[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                         [H.A.S.C. No. 113-109]

                   BENEFICIARY AND ADVOCACY OVERVIEW
                        OF THE FISCAL YEAR 2015
                           PRESIDENT'S BUDGET

                               __________

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON MILITARY PERSONNEL

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             APRIL 9, 2014


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                   SUBCOMMITTEE ON MILITARY PERSONNEL

                  JOE WILSON, South Carolina, Chairman

WALTER B. JONES, North Carolina      SUSAN A. DAVIS, California
JOSEPH J. HECK, Nevada               ROBERT A. BRADY, Pennsylvania
AUSTIN SCOTT, Georgia                MADELEINE Z. BORDALLO, Guam
BRAD R. WENSTRUP, Ohio               DAVID LOEBSACK, Iowa
JACKIE WALORSKI, Indiana             NIKI TSONGAS, Massachusetts
CHRISTOPHER P. GIBSON, New York      CAROL SHEA-PORTER, New Hampshire
KRISTI L. NOEM, South Dakota
                Craig Greene, Professional Staff Member
                 Debra Wada, Professional Staff Member
                           Colin Bosse, Clerk

























                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2014

                                                                   Page

Hearing:

Wednesday, April 9, 2014, Beneficiary and Advocacy Overview of 
  the Fiscal Year 2015 President's Budget........................     1

Appendix:

Wednesday, April 9, 2014.........................................    21
                              ----------                              

                        WEDNESDAY, APRIL 9, 2014
 BENEFICIARY AND ADVOCACY OVERVIEW OF THE FISCAL YEAR 2015 PRESIDENT'S 
                                 BUDGET
              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

Hayden, Col Michael F., USAF (Ret.), Director, Government 
  Relations, Military Officers Association of America; Co-Chair, 
  The Military Coalition.........................................     3
Jones, Rick, Legislative Director, National Association for 
  Uniformed Services; Co-Director, National Military and Veterans 
  Alliance.......................................................     5

                                APPENDIX

Prepared Statements:

    Hayden, Col Michael F........................................    26
    Jones, Rick..................................................    71
    Wilson, Hon. Joe.............................................    25

Documents Submitted for the Record:

  Statements from:
    Air Force Association........................................    98
    Association of the United States Army........................    89
    Military Officers Association of America.....................   153
    National Military Family Association.........................   114
    Reserve Officers Association of the United States............   100
    The American Legion..........................................   151
    U.S. Naval Sea Cadet Corps...................................   149
    Veterans of Foreign Wars of the United States................   143

Witness Responses to Questions Asked During the Hearing:

    Mrs. Davis...................................................   165

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]

 BENEFICIARY AND ADVOCACY OVERVIEW OF THE FISCAL YEAR 2015 PRESIDENT'S 
                                 BUDGET

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                        Subcommittee on Military Personnel,
                          Washington, DC, Wednesday, April 9, 2014.
    The subcommittee met, pursuant to call, at 2:02 p.m., in 
room 2118, 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. Ladies and gentlemen, I would like to welcome 
everyone to a meeting of the Military Personnel Subcommittee of 
the House Armed Services Committee. The hearing will come to 
order.
    As we proceed, we will be hearing testimony from the 
representatives of The Military Coalition and the National 
Military and Veterans Alliance about military personnel issues 
addressed in the President's budget submission for fiscal year 
2015.
    Veterans service organizations are vital to providing 
firsthand advice and counsel to Members of Congress, and we 
really appreciate you being here today.
    Maintaining an All-Volunteer Force that has experienced 
almost 13 years of persistent conflict is paramount for our 
national security. The subcommittee remains committed to 
ensuring that the men and women of our Armed Forces, military 
families, and the retirees who have served before them receive 
the benefits and entitlements they deserve.
    The President's budget significantly reduces ground and air 
force end strength and slows the growth of compensation and 
personnel benefit programs for all service members, shifting 
spending to other programs.
    Our focus today is to discuss with the beneficiary and 
advocacy organizations that represent military members, their 
families, and retirees the reductions the Department 
[Department of Defense] is proposing to create efficiencies in 
personnel programs, to include pay, compensation, and health 
care, and whether these proposals should wait until the 
commission on military compensation is complete with its review 
and recommendations.
    Before I introduce our panel, let me offer Congresswoman 
Susan Davis, the ranking member of the committee, of 
California, an opportunity to make her opening remarks.
    [The prepared statement of Mr. Wilson can be found in the 
Appendix on page 25.]

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

    Mrs. Davis. Thank you. Thank you, Mr. Chairman.
    Thank you both for being here.
    I also want to welcome our beneficiary representatives, 
Michael Hayden, who is representing The Military Coalition, and 
Rick Jones, who is representing the National Military and 
Veterans Alliance, big responsibility. A lot of people behind 
you. Thank you both for being here to represent a collection of 
military and veterans organizations.
    We know that there were many organizations that would like 
to have testified before the committee, and so we have a number 
of their written testimonies that will be submitted for the 
record. And, as you know, we could not accommodate everyone's 
desire.
    It has been several years since we had the beneficiary 
organizations before the subcommittee. I believe that the last 
beneficiary hearing also focused on proposed changes to the 
defense health system that was included in the President's 
budget. And here we are again, only this time the proposals 
being put forth are even more extensive than just military 
health care.
    And so the committee is faced with assessing the impact of 
several personnel and healthcare proposals that have been 
included in the President's budget. These include a 1 percent 
pay raise for the force, except for general and flag officers, 
who would receive no pay raise in fiscal year 2015; an increase 
in the out-of-pocket expenses for housing; a reduction in 
appropriated support for the commissary system; travel and 
transportation benefit changes; and a restructuring and fee 
increase for the TRICARE system.
    Individually, you know, maybe to some, that does not seem 
significant, and the All-Volunteer Force may be able to 
withstand these changes. However, we know that that is not the 
case, that these changes are all being proposed as a package, 
combined with significant drawdown in end strength for the Army 
and for the Marine Corps, the realignment of forces in the Air 
Force, and an improving economy, which does have an impact, we 
know--which is a good thing, but it also has an impact. There 
is concern that the collective change may have an adverse 
impact on service members and their families and that they will 
vote by leaving the Armed Forces.
    Our Nation, as we know, is facing difficult economic times. 
With the threat of sequestration in fiscal year 2016 and 
beyond, the Department will be faced with making very difficult 
decisions. And if we do not make any changes to personnel 
costs, it will mean that there will be less resources for those 
who do remain in uniform to train and be prepared to win our 
Nation's wars.
    That said, I also think that we need to take into account 
the work of the Military Compensation and Retirement 
Modernization Commission to ensure that we understand the 
cumulative effects of all of these changes and the potential 
impact to the recruitment and the retention of the All-
Volunteer Force.
    We need to work together, and I know the chairman shares 
that--to find a way forward that will continue to ensure the 
benefits are there for those currently serving, especially 
those who are in harm's way, and to ensure that the benefits 
being provided are sustainable into the future. I look forward 
to a productive dialogue on your thoughts of how we can move 
forward.
    Thank you, Mr. Chairman.
    Mr. Wilson. Thank you, Ms. Davis.
    Now I would like to welcome our distinguished witnesses:
    Mr. Michael F. Hayden, Colonel, U.S. Air Force, retired, 
the Director of Government Relations for the Military Officers 
Association of America, MOAA. Colonel Hayden is representing 
The Military Coalition.
    And Mr. Rick Jones, Legislative Director, National 
Association for Uniformed Services. Mr. Jones is representing 
the National Military and Veterans Alliance.
    I ask unanimous consent to enter a statement from the 
Association of the United States Army, the Air Force 
Association, the Retired Officers Association, the National 
Military Family Association, the Veterans of Foreign Wars, the 
Military Officers Association of America, and the U.S. Naval 
Sea Cadets into the record.
    Without objection, so ordered.
    [The information referred to can be found in the Appendix 
beginning on page 89.]
    Mr. Wilson. Colonel Hayden, we will begin with your 
testimony.
    As a reminder, statements are to be held to 5 minutes. And 
Craig Greene is going to make sure all of us stay within the 5-
minute rule. He is above reproach on his ability to keep time.
    And then, following your presentation, Mr. Jones. Look 
forward to this, obviously. And we do have your written 
testimony. Following each of your testimony, we will have 
rounds of 5 minutes each until adjournment.
    So we now proceed with Colonel Hayden.

