[House Report 110-652]
[From the U.S. Government Publishing Office]
110th Congress Rept. 110-652
HOUSE OF REPRESENTATIVES
2d Session Part 2
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DUNCAN HUNTER NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009
_______
May 20, 2008.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Skelton, from the Committee on Armed Services, submitted the
following
SUPPLEMENTAL REPORT
[To accompany H.R. 5658]
This supplemental report shows the cost estimate of the
Congressional Budget Office with respect to the bill (H.R.
5658), as reported, which was not included in part 1 of the
report submitted by the Committee on Armed Services on May 16,
2008 (H. Rept. 110-652, pt. 1).
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 20, 2008.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5658, the National
Defense Authorization Act for Fiscal Year 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kent
Christensen.
Sincerely,
Robert A. Sunshine
(For Peter R. Orszag, Director).
Enclosure.
H.R. 5658--National Defense Authorization Act for Fiscal Year 2009
Summary: H.R. 5658 would authorize appropriations totaling
$602 billion for fiscal year 2009 for the military functions of
the Department of Defense (DoD), for certain activities of the
Department of Energy (DOE), and for other purposes. That total
includes $70 billion for military operations in Iraq and
Afghanistan. The bill also would authorize $1.6 billion in 2008
supplemental appropriations, primarily for military
construction projects. In addition, H.R. 5658 would prescribe
personnel strengths for each active-duty and selected reserve
component of the U.S. armed forces. CBO estimates that
appropriation of the authorized amounts would result in
additional outlays of $596 billion over the 2008-2013 period.
Including outlays from funds previously appropriated,
spending for defense programs authorized by the bill would
total about $600 billion in 2009, CBO estimates. That figure,
however, excludes outlays from the likely enactment of
supplemental appropriations for 2008 that are not authorized by
the bill. Including the effects of those additional
supplemental appropriations for 2008 now being considered by
the Congress, spending in 2009 would total more than $630
billion.
The bill also contains provisions that would both increase
and decrease costs of discretionary defense programs in years
after 2009. Most of those provisions would affect force
structure, compensation, and benefits. In total, such
provisions would raise costs by about $3 billion annually,
assuming appropriation of the necessary amounts.
The bill contains provisions that would both increase and
decrease direct spending, primarily from changes in the TRICARE
pharmacy benefit and retirement programs, and from the sale of
assets from the National Defense Stockpile. We estimate that
those provisions combined would increase direct spending by $2
million in 2009, but would decrease such spending by $13
million over the 2009-2013 period and $75 million over the
2009-2018 period. Enacting the bill would not affect federal
revenues.
Section 4 of the Unfunded Mandates Reform Act (UMRA)
excludes from the application of that act any legislative
provisions that enforce the constitutional rights of
individuals. CBO has determined that section 591 would fall
within that exclusion because it would modify the authority of
the President to employ the armed services to protect
individuals' civil rights. Therefore, CBO has not reviewed that
section of the bill for mandates.
Other provisions of H.R. 5658 contain both
intergovernmental and private-sector mandates, but CBO
estimates that the annual cost of those mandates would not
exceed the thresholds established in UMRA ($68 million for
intergovernmental mandates in 2008 and $136 million for
private-sector mandates in 2008, adjusted annually for
inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 5658 is summarized in Table 1. Most of
the costs of this legislation fall within budget function 050
(national defense).
Basis of estimate: For this estimate, CBO assumes that H.R.
5658 will be enacted near the start of fiscal year 2009 and
that the authorized amounts will be appropriated.
Spending subject to appropriation
The bill would specifically authorize appropriations
totaling $602 billion in 2009 (see Table 2). Almost all of
those authorizations fall within budget function 050 (national
defense); $70 billion would be for DoD's costs associated with
continuing operations in Iraq and Afghanistan. The total also
includes funds authorized for activities in other budget
functions. They include: $63 million for the Armed Forces
Retirement Home (function 600--income security); $19 million
for the Naval Petroleum Reserves (function 270--energy); and
$136 million for the Maritime Administration (function 400--
transportation).
In addition, the bill would authorize such sums as may be
necessary to the Department of State for activities that would
include the creation of a response readiness corps and a
civilian reserve corps, which would aid in reconstruction and
stabilization operations. CBO estimates that authorization,
plus additional foreign assistance that would be authorized by
the bill, would require appropriations of about $650 million
over the 2009-2010 period. Those costs would fall within budget
function 150 (international affairs).
For 2008, the bill would authorize $1.6 billion in
supplemental appropriations, primarily for military
construction programs. Assuming those appropriations will be
provided near the end of 2008, CBO estimates outlays from that
additional funding would begin in 2009. Estimated outlays from
authorizations of regular appropriations for 2009 and 2010 are
based on historical pending patterns.
The bill also contains provisions that would both increase
and decrease various costs, mostly for changes in end strength,
military compensation, and health benefits, that would be
covered by the fiscal year 2009 authorization and by
authorizations in future years. Those estimated authorizations
are shown in Table 3 and discussed below. The following
discussion does not address the timing of outlays from those
estimated authorizations.
Force Structure. The bill would affect force structure by
setting end-strength levels for the various military services.
Title IV would authorize active and reserve end-strength
levels for 2009 and would set the minimum end-strength
authorization in permanent law.
The bill would specifically authorize regular
appropriations of $124.7 billion for the costs of military pay
and allowances in 2009. For related costs due to operations in
Iraq and Afghanistan, the bill would authorize an additional
$1.2 billion for 2009.
Under title IV, the authorized end strengths in 2009 for
active-duty personnel and personnel in the selected reserves
would total about 1,370,000 and 850,000, respectively. Of those
selected reservists, about 79,600 would serve on active duty in
support of the reserves. In total, active-duty end strength
would decrease by about 3,300 and selected-reserve end strength
would increase by about 100 when compared with levels
authorized in 2008.
Section 401 would authorize 7,000 additional active-duty
personnel for the Army and 5,000 additional active-duty
personnel for the Marine Corps--which CBO estimates would
increase costs to DoD by about $2 billion in 2009 and about
$11.5 billion over the 2009-2013 period. Those costs include
the pay and benefits of the additional personnel, as well as
costs for operation and maintenance, procurement, and
construction.
