriors that transition from DOD to VA 
health care.
    So those are just a couple areas that we would recommend. 
Thank you.
    Mr. Wilson. Thank you.
    Mr. Jones. Exactly right. I echo both of those thoughts, 
particularly the AHLTA thing.
    AHLTA comes in with rave reviews from defense contractors, 
but the doctors seem to say it is a burdensome system. It is 
incompatible with VA, and DOD and VA have been working on 
finding a way to combine the electronic system for years. 
Charles Percy, Senator from Illinois, long ago, 1982, began the 
process. He said, we need to pull this electronic health record 
together.
    Mr. Wilson. Right.
    Mr. Jones. I would also point out that there are 
opportunities for this sort of combination of joint working 
between VA and DOD.
    In South Carolina, for example, in Charleston, South 
Carolina, there is a major veterans pharmaceutical distribution 
system right across the street from the hospital. We have sent 
people down there. And they had an oversight hearing last year, 
the Department, at the House Veterans' Affairs Committee, where 
there were problems in the mail order and distribution of 
pharmaceuticals. But it was pointed out that all you had to do 
was walk across the street to connect with VA to get this job 
done. So that is a major problem.
    Procurement reform is necessary in DOD. GAO pointed out 
several issues this past week in procurement reform. These are 
major issues and areas that we need to look at. And, of course, 
to incentivize the health-care mail-order system is important, 
as well. It can save a lot of money for beneficiaries, in 
particular, who we represent.
    Mr. Wilson. And, to be fair--and I apologize. We need to go 
immediately to Ms. Davis. I am subject to the 5 minutes, too, 
obviously.
    Mrs. Davis. Thank you, Mr. Chairman.
    So, why don't I let the rest of you finish with my time? Go 
ahead.
    Mrs. Holleman. Quickly, of course I agree with the 
suggestions already made.
    I think there should also be more of a focus on treating 
chronic illnesses. It has been discussed, it was discussed 
briefly, as all things were, yesterday, concerning the medical 
home and that pattern and that structure. Certainly, the 
government is looking at that. But that should really be a 
major, major focus, as it has been shown it saves money and it 
accomplishes the purpose of the health-care system. And USFHP 
is a prime example of how that works and how it saves money and 
improves lives.
    Mrs. Moakler. We, of course, agree with all the previous 
efficiencies that have been introduced. But we would like to 
re-emphasize that establishing a unified joint medical command 
structure would certainly introduce many efficiencies. As you 
know, we are a purple organization, and we feel that families 
would be best served by a joint command, a joint medical 
command.
    We also encourage the inclusion of recommendations of the 
Task Force on the Future of Military Health Care in this year's 
NDAA [National Defense Authorization Act]: restructuring TMA 
[TRICARE Management Activity] to place greater emphasis on its 
acquisition role; examining and implementing strategies to 
ensure compliance with the principles of value-driven health 
care; reassessing requirements for purchased care contracts to 
determine whether more cost-effective strategies can be 
implemented; and removing the systemic obstacles to the use of 
more efficient and cost-effective contracting strategies.
    Mr. Hanson. Medical and dental readiness continues to be 
having a big impact on Reserve Component mobilization. And as 
Dr. Heck pointed out at yesterday's hearing, if Reserve 
dentists and doctors were permitted to treat fellow reservists, 
this would save health dollars and help our Nation's readiness.
    Ms. Cooke. And I would echo the comments of my colleague, 
Mrs. Holleman. The best way to decrease health-care costs is to 
eliminate the medical conditions that diminish quality of life 
and contribute disproportionately to rising health-care trends. 
So I would suggest an upfront investment in prevention in 
programs to minimize and eliminate chronic conditions as a 
long-term efficiency.
    Mrs. Davis. Thank you so much. I appreciate everybody.
    Maybe I just want to really focus on your comments, Ms. 
Cooke, earlier especially, because I think, as it was explained 
to us yesterday, there is a difference in the capitated care, 
and so we are trying to really understand.
    I know prevention saves money. I believe that. When we have 
been looking at health care for the country, we have made that 
point repeatedly. Unfortunately, it doesn't score when you are 
trying to figure out what some of those best methods are. And 
that is a great frustration, even though you know that you are 
going to be able to do that.
    Can you explain a little bit better, then, how your plan 
actually saves money? And how has that been documented over the 
years?
    Ms. Cooke. Yes. Thank you for the opportunity.
    I will comment that the comments yesterday suggesting that 
there was a difference in cost, again, seem to us to be 
inconsistent with the law. And so we look forward to CBO's [the 
Congressional Budget Office's] scoring what this proposal would 
be, in that, by law, our costs cannot exceed what the 
government would pay.
    But with regard to managing chronic conditions, you know, 
the health-care industry faces the problem of, how do you 
quantify nonevents? How do you quantify the fact that certain 
people would have gotten diabetes and otherwise today do not?