  STATEMENT OF COL MICHAEL F. HAYDEN, USAF (RET.), DIRECTOR, 
GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF AMERICA; 
                CO-CHAIR, THE MILITARY COALITION

    Colonel Hayden. Chairman Wilson, Ranking Member Davis, and 
distinguished members of the subcommittee, on behalf of our 
coalition partners, I thank you for providing the opportunity 
to testify today on the fiscal year 2015 budget proposals by 
the Department of Defense.
    At the heart of the budget challenges facing the Department 
is the devastating effect of sequestration. Although the 
Bipartisan Budget Act of 2013 mitigated the sequestration 
spending cuts for fiscal year 2014 and 2015, the original 
sequestration cuts for 2016 and beyond remain in effect and, we 
believe, will place national security at risk if continued.
    The coalition strongly urges Congress to eliminate 
sequestration and fund our military levels that enable our 
components of the Armed Forces to be adequately manned, 
trained, and equipped to focus on the mission.
    While debt reduction is a national priority, we believe 
such a disproportionate share of this burden must not be 
imposed on the Pentagon and especially on the backs of the 
military members and their families. No Federal obligation is 
more important than protecting national security, and the most 
important element of national security is sustainment of a 
dedicated, top-quality, career uniformed force.
    The past 12 years of unprecedented demands and sacrifices 
highlight how radically different military service conditions 
are from civilian life. The only times the All-Volunteer Force 
has been jeopardized has been through budget-driven cutbacks in 
the military compensation package that gave insufficient weight 
to the extraordinary demands and sacrifices inherent in a 
service career.
    Yet budget critics persist in asserting that military pay 
and benefits since 2000 are unsustainable and they should be 
slashed to resemble civilian benefit packages. We believe it is 
important to put the growth-since-2000 argument in the proper 
context to understand why military pay and benefits rose faster 
than the average American's from 2000 to 2010.
    Has cost growth gone up since then? Yes, certainly. But 
using 2000 as a baseline without reflecting on the historical 
context is grossly misleading. This implies that the turn of 
the century was an appropriate benchmark for estimating what 
reasonable personnel and healthcare spending should be, and 
nothing could be further from the truth.
    At that time, years of budget cutbacks had depressed 
military pay to where a 13.5 percent pay gap existed. It cut 
retirement value by 25 percent for those post-1986 entrants. It 
had military families paying 18 to 20 percent out of pocket for 
their housing costs. And it booted beneficiaries over the age 
of 65 completely out of the military healthcare system.
    As a result, retention was on the ropes and the Joint 
Chiefs of Staff at the time were imploring Congress to fix the 
problems to prevent a readiness crisis. And Congress worked 
diligently over the next decade to restore military pay 
comparability, to repeal the retirement cuts, to zero out the 
housing costs, and to restore promised health care for older 
retirees. And the coalition thanks you for that. In other 
words, the cost growth was essential to keep the previous 
cutbacks from breaking the career force.
    Since then, Congress has implemented changes that have 
slowed the growth to personnel: a 16 percent increase to 
TRICARE Prime enrollment rates and significant increases to 
pharmacy fees. And both will continue to increase in the future 
years at the rate of inflation. A mandatory mail-order pilot 
for maintenance meds for TRICARE for Life beneficiaries was 
also implemented.
    End-strength reductions to the tune of 124,000 service 
members have already been started by the services, and this 
budget calls for an extra 78,000-plus in end-strength cuts. 
Since 2010, pay raises have dramatically slowed. They have 
either kept pace with the private sector pay or, in the case of 
this year, they have been capped below private sector.
    The fact is that, since 2000, personnel and healthcare 
costs experienced an average of about a 7.6 percent rate of 
growth. But that cost growth was essential to keep the previous 
compensation cutbacks from breaking the career force. And, 
since 2010, personnel cost growth has already slowed to less 
than 2 percent per year.
    Between the fiscal year 2014 and 2015 pay caps, this 
proposed BAH [Basic Allowance for Housing] change, the planned 
reductions in the commissary, and the new healthcare fees, an 
E-5 family of four would experience nearly a $5,000 loss in 
purchasing power annually. For an O-3, that family of four 
would experience nearly a loss of $6,000 annually.
    These budget proposals would be major steps backwards 
towards repeating the insidious measures which led to retention 
and readiness problems in the past and would undo the needed 
compensation improvements Congress put into place since 2000. 
These piecemeal reductions are doubly inappropriate since the 
congressionally directed commission could be offering even 
broader reforms next year.
    America will remain the world's greatest power only as long 
as it continues to fulfill its reciprocal agreement to the only 
weapons system that has never let our country down, and that is 
our extraordinary, dedicated, top-quality All-Volunteer Force.
    Thank you, and I look forward to your questions.
    [The prepared statement of Colonel Hayden can be found in 
the Appendix on page 26.]
    Mr. Wilson. Thank you so much, Colonel. And we appreciate 
your insight that you have presented.
    Mr. Jones.