TABLE 1.--BUDGETARY IMPACT OF H.R. 5658, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009
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By fiscal year, in millions of dollars--
-----------------------------------------------------------------
2008 2009 2010 2011 2012 2013
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SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for Programs
Authorized by H.R. 5658:
Budget Authority 1A\1\.................... 581,460 0 0 0 0 0
Estimated Outlays......................... 567,251 220,708 80,368 28,382 11,404 4,810
Proposed Changes:
Authorization of Supplemental
Appropriations for 2008 for DoD:
Authorization Level................... 1,642 0 0 0 0 0
Estimated Outlays..................... 0 109 678 496 172 94
Authorization of Appropriations for 2009,
primarily for the Departments of Defense
and Energy:
Authorization Level................... 0 531,651 0 0 0 0
Estimated Outlays..................... 0 341,453 123,102 41,432 13,498 5,359
Authorization of Appropriations for 2009
for Military Operations in Iraq and
Afghanistan:
Authorization Level................... 0 70,000 0 0 0 0
Estimated Outlays..................... 0 37,382 20,111 8,255 2,577 872
Authorization of Appropriations for the
Department of State:
Estimated Authorization Level......... 0 350 302 0 0 0
Estimated Outlays..................... 0 236 256 75 33 21
Subtotal, Proposed Changes:
Estimated Authorization Level..... 1,642 602,001 302 0 0 0
Estimated Outlays................. 0 379,180 144,147 50,258 16,280 6,346
Total--Including Spending Authorized by H.R.
5658:
Estimated Authorization Level............. 583,102 602,001 302 0 0 0
Estimated Outlays......................... 567,251 599,888 224,515 78,640 27,684 11,156
CHANGES IN DIRECT SPENDING 1A\2\
Estimated Budget Authority.................... 0 -38 155 -24 -52 -49
Estimated Outlays............................. 0 2 155 -24 -52 -94
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\1\The 2008 level is the amount appropriated for programs authorized by the bill.
\2\In addition to the direct spending effects shown here, enacting the bill would have additional effects on
direct spending after 2013 (see Table 4). In total, CBO estimates that enacting the bill would reduce direct
spending by $75 million over the 2009-2018 period.
Notes.The President has requested $103 billion in supplemental defense appropriations for 2008, primarily for
military operations in Iraq and Afghanistan. Aside from the $1.6 billion in additional 2008 funding that would
be authorized for military construction and family housing projects, the bill would not authorize the
supplemental funding requested by the President. If, however, the Congress ultimately provides the entire $103
billion, CBO estimates that additional outlays from those appropriations would total $28 billion in 2008, $36
billion in 2009, and smaller amounts in subsequent years.
For 2009, the authorization levels under ``Proposed Changes'' include amounts specifically authorized by the
bill, as well as the effect of an indefinite (i.e., unspecified) authorization for the Department of State.
For 2010, the amount also reflects the effect of that same indefinite authorization. The bill also implicitly
authorizes some activities from 2010 through 2013; those authorizations are not included above (but are shown
in Table 3) because funding for those activities would be covered by specific authorizations in future years.
Section 401 also would decrease the Navy's active-duty end
strength by 2,775 and decrease the Air Force's active-duty end
strength by 12,513. CBO estimates that the decrease in end
strength for the Navy and the Air Force combined would cut
costs for salaries and other expenses by about $1 billion in
the first year and about $2 billion annually in subsequent
years.
Sections 411 and 412 would authorize the end strengths for
the reserve components, including those who serve on active
duty in support of the reserves. Under this bill, the selected
reserve would experience a net increase in end strength of 100,
with the Navy Reserve and Air Force Reserve losing personnel
while the Army National Guard would see an increase. The number
of full-time reservists who serve on active duty in support of
the reserves would increase by about 4,000. CBO estimates that
the net result of implementing those provisions would be an
increase in costs for salaries and other expenses for selected
reservists of $241 million in 2009 and about $500 million a
year thereafter as compared with the authorized end-strength
levels for 2008.
TABLE 2.--SPECIFIED AUTHORIZATIONS IN H.R. 5658 FOR FISCAL YEAR 2009
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By fiscal year, in millions of dollars--
Category ------------------------------------------------------
2009 2010 2011 2012 2013
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Authorization of Regular Appropriations
Department of Defense Military Personnel:\1\
Authorization Level.............................. 124,660 0 0 0 0
Estimated Outlays................................ 118,926 5,236 125 12 0
Operation and Maintenance
Authorization Level.............................. 180,559 0 0 0 0
Estimated Outlays................................ 132,133 37,524 6,999 1,874 751
Procurement
Authorization Level.............................. 104,198 0 0 0 0
Estimated Outlays................................ 28,629 38,593 21,737 7,977 3,173
Research and Development
Authorization Level.............................. 79,725 0 0 0 0
Estimated Outlays................................ 43,636 28,730 4,801 1,149 363
Military Construction and Family Housing:
Authorization Level.............................. 24,457 0 0 0 0
Estimated Outlays................................ 4,084 8,602 6,844 2,483 1,071
Revolving Funds and Other:\2\
Authorization Level.............................. 1,613 0 0 0 0
Estimated Outlays................................ 2,806 126 16 3 1
Subtotal, Department of Defense:\3\
Authorization Level...................... 515,212 0 0 0 0
Estimated Outlays........................ 330,214 118,811 40,522 13,498 5,359
Atomic Energy Defense Activities:\4\
Authorization Level.............................. 16,221 0 0 0 0
Estimated Outlays................................ 11,066 4,256 899 0 0
Other Programs:\5\
Authorization Level.............................. 218 0 0 0 0
Estimated Outlays................................ 173 35 11 0 0
Subtotal, Authorization of Regular
Appropriations:
Authorization Level...................... 531,651 0 0 0 0
Estimated Outlays........................ 341,453 123,102 41,432 13,498 5,359
Authorization of Appropriations for Military Operations
in Iraq and Afghanistan:
Military Personnel:
Authorization Level.............................. 1,194 0 0 0 0
Estimated Outlays................................ 1,189 0 0 0 0
Operation and Maintenance:
Authorization Level.............................. 56,267 0 0 0 0
Estimated Outlays................................ 33,964 15,763 4,798 1,038 322
Procurement:
Authorization Level.............................. 12,151 0 0 0 0
Estimated Outlays................................ 1,882 4,233 3,473 1,564 569
Research and Development:
Authorization Level.............................. 388 0 0 0 0
Estimated Outlays................................ 207 145 24 5 1
Special Transfer Authority:
Authorization Level.............................. 0 0 0 0 0
Estimated Outlays................................ 140 -30 -40 -30 -20
Subtotal, Iraq and Afghanistan:
Authorization Level...................... 70,000 0 0 0 0
Estimated Outlays........................ 37,382 20,111 8,255 2,577 872
Total Specified Authorizations:
Authorization Level.................................. 601,65 1 0 0 0
Estimated Outlays.................................... 378,835 143,213 49,687 16,075 6,231
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\1\For purposes of this estimate, CBO assumes that the authorization of appropriation in section 421 for
military personnel includes $10,351 million for accrual payments for the TRICARE For Life program.