    Throughout the six programs, we have over 40 disease 
management and care management programs. And so I will give an 
example of Johns Hopkins. We are very focused on research. We 
have one program that is called Guided Care that embeds 
clinical staff nurses in primary-care sites and provides them a 
panel of military retirees based on the chronic conditions that 
they have.
    And so there has been assessment that, because of that 
program, which focuses on not only engaging the member but 
visiting the member's home, engaging the family, understanding 
what community resources are, and actually developing a care 
plan for the military beneficiary that they keep on their 
refrigerator, with the clinical nurse sometimes accompanying 
them to specialty care services, has shown a decrease in costs 
with regard to repeat inpatient admissions and has also shown 
an increase in satisfaction with the member and the provider.
    Mrs. Davis. My time is up, but perhaps in the next round we 
will have a chance to come back or someone else could ask about 
how, given all that--and I appreciate what you are saying, 
because I believe that, but I also want you to show us how you 
could reduce costs, if needed.
    Ms. Cooke. Okay.
    Mr. Wilson. Thank you very much, Ms. Davis.
    We now have Dr. Joe Heck of Nevada.
    Dr. Heck. Thank you, Mr. Chairman.
    You know, what we heard when the other panel was here was 
this analogy or the comment made about that they are talking 
about the working-age retirees. So, potentially, somebody 
enlisted at the age of 18, retired at the age of 38, and what 
is going to happen from age 38 to, let's say, 65. And that 
individual may go on to a second career, maybe a very 
successful career, and be very well-off, and whether or not 
there should be some responsibility on that person's part or 
their new employer's part to provide some of their health-care 
coverage.
    I would like for you to address the counterargument and why 
that analogy doesn't really hold water.
    Mr. Strobridge. Yes, sir. I think we would like very much 
to address that.
    That is one of the problems I think we have with some of 
the DOD descriptions. You know, when they talk about working-
age retirees, there is almost an implication there that, if you 
go out and get a job, then, you know, you didn't really earn 
your health care. And from the perspective of the military 
people, they spend 20 or 30 years on Active Duty being told 
that if you put up with these conditions that other Americans 
aren't willing to put up with, then you will be provided a 
package of retirement benefits, including health care. And 
nobody in there said, ``Oh, but that doesn't apply if you go 
get a civilian job.''
    That is what gets military retirees so upset, because they 
fulfill all the conditions, all the extra sacrifices that the 
government imposes. And the government imposes no cap on the 
amount of sacrifices that they will extract. Once that service 
is rendered, all of a sudden some folks in the Administration 
want to seem to say, you know, that service has no value 
anymore, that, you know, if you get a civilian job, DOD has no 
employer responsibility to you even though you served as a DOD 
employee under those conditions for 20 or 30 years.
    To us, that is very important. That is why I mentioned in 
my oral statement, we think it is very important to have some 
statement in law, where there is none now, that states 
explicitly that military health care is one of the crucial 
offsets to the adverse conditions of service that is, in fact, 
an upfront and very substantial premium payment.
    And that would help defeat some of these arguments, I 
think, upfront that people want to devaluate the service and 
only compare cash to cash, which to us is an apple-to-orange 
comparison.
    Mr. Hanson. One of the arguments that we made for the 
existence of TRICARE Reserve Select was to improve the hire-
ability of members of the Guard and Reserve by having a health-
care plan that is exportable. That would help small employers 
know that, when they bring an individual in, that they are 
bringing a health-care plan with them.
    And this is one of the incentives that we have in place, 
because we are beginning to see problems with re-employment of 
people that have been deployed.
    And this same argument can be taken over to TRICARE for the 
Active Duty retirees, as well, because here is an experienced 
working pool that is needed by this Nation's economy, and if 
they have a TRICARE health to bring with them, as well, that 
means they can be hired by individuals who maybe couldn't 
afford equivalent people in the normal working place that 
didn't have a military background.
    Mr. Jones. Mr. Heck, Robert Gates, the Secretary of 
Defense, says these working retirees, as you described, are 
beneficiaries who were employed full-time while receiving full 
pensions, often foregoing their employer's health plan to 
remain on TRICARE.
    Well, it is apparent that some may find it very hard to 
understand, but the simple fact is that these men and women 
earned a retirement benefit, and they actually look forward to 
using it. It is a breach of moral contract to stump that 
promise that has been made to these folks.
    Mr. Barnes. Dr. Heck, I would add that this issue goes to 
military service being unlike any other career occupation. And 
there is a propensity to constantly focus on the dollar, the 
bottom line, and not on the commitment that was made and those 
that served in the past.
    Also, with regard to the enlisted force, those retired from 
the enlisted service, many of them do not have the high-paying 
jobs or the resources that are assumed when these discussions 
or when these points are brought forward.
    Also, approximately 1 percent of the population is 
shouldering the responsibility for defending our Nation. And 
the total amount of defense spending as a percentage of GDP 
[gross domestic product] is historically low during a wartime 
period compared to past periods of conflict. So, a couple 
observations to add to the discussion here.