    STATEMENT OF RICK JONES, LEGISLATIVE DIRECTOR, NATIONAL 
   ASSOCIATION FOR UNIFORMED SERVICES; CO-DIRECTOR, NATIONAL 
                 MILITARY AND VETERANS ALLIANCE

    Mr. Jones. Chairman Wilson, Ranking Member Davis, and 
members of the subcommittee, thank you for the opportunity to 
appear before you this afternoon.
    National Military Veterans Alliance member organizations 
are deeply troubled by the administration's budget plan, 
constrained as it is by a cap limiting national security 
resources. The plan makes steep reductions in force structure, 
compensation, and benefits that we cannot support.
    Certainly, progress must be made against the deficit and 
national debt; however, defense spending is not the driver of 
our national deficit or debt. It is a declining percentage of 
our Nation's total economy. It is less than 18 percent of the 
total Federal spending. Yet, under sequester, defense faced 50 
percent of the cuts. It is disproportional. It is 
disproportional by any measure, cutting defense too deeply, too 
steeply, too quickly.
    We were told it would never come into effect, yet we are 
now in year 2 of this blunt approach. Sequestration was bad 
policy when suggested, it was bad policy when accepted, it was 
bad policy when it began, and it remains bad policy to let it 
continue. To allow sequester-level cuts to persist would be a 
huge strategic miscalculation. It is not in our country's best 
interest. The National Military and Veterans Alliance urges you 
to end sequestration on national security spending.
    Regarding the Pentagon proposals, the proposals include 
lower pay raise, increased out-of-pocket costs for housing, 
lower savings at the commissaries, increased TRICARE fees. The 
administration calls this a reasonable approach. In making the 
case for higher TRICARE fees, Comptroller Robert Hale said 
``Fee hikes would bring money to the Pentagon needed for 
readiness.'' Secretary Hagel said, ``We have to burn personnel 
costs to save readiness.''
    Alliance organizations are all for military readiness. This 
is a perilous time. Failure to ensure readiness presents an 
unacceptable risk to our Nation and her troops. Readiness, 
however, is the responsibility of all Americans. Peace and 
national security are the most basic duty of the people as a 
whole. We can't just place the burden on the backs of our 
service members.
    We commend members of the subcommittee for rejecting 
previous plans to increase TRICARE fees. Pentagon leadership 
used to say TRICARE costs were crippling national security, 
eating us alive. In a letter to former Secretary Panetta, you 
recognized that, instead of draining resources, the TRICARE 
account served as a cash cow. It was raided to pay for cost 
overruns in other programs. You noted that, in 2012, $708 
million was stripped out of the TRICARE account, $772 million 
taken out in fiscal year 2010, a whopping $1.36 billion taken 
in fiscal 2011, and in fiscal 2013 $800 billion moved.
    TRICARE is the most important noncash benefit provided to 
those who serve a career in the military. It is a promised 
benefit, part of a moral contract for a force that has served 
us well. To uphold this moral contract with our men and women 
in uniform, their families, and military retirees, we urge 
rejection of the new Pentagon plan to set participation fees 
for TRICARE programs.
    On commissaries, you know that commissaries are a core 
benefit of the military family, an integral part of total 
compensation. Military families see a 30 percent savings in 
shopping at commissaries. They save up to $4,400 a year. The 
Pentagon plan would crush that savings, hitting families right 
in the pocketbook.
    The strangulation plan the Pentagon has foisted out would 
mean higher prices at the commissaries, making commissary 
shopping less attractive, resulting in fewer customer visits 
and diminished sales. It would also cause a deep drop in sales 
at exchanges--exchanges which pay for Morale, Welfare, and 
Recreation programs, such as child care and sports programs for 
the family.
    Let me take an opportunity to praise this panel and the 
full committee for its passage, as part of the 2010 National 
Defense Authorization Act, the Military and Overseas Voter 
Empowerment Act. The MOVE Act has removed many of the obstacles 
for voting, particularly for members overseas. It has been 
effective, but, like everything on Earth, it is not perfect. We 
are asking you to take a second look at this and to consider 
ending the waiver for States that miss the 45-day deadline to 
mail ballots to those who request the right to vote.
    We also ask you to take a look at the SBP-DIC bill 
[Survivor Benefit Plan and Dependency and Indemnity 
Compensation], concurrent receipt, and a number of other issues 
that are outlined in the written testimony.
    Thank you again very much for the opportunity to testify.
    [The prepared statement of Mr. Jones can be found in the 
Appendix on page 71.]
    Mr. Wilson. Thank, again, both of you for being here today. 
It really has been so helpful to all of us, in a bipartisan 
manner, for the information that you have provided to correct 
some misstatements that have been made to this committee about 
eating the healthcare budget alive. The research that was 
provided was very helpful to us so that we could best represent 
our constituents. So thank you very much.
    And, indeed, the point needs to be made, defense spending 
is not driving the national debt; that, indeed, the primary 
function of the national government should be national defense. 
And so thank you for what you are doing to protect American 
families.
    And defense sequestration, it needs to be addressed. And we 
will be having budget votes in the next 24 hours. And I am very 
pleased, and good people can disagree, but Congressman Paul 
Ryan does include addressing defense sequestration in one of 
the votes we have tomorrow.
    For both of you, the three options for TRICARE have allowed 
family members and retirees to choose the best option for their 
family. There is an effort promoting that just one TRICARE 
option would be provided to streamline the system.
    What do you think of these changes, and how would it impact 
retirees?
    And how will the co-pays impact retirees, Colonel?
    Colonel Hayden. Thank you very much.
    This consolidation effort, as we look at it, where you take 
the TRICARE Prime, Standard, and Extra program and you 
consolidate it into one, which much more looks like the old 
CHAMPUS program from years back, is, from our perspective, the 
service members, to include not just the retiree population, it 
is also going to impact the currently serving family members, 
that they are going to be paying more and they are going to get 
less of a program associated with it.
    For example, under the program, you take what is the 
TRICARE Prime enrollment fee, they relabel it as a 
participation fee. They keep the same value and keep it tied to 
the cost-of-living adjustments for that retiree. And what you 
end up losing here is the access standards that were guaranteed 
under TRICARE Prime so that you would be guaranteed to be able 
to get an appointment either in the MTF [military treatment 
facility] or in the network associated with it. And that was 
the whole purpose behind paying the enrollment fee in the first 
place.
    On top of it, for the retirees over age 65, a rehash of 
what was somewhat the proposal from last year, that under this 
they still wanted to do an enrollment fee for the TRICARE for 
Lifers over age 65. And this time it is capped at 2 percent of 
the retiree's pay. And there are some caps associated with it 
for those that are
O-6s and below, as well as a higher cap for those in the out-
years for general officers and flag officers.
    The real issue is that we just think that this is--and it 
just flies in the face of the entire TRICARE for Life program 
itself, paying an enrollment fee where they are already paying 
Medicare Part B along with it. And there is no guaranteed 
access or anything else associated with this thing. So it is 
just foisting more fees onto the beneficiary, and that wasn't 
part of the original bargain when TRICARE for Life was put 
together.
    And the ultimate issue is, when you go back and take a look 
at the proposals, what does it do to the currently serving 
family? And in there to encourage, if you would, those that go 
and use the emergency rooms or they use the urgent care well, 
now, those families that actually will have limited or no 
access to military treatment facilities are going to end up 
paying much more. If it is an issue that takes place if you 
have a broken arm over the weekend or if you have someone who 
falls, your child, and hits their head, they are now going to 
pay a co-pay to go into that emergency room associated with it. 
And from us, this just flies in the face of what we should be 
providing to those military members and their families while 
they are serving.
    A lot of things transpired back in the late 1990s, where we 
went from hospitals and we downsized to clinics, and the 
clinics then no longer provided emergency-room care on the 