\2\This authorization includes the effect of section 1403, which would authorize the transfer of up to $1.3
billion of unobligated balances from the National Defense Stockpile Transaction Fund to the Defense Health
Program. That transfer from the stockpile, which would be subject to appropriation action, would lower the
2009 authorization level for the revolving funds by an estimated $1.3 billion. However, the transfer would not
affect outlays in the revolving funds over the 2009-2013 period because under current law those balances are
unlikely to be spent.
\3\Estimated outlays for DoD reflect a $4 billion limit in general transfer authority, as stated in the
committee's report for the bill.
\4\This authorization is primarily for atomic energy activities within the Department of Energy.
\5\These authorizations are for the Maritime Administration, the Armed Forces Retirement Home, and the Naval
Petroleum Reserves.
Notes: This table summarizes the authorizations of appropriations explicitly stated in the bill--generally in
specified amounts. The bill also would explicitly authorize the appropriation of unspecified amounts, such as
the authorization in title XVI of ``such sums as may be necessary'' for activities of the Department of State.
The latter authorizations, along with amounts implicitly authorized by the bill, are not shown here, but are
included in Table 3.
TABLE 3.--ESTIMATED AUTHORIZATIONS OF APPROPRIATIONS FOR SELECTED PROVISIONS IN H.R. 5658
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By fiscal year, in millions of dollars--
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Category 2009-
2009 2010 2011 2012 2013 2013
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FORCE STRUCTURE
Army and Marine Corps Active-Duty End 2,046 2,516 2,529 2,273 2,172 11,536
Strengths....................................
Navy and Air Force Active-Duty End Strengths.. -1,047 -1,939 -1,999 -2,065 -2,133 -9,183
Reserve Component End Strengths............... 241 481 496 513 528 2,259
Reserve Technicians........................... 33 68 70 72 74 317
COMPENSATION AND BENEFITS (DoD)
Pay Raises.................................... 324 778 1,260 1,770 2,316 6,448
Expiring Bonuses and Allowances............... 54 25 9 2 1 91
Housing Allowance for Senior Enlisted 11 46 47 48 50 202
Personnel....................................
Transportation Allowances..................... 79 126 128 129 130 592
Stabilization Pay............................. 1 4 7 9 11 32
Education for Military Spouses................ 40 64 89 117 146 456
Foreign Language Pay.......................... 24 48 49 51 52 224
Critical Wartime Health Specialties........... 14 12 11 11 2 50
Loan Repayment for Reserves................... 24 8 2 0 0 34
DEFENSE HEALTH PROGRAM
Waiver of Cost Sharing for Preventive Services 67 130 130 134 142 603
Prohibition on Increase in Pharmacy Copayments 75 210 0 0 0 285
Smoking Cessation Program..................... 23 42 42 43 45 195
Prohibition on Increase in Enrollment Fee..... 47 87 0 0 0 134
TRICARE Reserve Select Premiums............... 3 9 15 22 29 78
Chiropractic Care............................. 2 11 11 12 13 49
Research Program on Extremity Injuries........ 5 5 5 5 5 25
Center of Excellence for Auditory Injuries.... 5 10 10 10 10 45
Preventive Health Allowance................... 3 12 12 9 0 36
Health Risk Management Demonstration.......... 2 8 8 6 0 24
MATTERS RELATING TO FOREIGN NATIONS
DoD Provisions................................ 500 495 45 45 45 1,130
Department of State Provisions................ 350 302 0 0 0 652
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Notes:For every item in this table except for the authorizations for the Department of State, the 2009 levels
are assumed to be included in the amount specifically authorized to be appropriated by the bill. Excluding the
authorizations for the Department of State, amounts shown in this table for 2010 through 2013 are not included
in Table 1, because authorizations for those amounts would be covered by specific authorizations in future
years.
Figures shown here may not add to numbers in the text because of rounding.
In addition, sections 413 and 414 would authorize the
minimum end-strength levels for military technicians, who are
federal civilian personnel required to maintain membership in a
selected reserve component as a condition of their employment.
Under this bill, the required number of technicians would
increase by 847 relative to the levels currently authorized.
CBO estimates the costs in civilian salaries and expenses that
would result from additional military technicians would be
about $33 million in 2009 and about $70 million annually
thereafter, as compared with the minimum end-strength levels
for technicians in 2008.
The bill also would authorize an end strength of 10,000
servicemembers in 2009 for the Coast Guard Reserve. Because
this authorization is the same as that under current law, CBO
does not estimate any additional costs for this provision.
Compensation and Benefits. H.R. 5658 contains several
provisions that would affect military compensation and benefits
for uniformed personnel.
Pay Raises. Section 601 would raise basic pay for all
individuals in the uniformed services by 3.9 percent, effective
January 1, 2009. CBO estimates the total cost of a 3.9 percent
military pay raise in 2009 would be about $2.5 billion.
Compared with current law (under which CBO estimates the
across-the-board increase that would go into effect on January
1 would be 3.4 percent), this section would increase the pay
raise in 2009 by an additional 0.5 percent. CBO estimates the
incremental cost of this larger raise would be $324 million in
2009 and total about $2.2 billion over the 2009-2013 period.
In addition, section 608 would guarantee pay raises that
are one-half of one percentage point higher than amounts
required by current law for fiscal years 2010 through 2013. CBO
estimates that the incremental cost associated with those
larger pay raises would be $337 million in 2010 and $4.3
billion over the 2009-2013 period.
Together, sections 601 and 608 would cost $324 million in
2009 and about $6.4 billion over the 2009-2013 period.
Expiring Bonuses and Allowances. Sections 611 through 615
would extend DoD's authority to pay certain bonuses and
allowances to military personnel for another year. Most of
those bonuses and allowances have dual authorities, established
in section 661 of the National Defense Authorization Act for
Fiscal Year 2008 (Public Law 110-181), which already extend
through December 2009. Several of the benefits, including some
without dual authority, are scheduled to expire in December
2008. Based on DoD's budget material, CBO estimates that
extending those authorities through December 2009 would cost
$54 million in 2009 and $91 million over the 2009-2013 period.