    Thank you.
    Mr. Wilson. Thank you, everyone.
    Indeed, Ms. James is really tough on this 5 minutes. And I 
tell you, she punches me. You all don't see this.
    Congresswoman Niki Tsongas of Massachusetts.
    Ms. Tsongas. Thank you all for appearing before our 
committee today. It is an important issue, and I appreciate the 
insight that I am receiving from each of your testimonies.
    Yesterday, in the first of this series of hearings, I said 
that before Congress could increase TRICARE fees for working-
age retirees, any proposal on the table would have to be proven 
to minimize impact. It would be inexcusable, in my mind, to 
deprive our retired heroes of the health benefits they have 
earned.
    I also question the disparate impact of any increases on 
servicemembers who accrue less annual retirement benefits than 
others. As you all know, retirement benefits vary greatly 
depending on a number of factors, such as how long a person 
served and whether they were decorated for extraordinary 
heroism. The key metric, however, is the rank they hold, or 
held. Retired generals can earn robust six-figure sums in 
annual retirement benefits, whereas enlisted personnel may only 
earn benefits in the teens.
    Yesterday, in the first part of this series, I asked Under 
Secretary Stanley and Assistant Secretary Woodson if the 
Department had seriously reviewed any proposals for a stepped 
increase of TRICARE Prime fees for working-age retirees 
determined on the basis of rank at the time of retirement and 
retiree benefits earned.
    Assistant Secretary Woodson answered that the Department 
did not consider this proposal because it would be difficult to 
administer since the Department would want to take into 
consideration retirees' other streams of revenue--a statement I 
do not agree with.
    More importantly, though, he stated that it was unnecessary 
in this case because the fee increases that were proposed are 
modest. But he stated that, quote, ``If we were proposing large 
fee increases, I would agree with you strongly.''
    My question, then, to all of you is, do you agree or 
disagree with Dr. Woodson's assessment?
    And if we could begin with you, Mr. Strobridge.
    Mr. Strobridge. Yes.
    The Department, in fact, did propose tiering fee increases 
previously. The Military Coalition has been unanimous in 
opposing means-testing of military benefits. We don't have that 
for Federal civilian health care. The President pays the same 
as the lowest GS employee.
    One of the concerns, I think, is creating a situation 
where, the longer you serve and the more successfully you 
compete for promotion, you know, the less your benefit is. And 
we don't think that is a good incentive.
    But more and more, as I said in my oral statement, the 
military benefit package is considered the offset for the 
adverse conditions of service. You earn the package mainly by 
your service.
    And I would have to agree with the answer that was given 
yesterday; once you start trying to split it, basically what 
you are saying is, who can afford to do what? And I think they 
were accurate. Once you start to say who can afford to do what, 
you have to look at all of your income, and it ultimately 
drives you to looking at last year's tax return.
    And, to us, we don't think that ought to be based on what 
kind of job you get as a civilian. We don't think it ought to 
be based on your spouse's income or how much you inherited from 
a parent. Your benefit derives from your service, not from your 
grade.
    Mr. Barnes. I would agree with Steve's comments.
    Also, I think the comparison issue between military 
benefits and Federal civilian benefits is a real strong, 
compelling example with regard to that concept.
    There are also a number of variables, I think. And I was 
not at the hearing yesterday, but, from your description, it 
sounds like the Department is referencing the complexities of 
administering that, with regard to just retirement income or 
total household income or what have you, with calculating that.
    So I go back to the equity issue, the connection, and 
looking at Federal benefits. And that has been our position, 
and we concur with the Coalition's position.
    Mr. Hanson. The Reserve Officers Association doesn't 
support a tiered approach based on rank because it should be 
pointed out that reservists and Guards members have an income 
in their retirement that is 25 percent to 30 percent of what an 
Active Duty member does because of the fact that they are part-
time warriors. So it would be very unfair to charge someone in 
the Reserves the same amount based on tiering that you would do 
an Active Duty member.
    Mr. Wilson. And we are at the 5-minute situation.
    Colonel Allen West of Florida.
    Mr. West. Thank you, Mr. Chairman, Madam Ranking Member.
    And, a few years ago, there was an Army commercial that 
said, ``We do more before 0900 than most people do all day.'' 
So thank you, Mr. Chairman, for bringing that commercial back 
to life.
    With that being said, you know, this panel and this 
briefing today is very important to me and it is very personal 
to me. I had a father who served in World War II; he was a 
disabled American veteran. My older brother in Vietnam; also a 
DAV [disabled American veteran]. I did a couple years in the 
Army, myself, and now my young nephew is following in my 
footsteps. My father-in-law served two tours in Vietnam, and my 
two brothers-in-law served also in the United States Air Force.
    So when I sit here today, I think about a quote from George 
Washington, and I am paraphrasing, when he said that future 
generations of a nation will judge itself based upon how well 
we treat our veterans.