weekends or in the evenings. And so, now, many of the service 
members, even living on installations, if there is some kind of 
pop-up requirement, some medical emergency that they have, they 
are going to have to race off the installation and they are 
going to second-guess that because they are going to think 
about, do I want to pay the co-pay to go to the emergency room? 
They are going to want to wait and say, maybe I can wait a day 
until the military treatment facility actually opens up. And I 
don't think we should actually be doing that to our military 
members and their families.
    Mr. Wilson. Thank you very much.
    And Mr. Jones.
    Mr. Jones. Agree completely with the Colonel.
    It looks as though the Pentagon has decided that TRICARE 
for Life was a mistake, and so they have decided to attach a 
participation fee to it. We don't see it that way. We see 
TRICARE as the provision from a grateful Nation for full, 
affordable health care to those who have served. It is a 
respect, in essence, a respect of the value that has been 
received by the service that has been given. We stand in 
freedom today because of that service, and that TRICARE for 
Life is provided as part of the value that has been received by 
the Nation.
    We are very pleased with TRICARE for Life as it currently 
stands. We like it. We think it works well in most instances. 
And we disagree with the Pentagon on that issue.
    Regarding the consolidation, it appears as though well, we 
currently have Standard and we currently have Prime. Prime has 
a fee attached to it. And it looks as though the consolidation 
would squeeze Standard and Prime into one outfit, one function. 
And, essentially, you would pay Prime and receive Standard. You 
get less but pay more.
    So we do not believe that that is the direction you should 
follow either. It is not a good path.
    Mr. Wilson. And thank both of you.
    And as I conclude, I want to thank Mr. Jones for raising 
the issue of commissaries. This is a worldwide system which is 
beneficial to military families. It also provides employment 
for dependents and spouses worldwide. It is unique. It just 
simply can't be recreated without really having a negative 
impact on military families.
    I now proceed to Ms. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    And I know that this is tough for everybody. And I think 
that the Congress has, certainly, great responsibility here, 
having not been able to come to a resolution at a time that was 
critically important for the country. And so I think we need to 
acknowledge that and try and move forward.
    I know how much time you spend with many of the people that 
you work with. And I am, sort of, looking for some reaction 
from folks and whether you have a sense from them that I think 
what I understand from your comments, of course, is that the 
sustainability issue is not really of so much concern. We 
probably need to be concerned about it, but I think right now 
there is not as much concern about that.
    What is it that you are hearing in terms of how we might 
prioritize some of this? You know, is there a difference, in 
terms of the issues that we are speaking about right now? And 
what is your sense?
    We know that there have been surveys, better surveys than 
we had in the past. Health care, certainly, is at the top of 
those, in terms of benefits that people are experiencing. And 
it matters a great deal whether you are talking to someone in 
the active service today or retirees; of course that matters.
    But what is it that you are pulling out of this that maybe 
isn't quite as obvious here?
    Colonel Hayden. It is an interesting point, because when 
you go back to many of the surveys that are provided to service 
members, their families, retirees, and you try to look at 
prioritizing benefits, you can come up with statistically valid 
information that shows, you know, pay is extremely important, 
the retirement benefit happens to be important. Health care, of 
course, extremely important. You can find surveys that come out 
and say the commissary is a terrible benefit. And that is true 
if you are talking to someone who is maybe an E-1 or an E-2 
that has no kids. So the real issue is you have to go beyond 
the surveys.
    And the interesting part is what we are getting the 
feedback from right now from retirees, from the currently 
serving and we actually have with MOAA today over 25 currently 
serving family members or currently serving members that are 
storming the Hill in efforts to try get the message across on 
what they feel about these things, the proposals that are 
coming forward, and not to look at it as a priority message but 
it is almost like a break-the-faith message is what they are 
having.
    Mrs. Davis. Uh-huh.
    Colonel Hayden. If you are going to look at these 
proposals, which we have characterized as almost Jello on the 
wall, it is just that the Department wanted to come over, they 
wanted to provide things, they think they can do these things 
without hurting retention, which, in our past case, you know, 
when you start doing pay caps, which is not just 1 year, they 
are talking now 2 years, with an additional 4 years in this, 
that we repeat the bad behaviors of the past, where it took 
Congress 10 years to fix the pay gap that existed in the late 
1990s.
    So to prioritize associated with this, it typically depends 
on the group that you are talking to. But our immediate 
feedback that we have received is that these proposals need to 
be blocked. They need to be looked at holistically. Congress 
put together the commission that is looking at this right now, 
and we are somewhat optimistic that they are looking at it just 
that way.
    Mrs. Davis. Do you think that----
    Colonel Hayden. The feedback----
    Mrs. Davis. If I could interrupt.
    Colonel Hayden. Sure.
    Mrs. Davis. Do you think that--who knows what exactly they 
are going to come up with. But the fact that they are looking 
at these issues and maybe looking at it more holistically, 
understanding that they are a package of changes that would 
have an impact on our families, would the same kind of 
recommendations make a difference, coming from them? I mean, is 
that part of what we are dealing with here?
    Colonel Hayden. I think the difference is their charter. 
The interesting part associated with it, they are not looking 
at a budget-cutting drill, which this definitely is. This is 
just ways to transfer money out of the MILPERS [Military 
Personnel] account, out of the DHP [Defense Health Program] 
account, and put it on the backs of the beneficiaries so that 
they can free up additional funding for other priorities within 
the Department.
    The best part that we are getting from the commission 
themselves is that they are trying to look at this and find out 
if there is a way to provide the benefit that could be done 
much more efficiently, much more cost-effectively, and at the 
end actually could end up improving retention and recruiting, 
which is the overall driver for strong readiness.
    Mrs. Davis. Uh-huh.
    Colonel Hayden. And, from our perspective, that is the way 
you should be looking at these, instead of hoping that after 2 
or 3 or 6 years of pay caps or eliminating--because what this 
really is going to do with the commissary benefit is you end up 
potentially just wiping the benefit completely out. And the 
whole purpose behind that is, you have people that are going to 
go from a 30 percent savings to a 10 percent savings in the 
commissary. And at the end of the day, they are going to vote 
with their feet. They are going to say, I am not going to go 
and drive on the post, you know, where it is going to take me 2 
gallons of gas to get there and back, to get a 10 percent 
savings that we hope. And, ultimately, it is going to shutter 
commissaries. That is what our bigger concern is. And there is 
a definite need.
    And that is why we are hoping a much more holistic approach 
will be part of the solution here looking at these. I am not 
saying we are going to embrace everything that comes out of 
this commission. No. I think the important thing is to have the 
commission do their work, let this come forward, and then let 
it go through the due process and allow this committee to take 
a very hard look at this to make sure we are not going to 
damage the recruiting and retention in the future.
    Mr. Jones. It is interesting that most people do think, 
Ranking Member Davis, that pay is the most important thing and 
health care is not the most important thing to Active Duty, it 
is more important to retirees.
    Interesting study I saw the other day, and I wish I could 
recall from where exactly, but it listed the priorities for 
Active Duty as being health care----
    Mrs. Davis. Yeah, I----
    Mr. Jones [continuing]. Because so many today are married. 
It is an All-Volunteer Force. Health care was number one. 
Education was number two. Pay was number three.
    So I think health care is important all down the line, and 
it is important to those families as a measure of quality of 
life. So it does matter.
    Mrs. Davis. Thank you.
    Mr. Wilson. And thank you, Ms. Davis.
    And we now proceed to Congressman Dr. Joe Heck of Nevada.