Housing Allowance for Senior Enlisted Personnel. Section
603 would increase the housing standard for enlisted members
with dependents in the rank of E-8 to the higher standard in
effect for E-9s with dependents. The basic allowance for
housing (BAH) is calculated using the housing standard assigned
to each rank. Based on information from DoD, CBO estimates that
this section would increase monthly BAH rates by about $130 on
average for the roughly 27,500 E-8s with dependents. The
increase would not become effective until June 30, 2009, and
CBO estimates the section would cost $202 million over the
2009-2013 period.
Transportation Allowances. Sections 604, 631, and 632 would
increase various travel and relocation benefits for military
servicemembers. Based on information from DoD, CBO estimates
those sections would cost $592 million over the 2009-2013
period.
Stabilization Pay. Section 606 would extend stabilization
pay to officers who are reassigned to lower grades. According
to DoD, this authority would primarily be used to allow
officers to maintain their existing level of pay should they
leave their current field to enter medical school. Under
current law, officers with several years in the service who
leave their current career track to become medical
professionals lose rank and pay when they enter medical school.
Based on information from DoD, CBO estimates that under section
606 about 100 additional officers would receive stabilization
pay annually, with an average first-year benefit of about
$27,000. That amount would gradually decline, as those officers
earned promotions in their new career field. This section would
cost about $1 million in 2009 and $32 million over the 2009-
2013 period, CBO estimates.
Education for Military Spouses. Section 582 would give the
Secretary of Defense the authority to establish a program to
help military spouses acquire education and training, and to
provide tuition assistance. According to DoD, this authority
would be used narrowly to reimburse military spouses for the
cost of obtaining an associates degree, or the necessary
licenses or other credentials to support a one-time change to a
career that can be readily transferred to a new location, such
as nursing, bookkeeping, or teaching. In addition, DoD would
limit the program to pay a maximum of $6,000 for two years of
education or training. CBO estimates that about 16,500 military
spouses would receive an average annual benefit of about $2,400
in the program's first year and that the program would
eventually grow to fund education benefits for over 60,000
military spouses a year. This section would cost $40 million in
2009 and $456 million over the 2009-2013 period, CBO estimates.
Foreign Language Pay. Section 619 would authorize the
Secretary of Defense to establish a pilot program to encourage
members of the Senior Reserve Officer Training Corps (SROTC) to
study certain critical foreign languages. Under this program,
DoD could pay bonuses, subsistence allowances, and incentive
pay to qualified students. Based on information from DoD, CBO
estimates that about 15,000 SROTC students would participate in
the program each year and earn about $200 each month in
incentive pay. In addition, CBO estimates that DoD would pay
bonuses averaging $2,000 to first-year students upon entering
the foreign language program as well as monthly subsistence
allowances of about $250 to a small portion of those first-year
students. On that basis, CBO estimates that the pilot program
would cost $24 million in 2009 and about $50 million a year
until the program expires in 2013.
Critical Wartime Health Specialties. Section 620 would
designate registered nurses, psychologists, and other mental
health professionals as possessing wartime specialties in
critically short supply. Under current law, the Secretary of
Defense may pay an annual bonus of up to $100,000 for each year
an officer with such a specialty agrees to serve in the
military. Based on information from DoD, CBO estimates that
under section 620 DoD would pay lump-sum bonuses to about 50
psychologists and 25 other mental health practitioners of
$70,000 and $50,000, respectively. Also, about 300 nurses would
receive $30,000 a year over four years for a four-year
obligation to serve in the military. DoD's authority to enter
into such agreements will expire on December 31, 2009. CBO
estimates section 620 would cost $14 million in 2009 and $50
million over the 2009-2013 period.
Loan Repayment for Reserves. Section 546 would increase the
amount of their education loans that DoD can repay for health
care professionals in the reserves. This section would increase
the current repayment amount of $20,000 up to the $60,000 that
active-duty servicemembers may receive. Based on information
from DoD, CBO estimates that under section 546 about 750
reservists would receive an average increase in loan repayments
equaling $32,400. The authority to pay this benefit would
expire December 31, 2009, and CBO estimates the provision would
cost $24 million in 2009 and total $34 million over the 2009-
2013 period.
Defense Health Program. Title VII contains several
provisions that would affect DoD's health care benefits.
Waiver of Cost Sharing for Preventive Services. Section 711
would authorize the Secretary of Defense to waive all
copayments and deductibles for preventive health services. The
waiver would apply to all active duty and retiree beneficiaries
and their dependents who are not Medicare-eligible. In total,
CBO estimates that section 711 would cost about $600 million
over the 2009-2013 period.
This waiver would primarily affect the out-of-pocket costs
for beneficiaries covered by TRICARE Standard, a fee-for-
service plan. Beneficiaries enrolled in TRICARE Prime, an HMO
option, would be unaffected, since they are not required to
make copayments for preventive services.
Based on data from DoD, CBO estimates that beneficiaries
covered by TRICARE Standard make about 10 million visits to
health care providers each year, with average out-of-pocket
costs of about $75 per visit. Data from the Centers for Disease
Control and Prevention (CDC) indicate that about 15 percent of
all outpatient visits per year are for preventive services.
Assuming this percentage applies to TRICARE beneficiaries, CBO
estimates that waiving copayments and deductibles for
preventive care services would shift $110 millionper year in
costs from beneficiaries to DoD. Those costs would increase over time
because of inflation, but would be lower in the first year (about $57
million) because of the time needed to issue new regulations and
negotiate new agreements with TRICARE contractors.
Although Medicare-eligible beneficiaries would be excluded
from the waiver, section 711 would allow the Secretary to
reimburse those beneficiaries for any out-of-pocket costs they
may incur for preventive health care services. That
reimbursement authority would expire after fiscal year 2009.
Medicare-eligible beneficiaries are already covered by the
TRICARE For Life benefit, which generally pays the remainder of
any costs not paid under parts A and B of Medicare, including
amounts for preventive services. However, some preventive
services covered by TRICARE are not covered by parts A and B of
Medicare--most notably the shingles vaccine.\1\ In those cases,
regular TRICARE Standard copayments and deductibles apply.
---------------------------------------------------------------------------
\1\The shingles vaccine is covered by Medicare Part D. However,
beneficiaries of TRICARE For Life generally do not participate in part
D because they already have pharmacy benefits under TRICARE.
---------------------------------------------------------------------------
Based on information from DoD, CBO estimates that as many
as 100,000 beneficiaries per year would seek reimbursement for
the shingles vaccine at an average cost of about $175 per
beneficiary, or almost $18 million per year. In addition,
TRICARE For Life beneficiaries may seek reimbursement for
preventive care received overseas, preventive breast cancer
MRIs, and other services not covered by Medicare. In total, CBO
estimates reimbursements to TRICARE For Life beneficiaries for
preventive services in 2009 would eventually total about $20
million, although CBO estimates only half of the payments would
be made in 2009 and that the rest would occur in 2010, because
of the time needed to write regulations and process claims.