    So I think it is very important that we understand that 
what we are talking about here is not a benefit; it is 
something that people have been willing, when they raised their 
hand, that they were going to give their lives for. And I think 
that this Nation owes them that.
    However, I will ask this question to you. You know, when I 
first retired, I would, you know, spend my Fridays going down 
to the VFW [Veterans of Foreign Wars] post. But I found myself 
not being able to endure that too much longer because, you 
know, myself, being a very avid distance runner, the cigarette 
smoke was just absolutely choking me.
    So my question to each and every one of you today: We are 
talking about what has to be done on this side, but I think 
there is a responsibility, also, for those of us who have 
retired. And so, how do we develop initiatives that incentivize 
healthy living in our military retirees?
    I think that is very important, so I would like to get your 
thoughts on that. Thank you.
    Mrs. Moakler. I think that the military health-care system 
has already introduced some preventive-care programs within the 
MTFs. And some of those can be focused on diabetes, helping 
those who are prediabetic to keep from having full-blown 
diabetes. There are also programs aimed at weight loss and 
controlling obesity. And as a beneficiary myself, I have seen 
those programs offered within the MTFs. And, also, some the 
TRICARE contractors are creating those programs, as well.
    As with any benefit offered to our military servicemembers, 
our retirees, our survivors, it is communicating the 
availability of these programs and ensuring that our families 
and our servicemembers can take advantage of those programs.
    Mrs. Holleman. I thoroughly agree.
    The military life, everyone thinks of it as a healthy life, 
and it is not; it is a fit life. People are fit, but they 
aren't all that healthy in some of the habits they develop, in 
large part because of the pressures of that life--smoking, 
alcohol consumption, other things that can really affect long-
term health requirements.
    And I firmly agree that the MTF programs, the contractors' 
programs, the programs, again, mentioned for the U.S. Family 
Health Plan, that sort of thing, should be a focus. And, as 
Kathy Moakler said, it should be widely publicized. Because how 
many times do they say you have to say something before it gets 
in my head? I think seven, for ads. At least, that is what 
Crest seems to run on. And I think we have to do the same 
thing.
    Mr. Strobridge. Congressman West, I think one of the 
frustrating things is that there has been a lot of effort tied 
to that, sometimes to no avail. We actually had to get this 
subcommittee to pass legislation to get DOD to run a pilot 
program to have TRICARE pay for smoking-cessation programs. And 
even then we don't include Medicare eligibles in a lot of those 
incentive programs that we have, because, as Ranking Member 
Davis points out, you know, you end up with the scoring 
problems for Medicare eligibles and those kinds of things. So 
the budget rules actually inhibit us doing things that will 
encourage healthy life sometimes.
    Something else we think that needs to be done is eliminate 
the co-pays for those maintenance medications for people with 
chronic conditions. There are all kinds of studies out there 
that show that even a modest co-pay deters people from taking 
their medication.
    So there are lots of disincentives built into the system 
that I think we can still do. Unfortunately it seems too often 
take a law change to get DOD to do those.
    Mr. Wilson. We are precisely at 5 minutes, as I have been 
gently reminded by Ms. James. And our subcommittee is so 
fortunate to have people with experience. So we have a former 
sergeant in the Army, a former major of the Marine Corps, 
Congressman Mike Coffman of Colorado.
    Mr. Coffman. Thank you, Mr. Chairman.
    I have got a question about TRICARE fees. And why don't I 
start at this end for those groups who represent beneficiaries 
and go the other way. And here is my question. Would your 
organization support the proposed increase, $30 for 
individuals, $60 for family annually, if it were tied to a 
retired pay cost-of-living adjustment vice Medicare? And for 
those who say no, what if the increase didn't impact current 
retirees? What if it were grandfathered in and didn't start for 
2 years? Just different iterations of the same question.
    But the primary thing is going to this about limiting the 
adjustment to whether or not there is a cost-of-living 
increase. So if the cost-of-living increase were 1 percent, or 
there wasn't one, then it would be limited to the 1 percent if 
that were the case as opposed to whatever medical inflation 
was.
    Let us start with the Reserve Officers Association.
    Mr. Hanson. Thank you, Congressman.
    In short, a combination of the modest increases this year 
with an index base on COLA is something that ROA could not 
object to.
    The one concern that I have with how you phrase things is 
the setting up of generational differences in benefits to where 
one group is grandfathered and the next is charged more. That 
should be uniform across all people who serve.
    Mrs. Moakler. I agree with Marshall Hanson on that. Our 
association has agreed to the increase in fees even when they 
were first--the principle of increase in fees, even when they 
were introduced 4 years ago, and we have always maintained that 
they should be tied to COLA. And I also agree that creating a 
population of haves and have-nots is never a good thing with a 
military benefit.