    Dr. Heck. Thanks, Mr. Chairman.
    Thank you both for being here today.
    You know, Colonel Hayden, I think you just succinctly gave 
the best analysis of the difference between the charter of the 
commission and the budget drill going on inside the building. 
And so thank you for putting that out there.
    You know, one of the things that--the phrase that is always 
thrown around is we have to keep faith with the men and women 
of our military. And I recently heard someone say that, in the 
current financial environment, that the phrase ``keeping 
faith'' may take on a different definition, where in the past 
``keeping faith'' was always about pay and benefits and the 
promises made, whereas moving forward ``keeping faith'' may be 
more about making sure the individual is trained and equipped. 
Again, this idea of moving money from a MILPERS pot to a 
readiness pot.
    Your opinion on that changing definition?
    Colonel Hayden. It is an interesting, what I would consider 
more of, kind of, a bumper-sticker approach.
    For several years now, we have had unsustainability; growth 
is going through the roof, spiralling out of control. And now 
we are going, well, we need to slow the growth in the personnel 
accounts so that we have enough funding to provide for 
readiness, to provide for the equipment and the training 
associated with it.
    We look at it as almost like a false choice. You need to 
look at this as an entire package. You need to have the funding 
there for the acquisition programs, for the training, the 
equipment, definitely. But if you don't--if you start scraping 
away at the pay and benefits, those things that you need in 
order to sustain the All-Volunteer Force, at the end of the day 
you may not have the trigger-pullers or the bomb-droppers that 
you need. And that is where the real concern is for us. We are 
repeating some of those same behaviors.
    And, unfortunately, one of the bigger things that we are 
leveraging in this debate right now is end strength. As to try 
to balance the budget, if you would, or look at where the early 
savings are, as a former force planner myself with the Air 
Force, I was there, I knew what you could do with end strength: 
quick fix, quick money, and you draw down the force in order to 
go ahead and fund the F-35 or the F-22 program, which we did. 
And you cut below, and you were sitting there going, we can go 
down to 90 percent manning.
    And I feel that, at the time, was a wrong maneuver that we 
did in the Air Force. And I am looking at it right now that we 
are just repeating that same bad behavior.
    Dr. Heck. Mr. Jones, you know, we talk about and you both 
mentioned some of the proposed changes in TRICARE. And I agree 
that what the drill looks like is really not--although it is 
being done under, quote, ``decreasing the cost of health 
care,'' end quote, that we are really not decreasing the cost, 
we are just shifting who is paying for it.
    Mr. Jones. Yes, sir.
    Dr. Heck. All right? So we are not decreasing cost.
    But to that end, if, let's say, the commission or the 
entities come forward and say, look, we are looking at ways to 
try to actually decrease costs before coming to you and saying 
we need more premiums, fees, and co-pays, like the 
consolidation of TRICARE programs, irrespective of--let's say 
it was done in a cost-neutral basis to the beneficiary, but 
there are opportunities for efficiencies. And, yeah, you may 
not get the appointment as quickly as you wanted, but this is a 
way for us to try to actually decrease costs to stave off 
increasing premiums and co-pays.
    Mr. Jones, where do you think that would fall with the 
community?
    Mr. Jones. Well, it is interesting that you say that we 
aren't really decreasing costs. If you push costs or shift 
costs to the beneficiary, part of this package is to actually 
reduce or slow the growth of TRICARE. The intent is people 
won't go, may not go, be more hesitant to go to see a doctor. 
But that is one of the elements of this.
    We know that a couple years ago that was exactly what the 
Department had in mind with rising TRICARE fees. They thought 
fewer people would go, fewer people would participate in 
TRICARE, and more people would jump the system and go into the 
private sector or perhaps go into the exchange which is now out 
there. So there is an element of decreasing costs with this 
shift.
    I may have missed your point, but----
    Dr. Heck. Well, I guess, you know, if there are 
recommendations to come back that would fundamentally change 
the system, like, let's say, a consolidation of the TRICARE 
programs, in an effort to truly decrease costs to the system so 
that there was no increased cost to the beneficiary, is that 
something that the community would be willing to look at and be 
willing to support?
    Mr. Jones. Yeah, we would be more than willing to look at 
something like that.
    Dr. Heck. Okay.
    Colonel Hayden. And I have to agree. I think the real issue 
here is, if it is transparent to the beneficiary or if the 
beneficiary actually--and what the commission is telling us, 
they are trying to figure out a way to even provide the 
benefit, a better benefit, at even a potentially lower cost. 
And that should be the premise behind it. It shouldn't just be 
a cost-cutting drill. It shouldn't be just, well, let's do away 
with TRICARE Prime because it is more expensive. And that is 
what I think the real issue is.
    We would be more than willing to take a hard look at these 
kind of proposals that provide the same level of benefit or 
better at a lower cost.
    Dr. Heck. Thank you, Mr. Chairman. My time has expired.
    Mr. Wilson. And thank you, Dr. Heck.
    We now proceed to Congresswoman Carol Shea-Porter of New 
Hampshire.
    Ms. Shea-Porter. Thank you very much.
    And thank you for being here.
    And let me say, I started off very prejudiced, having been 
a military spouse, and my father-in-law ran the commissary. So, 
you know, I am starting off in a position of actually knowing 
what this means to families.
    So I wanted to start by talking about the commissaries. My 
understanding is that a lot of the lower paid rank and file are 
actually qualifying for food stamps or the SNAP [Supplemental 
Nutrition Assistance Program] program. So what impact would 
this have if we take the commissaries away and they lose, 
basically, the savings that they have? Can you, kind of, 
estimate the impact that you think this would have on these 
families?
    Mr. Jones. Well, your point is well-taken, that there is an 
increase in food stamps in certain segments of the military, 
and families in particular, of course. And it would, it would 
hit them in the pocketbook. They would have to--the food stamps 
and their budget for food would not go as far. Their other 
payments for other concerns they may have for the family would 
have to be reassessed.
    So the point is well-taken. Food stamps only go so far, and 
when you have an opportunity to save 30 percent of your food 
costs at the commissary, your money goes further at the 
commissary.
    Colonel Hayden. As a former economist from way back when, 
okay, I have, kind of, crunched some numbers associated with 
this. And I actually got some numbers from the Department 
itself. DECA [Defense Commissary Agency] estimates that annual 
savings for a family of four shopping exclusively at the 
commissary is around $4,500 a year that they wouldn't have--
that they don't have to pay because they don't use the Safeways 
or the Giants outside the gate.
    The interesting part is that, with this proposal, because 
they go from what is a 30 percent savings, on the average, to 
now around a 10 percent savings, ultimately, for that family of 
four, they are going to lose $3,000 worth of purchasing power 
every year. That means they are going to have to find that 
$3,000 already within their budget to figure out how to pay and 
put the groceries, if you would, onto that table day-in and 
day-out.
    So that is what we see as the true financial loss 
associated with this.
    Ms. Shea-Porter. I find this breaking a social contract. 
You know, it has always been understood that if you served and 
you put your life at risk and left your family or took your 
family places they might not have chosen on their own, that 
there would be, at the end of the rainbow, you know, there 
would be this. So I am disturbed by pretty much all the changes 
there.
    But what is the tipping point? Because always in the 
military, if you ask Active Duty, they will say, my dad served, 
my mother served, my grandfather served, my grandmother served. 
You know, there is a chain there. What is the tipping point, do 
you think, where they start saying, I can do better on the 
outside, this is just too much hassle, or a family member says, 
that is it, I am done?
    And I want to add to that, before you answer that, that I 
can remember during the Vietnam era and my husband was at 
Fitzsimmons Army Medical Center. And there were a lot of 
unaccompanied men on their last tour of duty because their 
wives and families were just shot, they had had it. And so they 
did their last assignment without their spouse there, because 