Prohibition on Increase in Pharmacy Copayments. Section 702
would prohibit DoD from increasing the cost-sharing amounts
that beneficiaries pay for pharmaceutical drugs for one year,
until 2010. For fiscal year 2009, the Administration is
proposing to increase the copayment for drugs purchased at
retail pharmacies from the current level of $3 to $15 for a
one-month supply of generic drugs and from $9 to $25 for the
same amount of brand-name drugs. The Administration is also
proposing to increase copayments for brand-name drugs purchased
through its mail order program from the current level of $9 to
$15, and to decrease copayments for generic prescriptions
purchased through the mail order program from $3 to zero. Those
copayment amounts would apply to active-duty dependents and all
retirees and their dependents.
Health care costs for active-duty dependents and non-
Medicare eligible retirees and their dependents are
discretionary costs and are covered under this part of the
estimate. Health care costs for Medicare-eligible retirees and
their dependents are covered by the TRICARE For Life benefit,
which is classified in the budget as a mandatory (i.e., direct
spending) program. CBO's evaluation of the pharmacy costs for
that group of retirees is discussed in the ``Direct Spending''
section of the estimate.
Based on data provided by DoD, CBO estimates that in 2009
about 59 million prescriptions will be filled at retail, mail-
order, and DoD pharmacies by active-duty dependents and non-
Medicare eligible retirees. At the current level of copayments,
those prescription drugs will cost DoD about $3.5 billion that
year. If implemented, CBO estimates that the Administration's
proposed new copayments would reduce that cost by almost $570
million in the first full year. About three-quarters of this
savings to DoD would occur because beneficiaries would bear a
larger portion of the costs through higher copays. The
remainder of the savings would result from reductions in
overall demand and other behavioral changes--increased use of
generic drugs, for example--brought about by the higher
copayments.
The Administration has the authority to implement the
proposed copayment changes under current law. However, in each
of the past several years, the Congress has prohibited DoD from
making such changes. The current prohibition expires on
September 30, 2008. Given this history, CBO assumes that there
is a 50 percent probability that DoD will implement its
proposed copayment structure in fiscal year 2009 absent any
direction from the Congress. Therefore, we estimate that
extending the prohibition through September 30, 2009, would
increase costs relative to current law by $285 million--50
percent of $570 million--over the 2009-2010 period. If DoD
implemented its proposed changes, the full effect of the
savings would not be realized until the second year, due to the
time needed to inform beneficiaries of policy changes, time
lags in the processing of claims, and gradual shifts in
beneficiaries' behavior.
Smoking Cessation Program. Section 713 would require the
Secretary of Defense to create a smoking cessation program
within TRICARE. The program would be available to all
beneficiaries of the TRICARE system who are not eligible for
Medicare. The program would provide a toll-free help line,
Internet-based educational material, and access to nicotine
replacement products and the prescription drug buproprion. CBO
used budget data from a DoD demonstration program--TRICARE's
TOBACCO-FREE ME--to estimate the cost of the help line and
Internet materials, as well as program management. That program
currently receives about $4 million per year and covers about
15,000 beneficiaries. Thus, CBO estimates the cost of extending
a toll-free help line, outreach, and management to all TRICARE
beneficiaries would cost about $25 million per year.
In addition, CBO estimates that the cost of providing
nicotine replacement products and buproprion would be about $15
million per year, based on data from the demonstration program,
as well as an analysis of current consumer spending on products
and pharmaceuticals related to smoking cessation. CBO also
adjusted its estimates to account for the fact that military
personnel have a higher propensity to smoke, relative to the
national average.
Although Medicare-eligible beneficiaries would be excluded
from this program, section 713 would allow the Secretary of
Defense to compensate those beneficiaries for any out-of-pocket
costs related to smoking cessation in fiscal year 2009.
Counseling for smoking cessation is currently covered under
Medicare Part B. Therefore, Medicare-eligible retirees in the
TRICARE system currently have their coinsurance for this
service covered. However, pharmaceuticals such as buproprion
are typically covered under Medicare Part D, which retirees in
the TRICARE system typically do not participate in. Using the
same methodology discussed above, CBO estimates the cost of
refunding 2009 expenditures for buproprion and other products
related to smoking cessation would be about $6 million, of
which half would be reimbursed in fiscal year 2009 and the
remainder in 2010. In total, CBO estimates the cost to
implement section 713 would total about $195 million over the
2009-2013 period.
Prohibition on Increase in Enrollment Fee. Section 701
would prohibit DoD from increasing fees or deductibles for
military retirees enrolled in TRICARE Prime, an HMO option, for
an additional year. (Section 701 of the National Defense
Authorization Act for Fiscal Year 2008 prohibits any increases
in fees or deductibles through fiscal year 2008.) Current
annual enrollment fees for military retirees enrolled in
TRICARE Prime are $230 for individuals and $460 for families.
(Active-duty members and their families do not pay enrollment
fees to participate in TRICARE Prime.) The Administration is
proposing to increase enrollment fees for retirees enrolled in
Prime to amounts ranging from $364 to $594 per year for
individuals and $720 to $1,118 for families. The size of the
fee would be based on the size of individuals' retirement
annuities. The increase would apply to over 600,000 retiree
households with almost 1.5 million beneficiaries. CBO estimates
that the total savings to DoD from increasing those enrollment
fees for one year would be about $264 million, and that the
effect of the fee increase would be spread across two fiscal
years due to the time needed to implement the changes.
However, because the Congress has prohibited DoD from
increasing TRICARE Prime enrollment fees for the last several
years, it is not clear whether DoD would increase the fees
absent any legislative action. Given this history, CBO assumes
that the probability that DoD would increase the TRICARE Prime
enrollment fees under current law is 50 percent. Therefore, we
estimate the cost of prohibiting the Prime enrollment fee
increase for another year would be about $132 million over the
2009-2010 period.
In addition, section 701 would extend by one year the
current prohibition on increasing the amount of the cost-share
that TRICARE beneficiaries pay for hospital stays. CBO
estimates that extending the prohibition for another year would
cost $2 million. In total, CBO estimates that section 701 would
cost $134 million over the 2009-2010 period.