    Mrs. Holleman. This question has been discussed in great 
detail and with some drama in my organization recently. After 
much discussion, TREA has found that we could agree to a COLA 
increase if that was absolutely necessary. Our people are 
dedicated. They are patriotic. They see the problems that are 
happening. But they see their problems, and they see their 
situations, and this is a very hard thing for them to make the 
conclusion.
    Mr. Jones. Mr. Coffman, thank you very much for your 
question. The 13-percent increase is modest in some people's 
eyes, but there is concern in our group that that increase is 
too steep. A 13-percent increase in Chinese military, as 
reported last week, can that be described as modest? I think 
the others would look at that in the same way we are looking at 
a 13-percent increase.
    We participate in retiree activity days across the Nation 
and overseas. We travel and meet with retirees at these 
opportunities that are on bases across the country. And what we 
have heard is the word ``grandfather.'' The grandfather word 
might be something that we would be attracted to, and we would 
certainly give it our very serious consideration. Thank you, 
sir.
    Mr. Barnes. Mr. Coffman, thanks for the question. I believe 
there is less opposition to what you are--or less concern in 
our association to what you are proposing than the current DOD 
proposal. But I have to state again that the oversight 
responsibility on this issue is key. DOD currently has the 
authority to adjust these fees apart from the USFHP part of 
this, which requires a legislative change. That goes back to 
1995 when TRICARE was established. So I think key to that, to 
answering this question, is consideration of those key aspects. 
Thank you.
    Mr. Strobridge. Congressman, I think we would have a hard 
time objecting to what you propose. We would put the caveat in 
there that we think it is important to put those principles in 
legislation to specify that the benefits or the health care 
package and retirement package is to offset the conditions of 
service, and that those, in fact, constitute an upfront 
premium, and that is why the COLA adjustment is reasonable. Is 
that a better deal than civilians get? Yes, it is. But 
civilians don't have to pay that upfront premium.
    Mr. Coffman. Thank you, Mr. Chairman. I yield back.
    Mr. Wilson. Thank you very much.
    I thank all of you. And I want to thank Congresswoman Vicky 
Hartzler of Missouri, who had been here, but she had a 9 
o'clock meeting. So she has just been a very valuable member of 
this subcommittee.
    As we proceed, in agreement with the ranking member, we 
will go through another round, and we will be asking a question 
each.
    The question I have for all of you--and we will begin in 
the reverse order with Ms. Cooke--and that is the proverbial 
question of pharmaceuticals. Should they be mail order, or 
should they be by pharmacy? I know that I found it very helpful 
to have a one-on-one contact with the local pharmacist. So not 
only could you let me know what you think about the mail order, 
but are there ways to reduce costs by using the local pharmacy?
    Ms. Cooke. I think there is a role for mail order. I think 
for beneficiaries who are on several routine maintenance 
medications, it may be more convenient for them to have those 
medications delivered to their home. But there are 
circumstances certainly for urgent conditions where having a 
relationship with the local pharmacist and being able to access 
those medications on a timely basis are critical.
    So I think there is not a one size fits all. I think to the 
extent that home delivery for maintenance medications is 
something that really should be considered, because I think it 
would save the Department money, but it could not necessarily 
offset people's right to receive urgent medications or exercise 
their options to receive it at the retail. So I think there is 
room for both.
    Mr. Hanson. The military coalition has worked hard with DOD 
Health Affairs to try and get beneficiaries to shift over to 
the mail-order system, and they are finding immediate savings 
by accomplishing this. So ROA, of course, supports this type of 
move. And to personalize it, both of my parents, who are in 
their late eighties, love the system because it saves them 
trips and constantly reminds them for refills.
    But as was pointed out in both my testimony and by my 
compatriot to my left, having some type of way that individuals 
aren't penalized when they have to go to a retail side with 
higher co-payments is something we have to explore and, I 
think, include in any type of system that we go to so that 
young families that have to do a late-night run to stop an ear 
infection don't pay higher prices just because they want to 
take people who have maintenance drugs and move them over to 
mail order.
    Mrs. Moakler. One of the things that we have discussed--of 
course, I agree with the statements of the two previous 
panelists, but one of the things we have discussed is education 
of the beneficiaries on how easy it is to use the mail-order 
pharmacy. Because people are reluctant. They are worried that 
they are not going to have enough pills. It can be difficult to 
make that initial start, especially if you are getting your 
prescription from a medical-treatment facility. But we do 
believe that not penalizing those servicemembers and family 
members who need that urgent medication or need a narcotic that 
they couldn't get sent through the mail order, they shouldn't 
be penalized with increased fees. But we do believe that the 
fees will promote greater efficiencies overall if more people 
use the mail-order pharmacy for their recurring medications.
    Mrs. Holleman. I agree with everything that the previous 
three people have said.
    I will also say that speaking to a pharmacist can be very 
helpful, particularly with an initial prescription. It is 
helpful if you are at the MTF. It is helpful if you are at a 
retail pharmacy. So I think it is obvious that we need both in 
the system. But for continuing maintenance drugs that you are 
taking for years and years, of course the home delivery is a 
very useful option.