they were getting ready to retire and they wanted to finally go 
home after 20 years or 25 years.
    So what is the tipping point, do you think, where people 
say, no, you know, looking at all of it, I just can't do it 
anymore, love my country, but I can't do it anymore?
    Mr. Jones. Kind of hard to determine what the tipping point 
is, but, in conversation with our members, we note that there 
is a loss of confidence and a hesitancy to recommend to the boy 
next door, to the family friend whose child is thinking about 
going military, a hesitancy to say, yes, this is a good way to 
go.
    Nevertheless, the military still represents an outstanding 
pathway to becoming all--the old quote, ``all you can be.'' It 
offers a lot in education, in advancement, in confidence. So 
the military still stands as a great pathway in this country to 
have a better life.
    Colonel Hayden. I actually thought the tipping point was 
going to be about 2007. When you looked at what was taking 
place with the Army and the mid-level NCOs [noncommissioned 
officers] and the mid-level officers, if you would, actually 
junior and mid-level officers, and they were starting to show 
some real strain, and the services, especially the Army, had to 
start providing retention bonuses at very high numbers 
associated with it in order to sustain that career force, if 
you would, what you needed, that real experienced base in order 
to continue to lead, and when you look at that timeframe, 
prosecuting two wars, multiple deployments, 15-month 
deployments at the time, all the other things that were going 
on to the force, I thought that is where we were really 
stretching it.
    And the only thing that I really believe that saved us a 
little bit, number one, were all the work that you were doing 
to bring that compensation package back to where it needed to 
be and, number two, we didn't have the greatest economy as we 
were coming out after that shortly thereafter in 2008, which 
kept a lot of the folks in. And that has retained a lot of the 
folks.
    I am more concerned right now that, with the rhetoric that 
we are starting to see and with the forcing out that we are 
doing with the end-strength reductions, we are hiding what 
could be a retention problem. We are already hearing from the 
service DCSPERs [Deputy Chiefs of Staff for Personnel], they 
are talking about how recruiting is starting to tighten up 
because the economy is starting to come back.
    And our concern is that, if you start doing this, where the 
economy starts coming up and at the very same time, you start 
bringing down if you would, the compensation package needed to 
sustain those people that have 10, 12, 15 years of service, 
there you are going to start putting real readiness at risk. 
Because you have to take 10 years, 12 years, 15 years to build 
those NCO and that officer corps.
    Ms. Shea-Porter. That is my concern, too. Thank you.
    I yield back.
    Mr. Wilson. And thank you, Ms. Shea-Porter.
    We now proceed to Congressman Dr. Brad Wenstrup of Ohio.
    What? I can't believe he left. Okay.
    We have Congressman Austin Scott from the Republic of 
Georgia.
    Mr. Scott. It is Wednesday. It was time for you to have a 
minor error, Chairman.
    Gentlemen, thank you for being here today.
    And I represent a tremendous number of men and women that 
serve our country, both in the civilian role and in uniform. 
And when I talk with the men and women back home, it just kind 
of makes the problem worse, in how much of the cut they are 
being asked to take. And when they look at us and they see us 
pushing changes to their benefit programs, reducing the 
promises that have been made to them, most of them tell me, I 
understand that minor changes have to be made, I am willing to 
take my share of them. Virtually every man and woman in uniform 
that works at our base says, I will take my share. But when you 
are funding free cell phones at the same time that you are 
cutting my benefits, that shows a lack of priorities from 
Congress.
    And I would just like to say, you know, I am sorry that we 
haven't been able to set our priorities any better than that as 
a Congress. And to the men and women that are out there, I hear 
you, I hear you loud and clear.
    Dr. Heck mentioned something, and I agree with him, going 
back to the cost of health care. The cost of health care in 
this country far exceeds what a similar procedure costs in any 
other country in the world. And you can get--a procedure may 
cost $1,000 at one facility and $3,000 at another one, and 
there is no correlation in price and quality of that procedure.
    And it seems to me that if there were a way for us to work 
with people like you to make sure that we were able to get the 
highest quality health care at the lowest possible price, then 
we could put that--we can do a better job of fulfilling that 
promise to the men and women in uniform.
    And so my question is, as we go through all of these budget 
reductions and things that are being forced on the Pentagon, 
are there alternative savings or reforms that you see or ways 
that we could do this where we get the men and women that 
deserve this benefit more for their dollar?
    Colonel Hayden. I am more than willing to try to take this.
    I actually think there are ways to improve the benefit. You 
know, when you look at healthcare delivery, right now we have 
somewhat service stovepipe, still, operations. DHA [Defense 
Health Agency] was a step to try to consolidate some of this, 
but we still have each of the surgeon generals that are 
associated with it and they still have their own budgeting 
authority associated with the programs.
    Just when you look at economy of scale in purchasing, when 
you need, you know, a piece of equipment in one hospital and 
you still need another piece of equipment in a military 
treatment facility, why not look at the economy of scale when 
you start doing the purchasing? Just because you are in one 
branch of the service and then another branch of the service 
and you have your own budget pots, maybe there can be a better 
way to do that, more of a purple way, if you would.
    Look, the coalition--not all coalition members have taken 
on and have agreed to a unified medical command, if you would. 
But this economy of scale, at least on the budgeting aspects, 
we can see that you could get some economy of scale on that.
    Mr. Scott. Well----
    Colonel Hayden. And that is just one step. There have been 
several reports that have been out there before that have 
pushed to do just that.
    Mr. Scott. This is just somewhat brainstorming, but, you 
know, the way we handle Medicare Advantage, the participant can 
choose between different insurance carriers. And my 
understanding is that with TRICARE there is just one insurance 
carrier in the region that handles that, and there is no choice 
for the consumer.
    I wonder if we maybe took some of the things that we do in 
Medicare Advantage, where we have given the consumer more 
options, I wonder if we looked at trying that with TRICARE, if 
that would give us the ability to maybe drive down some of 
those costs.
    With that said, Mr. Chairman, I will yield the 13 seconds 
that I have left.
    Mr. Wilson. Here, here. Thank you, Congressman Scott. Thank 
you for your passion and concern.
    We are going to proceed, if there are any further 
questions--I just have one, because I just think a point that 
both of you have made just needs to be restated. And, in 
particular, that is the impact on families and the actual 
fiscal, f-i-s-c-a-l, impact on a family. Because that is what 
the people at home need to know and understand the consequence. 
Because they can identify--Colonel, you have already indicated 
a $5,000 net reduction in spendable capital.
    So, both of you, if you could restate again, do you see the 
additional cut of out-of-pocket housing expense, combined with 
the reduced less-than-ECI [employment cost index] pay raise, 
and an increase in commissary prices as a cut in the purchasing 
power? And, again, an estimate from each of you on enlisted and 
officers.
    Colonel first and then Mr. Jones.
    Colonel Hayden. It is definitely a loss of purchasing 
power, at the end of the day. The annual loss that we found for 
an E-5, 10 years of service, if you would, family of four, with 
these proposals fully in place--and I consider this still a 
very conservative estimate. I used DOD's numbers for the health 
care, if you would, which was what they figured would be an 
additional about $200 out of pocket that a family would see. 
And I only did 2 years of the pay caps instead of the full 6 
years of pay caps.
    So, with that in place, at the end of the 2 to 3 years of 
implementation associated with this, they are looking at a loss 
of annual purchasing power of $5,000 for that E-5. And for that 
O-3 family of four, it is almost $6,000.
    Mr. Wilson. Sadly, that is a number that families can 
understand.
    Mr. Jones. It is a number that families can understand. And 
we agree with the numbers. But there is also a retention here--
there is a cost to the country, as well. These folks who lose 
that amount of money may decide that this is not the path they 