TRICARE Reserve Select Premiums. Section 705 would prohibit
DoD from increasing premiums for participation in the TRICARE
Reserve Select (TRS) health benefit. This benefit provides
health coverage to part-time reserve members. Current premiums
are $972 per calendar year for individuals and $3,036 for
family coverage, which are supposed to be set to cover 28
percent of the total cost per beneficiary.\2\ Under current
law, DoD has the authority to increase those premiums each year
to reflect rising medical costs. Assuming that current premiums
accurately reflect 28 percent of the total cost, CBO estimates
that premiums would need to increase an average of 6 percent
per year to maintain that same cost percentage, resulting in
additional collections of about $160 million over the 2009-2013
period.
---------------------------------------------------------------------------
\2\Although 10 U.S.C. 1076d sets TRS premiums at 28 percent of the
total estimated cost per beneficiary, there is some dispute about
whether DoD has been accurately estimating those costs. See Government
Accountability Office (GAO), Military Health Care: Cost Data Indicate
That TRICARE Reserve Select Premiums Exceeded the Costs of Providing
Program Benefits, GAO-08-104 (December 2007). DoD has not announced any
major changes to TRS premiums as a result of this GAO report. For this
cost estimate, CBO assumes there will be no major downward adjustment
of the current premiums.
---------------------------------------------------------------------------
However, in each of the last several years, the Congress
has used the annual Defense Authorization Act to prohibit DoD
from increasing TRS premiums. The current prohibition expires
on September 30, 2008. Given this history, CBO assumes there is
a 50 percent probability that DoD will increase TRS premiums in
fiscal year 2009 absent any direction from the Congress.
Therefore, we estimate that extending the prohibition
indefinitely would increase costs relative to current law by
almost $80 million 50 percent of $160 million over the 2009-
2013 period.
Chiropractic Care. Section 704 would require DoD to provide
chiropractic services to all current active-duty members.
Currently, chiropractic care is only available to active-duty
members at 49 military treatment facilities (MTFs). Based on an
analysis of current military base population reports, CBO
estimates that about 700,000, or roughly half, of the 1.4
million active-duty members are currently able to receive
chiropractic services.
To estimate the cost of providing care to the rest of the
active-duty population, CBO used information from the final
report of DoD's chiropractic health care demonstration
program,\3\ which took place between 1995 and 1999. Based on
that information and adjusting for inflation since then in
health care costs, CBO estimates that extending chiropractic
care to the remainder of the active-duty population would
result in 200,000 additional visits to chiropractors each year,
at a cost of about $105 per visit, or just over $21 million per
year.
---------------------------------------------------------------------------
\3\ Birch and Davis Associates, Inc., Chiropractic Health Care
Demonstration Program: Final Report (report submitted to the Office of
the Assistant Secretary of Defense (Health Affairs), February 2000).
---------------------------------------------------------------------------
However, evidence suggests that many individuals who seek
out chiropractic care do so as a substitute for more
traditional forms of care, such as visits to primary care
physicians, and other forms of physical therapy. Based on
information in the Final Report, the reduced usage of those
other forms of care could offset the added cost of chiropractic
care by about one-half. Therefore, CBO estimates the added cost
of providing chiropractic care to the remainder of the active-
duty population would be about $11 million per year, or about
$49 million over the 2009-2013 period. Costs would be lower in
the first year because of the time needed to set up
chiropractic clinics at other MTFs and the time needed to
negotiate contracts with private-sector providers.
Other Health Care Provisions. CBO estimates that other
provisions in title VII would increase DoD health care costs by
about $130 million over the 2009-2013 period. Those other
provisions would:
Establish a peer-reviewed research program
to study injuries to extremities,
Create a center of excellence in the
prevention and treatment of auditory injuries,
Authorize a demonstration program centered
around a monthly allowance to encourage servicemembers
to use preventive health services, and
Require a three-year demonstration program
on health risk management.
Matters Relating to Foreign Nations. The bill contains
several provisions that would affect spending on matters
relating to foreign nations.
DoD Provisions. Several provisions in title XII would
affect DoD's activities involving foreign nations. CBO
estimates that the costs for those programs would total $500
million in 2009 and about $1.1 billion over the 2009-2013
period. Various sections of title XII would modify
authorization levels for existing programs by:
Extending by two years, through 2010, the
current authorization of $75 million a year to develop
the capacity of the Pakistan Frontier Corps,
Extending by two years, through 2010, the
current authorization of $300 million a year to expand
the capacity of foreign military forces to conduct
counterterrorism operations,
Extending by two years, through 2010, the
current authorization of $100 million a year for U.S.
efforts to secure and stabilize foreign countries,
Increasing the authorization level to $35
million a year for U.S. efforts to provide special
operations forces to combat terrorism ($25 million is
currently authorized through 2010 for that purpose),
Increasing the authorization level to $35
million a year for foreign officials to receive
training under the Regional Defense Counterterrorism
Fellowship Program ($25 million is currently authorized
for that purpose),
Extending by one year, through 2009, the
current authorization of $5 million to participate in
multinational military centers of excellence meetings.
Department of State Provisions. Title XVI would establish
an Office of the Coordinator for Reconstruction and
Stabilization within the Department of State to conduct
reconstruction and stabilization operations. The bill would
authorize the Secretary of State to establish and maintain a
response readiness corps and a civilian reserve corps and would
authorize the appropriation of such sums as may be necessary
over the 2007-2010 period for personnel, education and
training, equipment, travel, and deployment costs. The bill
also would authorize the President to provide assistance of up
to $100 million a year over the 2008-2010 period to stabilize
and rebuild a country or region that is in, or emerging from,
conflict or civil strife. CBO estimates that those programs
would cost about $650 million over the 2009-2013 period.
Direct spending
The bill contains provisions that would affect direct
spending, and CBO estimates that those provisions combined
would increase such spending by $2 million in 2009, but would
decrease such spending by $13 million over the 2009-2013 period
and $75 million over the 2009-2018 period (see Table 4). The
largest budgetary effects would result from changes in the
TRICARE pharmacy benefit and retirement programs, and the sale
of assets from the National Defense Stockpile.
Stockpile Sales. Enacting the bill would lead to increased
receipts from the sale of material in the National Defense
Stockpile. Section 1412 would increase by $410 million the
target contained in the National Defense Authorization Act for
Fiscal Year 1999 (Public Law 105-261, as most recently amended
by Public Law 110-181) for continual sales of tungsten from the
National Defense Stockpile, and it would extend sales through
fiscal year 2016. CBO estimates that there would be sufficient
quantities of tungsten in the stockpile to achieve additional
receipts of $410 million over the 2009-2016 period.