    Mr. Jones. Home delivery is a useful option, and it saves 
the beneficiary and the Department of Defense taxpayers money. 
However, one of the things that could save money for the 
Defense Department and we feel is a primary reason for the 
higher costs in the pharmaceutical program is the lack of 
aggressiveness in pursuit of the Federal pricing schedule for 
the drugs they used in the Department.
    Some years ago we offered the opportunity for Federal 
pricing. It was projected to return $1.6 billion annually. 
Well, the lack of aggressive nature of the Defense Department 
in securing Federal pricing has resulted in one-third of that 
amount being received--well, $600 million. So we need a little 
more aggressive action on the part of the Defense Department 
and a little less blame on retirees.
    Mr. Wilson. And I apologize, Mr. Barnes, but my time is up. 
So I now proceed to Mrs. Davis.
    Mrs. Davis. Thank you.
    Why don't you just turn to some of the transition programs 
really quickly, because I know that a number of programs have 
been developed to respond to wounded warriors and their 
families. But when I speak to people, I always have the feeling 
that something is not quite connecting. If you could specify as 
quickly as possible, where do you see that gap? What is the 
problem?
    I think that we have also identified--I think a number of 
you did--in the data systems and being able to go from the DOD 
to the VA. But I am just wondering, is there something about 
the way the service could be improved that would enable that 
transition to be much smoother when it comes to our families?
    Mr. Strobridge. Are you talking about the transition 
between DOD and VA or----
    Mrs. Davis. Transition back to the community.
    Mr. Strobridge. Back to the community.
    One of the things that we have talked about consistently 
that is a chronic problem is mental health/behavioral health. 
DOD has made great strides--I mean, everybody and his brother 
is trying their best to do these kinds of things and to try to 
find ways that it can be done and delivered in a way that the 
beneficiaries are comfortable with.
    There is a lot of fear on this issue. The servicemember is 
concerned that if they identify themselves, they are going to 
hurt their career, in many cases with good reason. The family 
members are reluctant to come forward for fear of the impact on 
the servicemember, for fear of being stigmatized. There are 
programs under way to try to do those in ways that are not 
reported back to the Defense Department. Those get more 
participation, but they don't identify the problem to DOD.
    So there is a chronic issue, and I have to think that the 
key is going to be the destigmatization effort. And I think we 
have a problem with the senior leaders talking 
destigmatization, but when it comes to the unit, if you come 
forward, you are stigmatized. And until that changes, until the 
action matches that rhetoric, I think we are going to continue 
to have a problem.
    Mr. Barnes. Congresswoman, excellent question. I would echo 
Steve's concern. And I will tell you from my experience when I 
was on Active Duty, having something about counseling in my 
record, it was like you just don't go there. And the stigma 
issue is huge, and it is going to take a long time to turn that 
around.
    Another aspect of this is family readiness, awareness of 
programs. Despite significant resources being committed to 
these across the services in the Department, we still hear 
story after story about spouses, family members and sometimes 
servicemembers that are not aware of programs and services that 
are available to them.
    Going back to the seamless transition issue, which I have 
to plug here, the bureaucratic challenges associated with the 
Department of Defense and the Department of Veterans Affairs 
for these wounded warriors and what they have to deal with is 
still very challenging. The special oversight committee is 
faltering. Great concept, but oversight is needed continually 
on this, and there needs to be a lot more done to effect 
seamless transition and take care of these wounded warriors and 
their families.
    Mr. Hanson. One challenge that we have, ma'am, is the 
duration that individuals are placed in these transitional 
programs. In some cases individuals are discharged as being fit 
when not all of their problems are recognized and recorded. In 
other cases you have individuals who are kept on medical hold 
because of the duration it takes to go through medical 
evaluation boards and physical evaluation boards. So these are 
things that need to have oversight and review, because it is 
not doing justice to our young warriors.
    Mrs. Moakler. We would also like to look at some bridge 
programs for our servicemembers and families who are being 
medically retired or medically discharged. Our association has 
promoted the idea of a 3-year Active Duty benefit for those 
servicemembers who are medically retired. We know they are 
still eligible for TRICARE as a retiree, but it would be 
similar to the survivor benefit. It would help them in those 
transitioning years with costs, with letting them use a system 
that they are familiar with as they transition into the 
community.
    I know we haven't talked about families with special needs, 
but perhaps providing 1 year of an ECHO [extended care health 
option] benefit for those families with disabilities, be they a 
wounded family that is being medically retired or even a 
retired family after 20 years who hasn't been able to settle in 
the community where they are going to make their final 
retirement.
    Mr. Wilson. Thank you all.
    And Congressman Allen West of Florida.
    Mr. West. Thank you, Mr. Chairman.