want to follow, they don't want to follow a career in the 
military, they don't want to serve in the military.
    And that is a consequence of these proposals, a possible 
consequence, a second-tier, third-tier, or fourth-tier 
consequence that we haven't really looked at with this budget 
plan that has come out from the Pentagon.
    Mr. Wilson. And, Mr. Jones, thank you for pointing out 
about retention. And people need to understand, the persons who 
are serving in our military are very skilled. We are facing an 
asymmetric, illegal enemy combatant, not in uniform, people who 
use women and children as shields. We have really never seen 
such conflict. And the training of our military personnel is 
extraordinary to face people who would equally and 
enthusiastically with a vehicle-borne IED [improvised explosive 
device] blow up a group of children. How can you--the training 
for this takes time.
    So I want to thank you.
    And anyone else, any further questions?
    Yes, Ms. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    And I know in your positions you might not necessarily have 
some of the input from the Guard and Reserve. But I am 
wondering, certainly in terms of the commissary--and I think 
some of the latest studies demonstrate that it is actually the 
Guard and Reserve that are using food stamps at a fairly high 
rate. Do you have any sense of that and the usage, in terms of 
the commissaries, for the Guard and Reserve and how they would 
be impacted by this?
    I guess the food stamp really would indicate that, in their 
regular jobs, in addition to the time that they deploy as Guard 
and Reserve, you know, that they are struggling. And we know 
that we have had, you know, a number of attempts to cut food 
stamps, which has affected this group of folks.
    Mr. Jones. You know, the economy has not been good, and we 
have watched an explosion in food stamp usage. Whether it is 
due to the economy or due to expansion of eligibility in food 
stamps, no one is really sure at the present. But we just 
recognize that, I think it is 41 million people today are on 
food stamps, 7 million some 6, 7 years ago. I am not sure of 
those, but I do recall reading an article on that.
    But I do not have statistics on the Reserve use of food 
stamps, just the knowledge that food stamps are being used in 
the commissaries. And I spoke with someone just the other day 
who said to me, it breaks my heart to see a young family at the 
commissary using food stamps.
    Mrs. Davis. Yeah. I know in our community, as well. I mean, 
many groups have stepped in, actually, to provide help from 
the--you know, vegetables and meals and a whole host of others 
for our service members at Pendleton and other places.
    Colonel Hayden. And we don't have the statistical 
information associated with that. It is something that I could 
take back and try to provide you some information that we have.
    The one thing I do know about food stamps, and it is kind 
of an interesting twist, at least for the currently serving, 
the Active Duty force, if you would, when you take a look, 
there are some rule sets associated with it, that if you are 
living on post, of course, you are not receiving a housing 
allowance associated with it. And so you could actually qualify 
for food stamps living on post, where if you live off post and 
are receiving a housing allowance, it then goes in and it shows 
the scale associated with it, so you wouldn't be eligible to 
receive the food stamps.
    So it becomes one of those things, what counts, what 
doesn't count, as you try to figure out the eligibility 
criteria on this.
    Mrs. Davis. Uh-huh.
    Colonel Hayden. But I will go back and take a look at the 
Guard and Reserve and get back to you.
    [The information referred to can be found in the Appendix 
on page 165.]
    Mrs. Davis. Yeah, okay. Thank you.
    And I know that we also have obviously had a chance to 
speak to service chiefs on this issue. And probably in the next 
few weeks, I think that, you know, they feel there is a case to 
be made in terms of readiness and whether or not families would 
trade off that, again, false choice, I think, as you are--but, 
nevertheless, would they trade off training and access to 
supplies, not to canonize ships, all those things, for other 
changes that would be occurring.
    I am sure you have had those discussions.
    Mr. Jones. Just, when you put a cap on how much you are 
going to allow for spending in defense, you make it an 
arithmetic exercise, rather than basing the expense on your 
national strategic plan or the threats that you face. I think 
you are always going to have a problem in squeezing out some of 
these very important programs that help the quality of life for 
families and those who serve.
    And that is what we are in this year, and there are 
tradeoffs in that. And we just shouldn't be there, we should 
not be there with our defense policy. This was the wrong way to 
go. And, again, we were told we would never follow this path of 
sequestration.
    Mrs. Davis. Uh-huh.
    Can I ask you, did you think that the commission, did they 
ask the right questions? Do you think they were helpful in that 
way as they interviewed you?
    Mr. Jones. The Military Compensation Retirement----
    Mrs. Davis. Right.
    Mr. Jones. Their questions--you know, they are looking, I 
think, at the right things at the present time. They may have 
been the source for the earlier comment about the survey 
putting health care, education, and pay in that order with our 
young service members.
    Mrs. Davis. Uh-huh. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Wilson. Thank you.
    We now proceed to Congressman Scott.
    Mr. Scott. Thank you, Mr. Chairman. I will make this brief.
    Colonel Hayden, I think one thing that, I think, as we do 
the arithmetic, as you said, Mr. Jones, in making sure that the 
public understands the impact of this is, we are not talking 
about $4,800 a year from somebody who makes $200,000 a year. 
And so, you said this is for an E-5?
    Colonel Hayden. The E-5 loses about 8 percent of their 
regular military compensation [RMC] with this. The RMC, if you 
would, was many times measured by the Department itself, and 
about a 6 percent loss is what we calculated. And that is kind 
of a back-of-the-envelope, so trust me on this, that is what we 
are looking at. But about an 8 percent or a 6 percent reduction 
in RMC.
    Mr. Scott. But as a percentage of their disposable income, 
it would be significantly higher. Just like every American, 
they have car payments, they have other payments that come out 
of their paycheck that are not optional, that they can't just 
get rid of.
    Colonel Hayden. This is money they have to find in their 
current budget now.
    Mr. Scott. That is absolutely right. And so, while it may 
be 8 or 10 percent of pay, it may be 40 or 50 percent of 
disposable income that they have after they have made their car 
payment and other payments that they have.
    So just, I appreciate what you are doing. Look forward to 
working with the two of you and helping you.
    Mr. Wilson. Thank you, Mr. Scott.
    Dr. Heck.
    Dr. Heck. Thanks, Mr. Chair.
    And I just want to follow up on a couple things. Certainly, 
I appreciate the perspective you give about the impact on 
retention, but, you know, it is also going to impact 
accessions, right? And we have seen recent surveys showing that 
there is a much lower propensity towards military service of 
men and women--or males and females in high school right now 
for entering military service. Of course, part of that is due 
to a resurging economy, but also many people are concerned 
about what that phrase, ``keeping faith,'' is going to mean to 
them, should they commit to time and service.
    And, Mr. Jones, I think you said it very well, in that this 
is turning into an arithmetic problem as opposed to a strategy 
problem. And I think, although not in this subcommittee, but 
that has been a discussion that we have had about the last QDR 
[Quadrennial Defense Review], and really trying to develop a 
QDR to a budget as opposed to the legislative mandate, which is 
the 20-year outlook at low to moderate risk.
    I agree that we need to withhold any decisions until we 
hear from the commission. In fact, that was the point I brought 
up when we had the Assistant Secretary and the G-1s here not 
too long ago. So I appreciate you reiterating those points.
    Thank you both for being here and representing the men and 
women in uniform and our retiree population. We appreciate it.
    I yield back.
    Mr. Wilson. Thank you, Dr. Heck.
    And, again, thank both of you for being here, Colonel 
Hayden with The Military Coalition, and Mr. Rick Jones, who is 
representing the National Military Veterans Alliance.
    And I would like to remember that Mr. Jones actually served 
at Moncrief Military Army Hospital at Fort Jackson, South 
Carolina. And he is still beloved. So this is good.
    And thank you all, your sincerity on behalf of the 
military, military families, and retirees. Thank you.
    And we are adjourned.
    [Whereupon, at 3:03 p.m., the subcommittee was adjourned.]