Section 1412 also would extend by one year the period to
sell materials from the National Defense Stockpile as
previously authorized in the National Defense Authorization Act
for Fiscal Year 1998 (Public Law 105-85 and most recently
revised by Public Law 107-107). These sales are set to expire
on September 30, 2008, and CBO believes that all materials will
be sold by that date. Thus, CBO estimates that no additional
receipts would be achieved by extending the sales through 2009.
Prohibition on Increase in Pharmacy Copayments. Section 702
would prohibit DoD from increasing the cost-sharing amounts
that beneficiaries pay for pharmaceutical drugs until 2010. For
fiscal year 2009, the Administration is proposing to increase
copayments for drugs purchased at retail pharmacies from the
current level of $3 to $15 for a one-month supply of generic
drugs and from $9 to $25 for the same amount of brand-name
drugs. The Administration is also proposing to increase
copayments for brand-name drugs purchased through its mail
order program from the current level of $9 to $15, and to
decrease copayments for generic prescriptions purchased through
the mail order program from $3 to zero. Those copayment amounts
would apply to active-duty dependents and all retirees and
their dependents.
Medicare-eligible retirees and their dependents are covered
by DoD's TRICARE For Life benefit, which is classified in the
budget as a mandatory (i.e., direct spending) program, and is
covered under this part of the estimate. Health care costs for
active-duty dependents and non-Medicare eligible retirees are
discretionary costs. CBO's evaluation of the pharmacy costs for
that group of beneficiaries is discussed in the ``Spending
Subject to Appropriation'' section of the estimate.
TABLE 4.--ESTIMATED IMPACT OF H.R. 5658 ON DIRECT SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------
Total Total
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009-2013 2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
Stockpile Sales:
Estimated Budget Authority.................... -70 -70 -60 -50 -50 -50 -50 -10 0 0 -300 -410
Estimated Outlays............................. -70 -70 -60 -50 -50 -50 -50 -10 0 0 -300 -410
Prohibition on Increase in Pharmacy Copayments:
Estimated Budget Authority.................... 75 230 40 0 0 0 0 0 0 0 345 345
Estimated Outlays............................. 75 230 40 0 0 0 0 0 0 0 345 345
Delayed Retirement for Military Technicians:
Estimated Budget Authority.................... -5 -7 -7 -6 -6 -6 -5 -5 -5 -4 -31 -56
Estimated Outlays............................. -5 -7 -7 -6 -6 -6 -5 -5 -5 -4 -31 -56
Shift of Payments from the Military Retirement
Fund:
Estimated Budget Authority.................... 0 0 0 0 0 0 0 0 0 0 0 0
Estimated Outlays............................. 0 0 0 0 -45 45 0 0 0 0 -45 0
Transfer from the National Defense Stockpile Fund:
Estimated Budget Authority.................... -40 0 0 0 0 0 0 0 0 0 -40 -40
Estimated Outlays............................. 0 0 0 0 0 0 0 0 0 0 0 0
Survivor Allowance:
Estimated Budget Authority.................... 3 3 4 4 5 5 5 2 0 0 19 31
Estimated Outlays............................. 3 3 4 4 5 5 5 2 0 0 19 31
Retired Pay for Reserve Members Wounded in Action:
Estimated Budget Authority.................... * 1 2 2 3 3 3 4 4 5 8 27
Estimated Outlays............................. * 1 2 2 3 3 3 4 4 5 8 27
Retirement Age of Certain Reserve Officers:
Estimated Budget Authority.................... -1 -2 -2 -1 -1 -1 -1 -1 -1 -1 -7 -12
Estimated Outlays............................. -1 -2 -2 -1 -1 -1 -1 -1 -1 -1 -7 -12
Education Benefits for Reserve Component Members:
Estimated Budget Authority.................... -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -5 -10
Estimated Outlays............................. -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -5 -10
Retirement of Warrant Officers:
Estimated Budget Authority.................... 1 1 * * 1 1 1 1 1 1 3 8
Estimated Outlays............................. 1 1 * * 1 1 1 1 1 1 3 8
Minimum Service for Retirement as an Officer:
Estimated Budget Authority.................... 0 0 0 0 0 1 1 * * * 0 2
Estimated Outlays............................. 0 0 0 0 0 1 1 * * * 0 2
Correction of Military Records:
Estimated Budget Authority.................... 1 0 0 0 0 0 0 0 0 0 1 1
Estimated Outlays............................. 1 0 0 0 0 0 0 0 0 0 1 1
Sale of Floating Drydock:
Estimated Budget Authority.................... -1 0 0 0 0 0 0 0 0 0 -1 -1
Estimated Outlays............................. -1 0 0 0 0 0 0 0 0 0 -1 -1
Total--Changes in Direct Spending:
Estimated Budget Authority................ -38 155 -24 -52 -49 -48 -47 -10 -2 0 -8 -115
Estimated Outlays......................... 2 155 -24 -52 -94 -3 -47 -10 -2 0 -13 -75
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.
Based on data provided by DoD, CBO estimates that by 2009
about 58 million prescriptions will be filled at retail, mail-
order, and DoD pharmacies by TRICARE For Life beneficiaries. At
the current level of copayments, those prescription drugs will
cost DoD about $3.9 billion per year. If implemented, CBO
estimates that the Administration's proposed copayment amounts
would reduce that cost by almost $690 million in the first full
year. About three-quarters of that savings would occur because
the beneficiaries would bear a larger portion of the cost
through higher copayments. The remainder of the savings would
result from reductions in overall demand and other behavioral
changes--increased use of generic drugs, for example--brought
about by the higher copayments.
CBO assumes there is a 50 percent probability that DoD will
implement its proposed copayment structure in fiscal year 2009
absent any direction from the Congress. Therefore, we estimate
that extending the prohibition through September 30, 2009,
would increase costs relative to current law by $345 million--
50 percent of $690 million--over the 2009-2011 period. If DoD
implemented its proposed changes, the full effect of the
savings would not be realized until the second year, due to the
time needed to inform beneficiaries of policy changes, time
lags in the processing of claims, and gradual shifts in
beneficiaries' behavior. Therefore, the cost of an additional
one-year prohibition would affect costs over several years.
Delayed Retirement for Military Technicians. Dual-status
military technicians are civilian employees of DoD who are
required to hold concurrent positions in the reserves. Under
current law, some technicians in the Air Force Reserve and Air
National Guard are forced to retire from their civil service
positions because they have both reached the maximum years-of-
service for officers in their grade and become eligible for an
unreduced civil service retirement, usually at age 55.