    I would like to go back to the question that I had 
previously asked, because I know there were some people that 
wanted to respond to that, because I think that when you look 
at the nature of military service, it really is Pavlovian in 
nature. I mean, we do reward people for the right type of 
behavior. So I really believe that if we are, you know, serious 
about how we can lower the cost for military retiree health 
care, then how can we make sure the military retirees are 
healthy? So I know that there were some people that still want 
to chime in on that. So, please.
    Mr. Jones. Yes, sir. It is an excellent question, and we 
appreciate the quotation from Washington. We used the quotation 
in our testimony. And the thought that the perception was so 
key, that we all should be able to recognize that. Those who 
will be coming into service tomorrow do reflect on how today's 
veterans in the military are being treated.
    You asked a question about how do we encourage individuals 
to maintain their public health, maintain their individual 
health. And you mentioned smoking and running and those sorts 
of things, which are key. Well, we do that not necessarily by 
government, but we do that necessarily by example and by 
appreciation. We note a lack in our communities of a community 
sense, of a community spirit. We see it with the litter on the 
highway. We see it with the lack of appreciation for people who 
excel. We see it for all sorts of things.
    What we are looking for is something like what was given--
apologies to Niki Tsongas of Massachusetts. Some years ago, 
Michael Strahan retired from football, the New York Giants. 
They had just won the Super Bowl, beating the previously 
undefeated Patriots. And Strahan was speaking with George Mara, 
the president of the Giants, and Mara said that Strahan thanked 
him and thanked the organization for all they had done for him. 
And Mara simply said, it is not the organization that you 
should be thanking. He said, I think you have done more than we 
can ever do for you. That is the example of excellence, and 
that is the example we need to have reflected in our 
communities.
    We know that there are, what, 20 percent of Americans today 
that are not ready physically to become a servicemember. We 
need to incorporate physical education in our schools. We once 
did. In my youth certainly; I am not sure in your youth, sir.
    Mr. West. Yes. Okay.
    Mr. Jones. But in my youth we had physical education, and 
it was a regimen. People enjoyed it. Dodgeball was a fun game.
    Mr. West. Unless you got hit in the head.
    Mr. Jones. You get hit in the head, you learn the game 
better. You always learned how to play the game a little bit 
better.
    But these are the things that the community--a sense of 
community and understanding and example. And you set a fine 
example, And there are so many other Americans today who are 
setting that example. And we try to do that with our 
preventative care in the hospital system, to encourage people 
to take the right course. Certainly we save a lot of money in 
insulin and diabetes and those sort of things if we can capture 
it early.
    And I appreciate you giving me the opportunity to speak on 
this issue. It is very important. We do it by example, not 
necessarily by government.
    Mr. Barnes. Congressman, I would thank for your service and 
thank you for the question.
    A couple of observations here with regard to your 
description of the VFW hall and the smoking is indicative of a 
demographic issue. We in our association are working to 
communicate with three generations, in essence: those currently 
serving, and those in between, and those that go back through a 
number of conflicts, into World War II and some before that. 
And communicating to them education awareness is key.
    The communications aspect of this, this goes to the use of 
the mail-order pharmacy issue, too. Awareness is a great deal 
of anxiety in certain demographics about trying something new 
and whatever. I will tell you I am enrolled in the medical home 
in Bethesda, and there are new efforts that are trying to be 
implemented, communications electronically and what have you, 
to help address some of these things. But I think the starting 
point is understanding the demographics and the perceptions of 
these different groups and trying to communicate and educate 
them about the importance of healthy lifestyles and changing 
some bad habits.
    Mr. West. Well, thank you.
    And, Mr. Jones, I will absolutely agree with you, it is 
leadership by example. That is the key thing. So next time I 
will ask Mr. Chairman if he will join me at 5:00 in the morning 
for a 6-mile PT [physical training] run.
    But thank you very much, and I yield back.
    Mr. Wilson. Well, I am willing to take you up for a 5-mile 
walk. I have got my pedometer.
    And we will be concluding with a question from Congressman 
Mike Coffman from Colorado.
    Mr. Coffman. Thank you, Mr. Chairman.
    Maybe you all could give me some--if we were to focus on 
the delivery process, and I will include family health care, 
individual in there as well. What specific changes do you think 
we can make to contain the costs? In other words, is there room 
to maneuver in terms of saying that there has got to be some 
kind of primary-care gatekeeper that one has to see before 
accessing a higher-priced specialist, particularly those people 
outside the network? And that might be sort of the Kaiser model 
of a nurse practitioner or a physician's assistant. I mean, are 
we doing enough in terms of cost containment at that level, 
particularly in primary care? Let me start with the U.S. Family 
Health Care Plan.
    Ms. Cooke. From a delivery process, I think it is less 
about the gatekeeper; it is integration. So almost 100 percent 
of beneficiaries enrolled in our plan have a primary-care 
manager, and it is the credibility and trust of the 
relationship. So it eliminates duplication of services. So that 
is one cost-cutting measure. There is a relationship there, so 
there is not a knee-jerk reaction to send the beneficiary off 
for specialty care or to send them off for urgent care when, in 
fact, they have the primary-care physician that understands 
their medical history and can provide that care. So I think 
that is critical.