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                   DOCUMENTS SUBMITTED FOR THE RECORD

                             April 9, 2014

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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             April 9, 2014

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              RESPONSE TO QUESTION SUBMITTED BY MRS. DAVIS

    Colonel Hayden. During the hearing, ranking member Susan Davis (D-
CA) requested information regarding food stamps/commissary and the 
Reserve Component.
    Interest in this issue surfaced following the February CNN Money 
report that highlighted the use of food stamps or Supplemental 
Nutrition Assistance Program (SNAP) benefits has increased at military 
commissaries. The following chart was included in their article:

        Military dollars spent on food stamps

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    Y.
Source: Defense Commissary Agency

    MOAA reached out to the Defense Commissary Agency (DeCA) and the 
Department of Defense to see if they had any data as to why the 
marketed increase since 2008. DeCA stated they were gathering 
demographics, but as to date, have not shared the information.
    Here is information that we have been able to gather that has led 
to increase usage by service members, veterans, and their families who 
may qualify for food stamps:
      According to DOD, of the 44 million Americans who qualify 
for food stamps, only 5,000 are active duty service members. The 
military services have offered the Family Subsistence Supplemental 
Allowance (FSSA) since 2001 specifically designed to lift the income of 
a military family above the eligibility for food stamps.
      Authorized commissary patrons as defined by Department of 
Defense Instruction 1330.17, Armed Services Commissary Operations, 
include active duty, Guard and Reserve members, military retirees, 
Medal of Honor recipients, 100 percent disabled veterans, and their 
authorized family members.
      The 2004 National Defense Authorization Act opened up 
access to the commissary for members of the Guard and Reserve. With the 
proper ID, unlimited commissary shopping privileges are authorized for:
          Ready Reserve members (Selected Reserve, IRR, and 
        Inactive National Guard)
          Retired Guard members
          ``Gray Area'' Guard retirees not yet age 60
          Dependents of these members with a DOD family member 
        ID
      In the 2008 NDAA, The House bill contained a provision 
(sec. 651) that would require the Secretary of Defense to revise 
regulations to ensure access to the defense commissary and exchange 
system by the surviving spouse and dependents of a veteran who had a 
service-connected disability rated at 100 percent or total, although 
the disability rating was awarded posthumously. The provision was not 
adopted, but the conferees believed that this change could be done in 
the regulations without the need for legislation. Accordingly, the 
conferees direct the Secretary of Defense to revise the Department of 
Defense regulations to provide access to the defense commissary and 
exchange systems.
      In 2009, as part of an involuntary separation incentive, 
member of the Armed Forces who is involuntarily separated from active 
duty under other than adverse conditions through Dec. 31, 2012 may 
continue to use commissary and exchange privileges for a two-year 
period beginning on the date of involuntary separation.
    Unfortunately, we do not have a specific answer as to the cause of 
the increase in use of food stamps at commissaries. We can only 
speculate that the combination of increased access by survivors and/or 
families, as well as the guard and reserve--all who could be eligible 
for food stamps--and the downturn of the economy (and job market in 
2008), could have led to more of this population becoming eligible for 
food stamps and usage at commissaries.   [See page 18.]

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