    Also, there is a value in understanding the complete 
picture of the beneficiary, not just having access to their 
inpatient or primary-care claims. It is really understanding 
what medications the beneficiary is on, utilizing health-risk 
assessments, engaging the beneficiary in their health.
    Mr. Coffman. I am sorry to interrupt you, but time is 
short. If I am a beneficiary--and I will be soon. I just 
received my letter for TRICARE. And so let us just say I make a 
decision that I think I have got diabetes, or there is 
something wrong where I want to see an endocrinologist, and I 
make that assessment. Can I do that? Can I make that decision 
myself and access a specialist?
    Ms. Cooke. Not according to the TRICARE Prime benefits. You 
would have to receive a referral. But again, if you were 
enrolled in a program that has a diabetes care management, 
disease-management program, even if you didn't raise your hand, 
you would be identified and sought out for active participation 
and have that managed.
    Mr. Coffman. Because I think that is one of the issues in 
terms of escalating health care costs is when you don't have a 
primary-care gatekeeper there, and people are making decisions 
that have direct access to specialty care without going through 
some type of gatekeeper process that says we can really do this 
at a lower cost here at this level instead of seeing a higher-
cost specialist.
    Does anybody else want to comment on that?
    Mr. Hanson. As Ms. Cooke pointed out, TRICARE Prime across 
the board with all the contractors has primary-care managers 
that try and control this. We have been briefed by DOD that the 
real costs that they are facing isn't so much the care that 
comes out of that program, but by the fact that so many people 
who are beneficiaries go directly to emergency care, which pops 
the care way up, and they are trying to find ways of bringing 
urgent-care centers and other ways of doing it to reduce the 
care there.
    Mr. Coffman. Okay. Good point.
    Mrs. Moakler. I think it is also interesting, our 
association, of course, is a big promoter of TRICARE Prime, but 
TRICARE Prime is not the entry to the benefit. We have so many 
of our beneficiaries who are not enrolled in TRICARE Prime 
either because of geographic reasons, or they choose not to be, 
but who are on TRICARE Standard. And I think it might be 
interesting to contrast those who are in TRICARE Standard who 
may be cobbling together their medical care and contrast their 
costs, mostly which are out of pocket but there is a cost to 
DOD, with those who are in managed care and have primary-care 
managers.
    Mr. Strobridge. Congressman Coffman, I think one of the big 
problems, you know, that we have sort of touched around here is 
the Department of Defense spends a lot of time on TRICARE 
Prime. We have talked before about this subcommittee's effort 
to put something in law requiring DOD to establish these 
healthy care kind of programs, which they did for TRICARE 
Prime, but they don't have those kind of chronic-condition 
programs for TRICARE Standard or the people over 65 under 
TRICARE for Life, yet we know who the diabetics are, we know 
who the high-cost people are. To us, there is a great 
opportunity to reach out to those people not to control their 
care, but to urge them to participate in these kinds of 
management programs.
    Mr. Coffman. Thank you.
    And I just want to assure Lieutenant Colonel West that what 
happens in the VFW hall stays in the VFW hall.
    I yield back, Mr. Chairman.
    Mr. Wilson. Thank you very much. I thank all of you.
    And at this time, Mrs. Davis, if there is no further. Oh, 
pardon me. Please.
    Mrs. Davis. Thank you, Mr. Chairman.
    I think that you have a lot more to say about this issue 
and how we work some of this and some of the questions to ask. 
So we certainly welcome you to, if you would like to put some 
of that in writing, to do that or to communicate with us in 
whatever way you prefer in our offices.
    I really appreciate the fact that we have to work through 
this. And I feel as if I don't have as good of information from 
the DOD as we might like to understand better the real impacts 
on some of this and whether or not we actually are not so much 
comparing apples to oranges as much as understanding the 
impacts that some of these changes may bring about, and, in 
fact, whether we are doing all that we can in terms of this 
prevention issue.
    If we are doing what I think Ms. Cooke has said, and if we 
are trying to bring about many of those economies of care and 
making for healthier people through this, then it ought not 
cost so much more. We ought to find a better way to do that. 
And I am hoping that we can work through this as we move 
forward. Thanks a lot.
    Mr. Wilson. Thank you.
    And I want to join in with Mrs. Davis. All of the members 
of the subcommittee are available and want to hear from you, 
meet with you.
    Also I want you to know what an extraordinary resource we 
have with Jeanette James. She herself has been a nurse. So we 
are very grateful for her service as the professional staff 
working with John Chapla. What a great team. VMI graduate. So 
we are very grateful.
    And at this time, we shall adjourn.
    [Whereupon, at 9:28 a.m., the subcommittee was adjourned.]
      
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