Section 511 would direct the Secretary of the Air Force to
allow those technicians to remain in the reserves until they
reach age 60, thus allowing them to continue in their civil
service positions. Under this section, some technicians who
would otherwise retire at age 55 would instead choose to delay
their retirements by one or more years, reducing direct
spending for civil service retirement and health care. (Because
military retirement benefits for reservists do not begin until
they reach age 60, there would not be a similar reduction in
spending for military retirements.)
Based on information from DoD, CBO estimates that in 2009,
about 90 military technicians would delay their retirements by
one or more years. Each year, a new cohort of technicians could
choose to stay in the civilian workforce and delay retirement,
eventually resulting in about 250 fewer retirements each year.
CBO estimates that this section would result in a net reduction
in direct spending for civil service retirement annuities and
health care benefits of $56 million over the 2009-2018 period.
Shift of Payments from the Military Retirement Fund.
Section 1004 would reduce by 1 percent all payments scheduled
to occur in September 2013 from the Military Retirement Fund.
Annuitants would be reimbursed for this one-time reduction in
October 2013. Based on the amounts of current outlays from the
fund, and taking into account expected inflation and changes in
the number of retirees, CBO estimates that this provision would
shift about $45 million in outlays from fiscal year 2013 to
2014, but would not affect total spending over the 2013-2018
period.
Transfer from the National Defense Stockpile Fund. Section
1004 also would require the Secretary of Defense to transfer
$40 million from the unobligated balances of the National
Defense Stockpile Transaction Fund to the U.S. Treasury, where
they would be deposited as miscellaneous receipts. CBO
estimates that the transfer would not affect federal spending
over the 2009-2018 period because under current law those
balances are unlikely to be spent over the next 10 years.
Survivor Allowance. The National Defense Authorization Act
for Fiscal Year 2008 (Public Law 110-181) authorized a monthly
allowance to be paid to those recipients of Survivor Benefit
Plan (SBP) payments who have their annuities reduced dollar-
for-dollar by the amount of Dependency and Indemnity
Compensation they receive from the Department of Veterans
Affairs. The amount of that monthly allowance will be $50 in
fiscal year 2009, increasing by $10 each year until it reaches
$100 per month in 2014. The allowance is scheduled to be
terminated five months into fiscal year 2016. As originally
written, Public Law 110-181 excluded the survivors of members
who died on active duty from receiving the allowance. Section
643 would eliminate this exclusion. Based on data from DoD's
Office of the Actuary, CBO estimates that almost 4,500
additional survivors would receive the allowance under this
section, which would increase direct spending for military
retirement by $31 million over the 2009-2016 period.
Retired Pay for Reserve Members Wounded in Action. Section
641 would allow reserve members who retired from the military
because of wounds received in combat to have their retirement
annuities calculated as if their years of service had all been
spent on full-time active duty. (Under current law, such
annuities are based on a combination of active and part-time
reserve duty.) Based on data from DoD's Office of the Actuary
and the Defense Manpower Data Center, CBO estimates that such a
change would increase the amount of annual compensation paid to
those members by about 50 percent, from an average of $10,000
per year to about $15,000 per year. Based on recent casualty
statistics, CBO estimates that about 220 new disability
retirees would benefit each year from that change in the
annuity calculation. Direct spending for military retirements
would increase by about $27 million over the 2009-2018 period,
CBO estimates.
Retirement Age of Certain Reserve Officers. Section 514
would allow officers serving in the National Guard in state
headquarters positions to remain in an active status until age
62. Currently, they must retire at age 60. CBO estimates that
this change would decrease spending from the Military
Retirement Fund because some officers would begin receiving
retirement annuities at a later date than they otherwise would
have. Based on information from DoD, we estimate that, under
section 514, about 25 officers each year would delay their
retirements by one year and would forgo about $70,000 in
annuities, reducing retirement expenditures by about $2 million
annually. The annual savings would decrease over time however,
as those officers would receive larger annuities when they do
retire. In total, CBO estimates this section would reduce net
direct spending for military retirements by $12 million over
the 2009-2018 period.
Education Benefits for Reserve Component Members. Section
545 would limit the use of education benefits by members of the
selected reserve who separate from the reserves after serving
on active duty in support of a contingency operation. Those
individuals would have to complete their service contract under
honorable conditions to remain eligible to receive benefits
after they separate. CBO estimates that this section would
decrease the number of reservists receiving benefits by about
200 per year, thereby reducing direct spending for veterans'
education benefits by $10 million over the 2009-2018 period.
Retirement of Warrant Officers. Section 501 would allow the
Navy and Marine Corps to require warrant officers who have at
least 30 years of active-duty service to retire. This provision
would increase spending from the Military Retirement Fund in
two ways. First, CBO estimates it would result in the
retirement of an additional 30 warrant officers in 2009 who
would otherwise not have retired, based on data from the
Defense Manpower Data Center. Also, since most warrant officers
with over 30 years of service are in the grade of W-5, it would
open up the ranks and allow more officers in the grade of W-4
to receive a promotion to W-5 before they retire. A retirement
annuity for a member who retires at W-5 is about $15,000 per
year higher than an annuity for a member that retires at W-4.
In total, CBO estimates this section would increase outlays
from the Military Retirement Fund by $8 million over the 2009-
2018 period.
Minimum Service for Retirement as an Officer. Officers who
began their military career as an enlisted servicemember must
complete at least 10 years of commissioned service to retire as
an officer. Those with less than 10 years commissioned service
will have their retirement annuities based on the highest
enlisted grade the member achieved. Section 503 would allow
members to retire as officers with a minimum of eight years of
commissioned service. This authority would apply to fiscal year
2014 only. Based on information from the services, CBO
estimates that about 35 officers would be allowed to retire
under this authority in 2014. Because those officers would
retire earlier than they otherwise would have, section 503
would increase costs to the Military Retirement Fund by about
$2 million over the 2014-2018 period.
Correction of Military Records. Section 592 would authorize
the Secretary of Defense to pay interest on certain financial
awards arising from the correction of military records. That
section provides retroactive authority to pay interest on
claims for lost pay, allowances, and other pecuniary benefits
awarded by a Correction Board ruling on or after October 1,
2007, to set aside a prior court-martial conviction. According
to DoD, four individuals have received such rulings since that
date. Those cases were from a 1944 mass court-martial that
resulted in 31 convictions.
Section 592 also would specify the rate to use in
calculating the interest payment for financial awards. Based on
information from DoD, CBO assumes an interest rate of 10
percent and estimates that each of these four veterans would
receive roughly $350,000. Because these payments are mandatory,
this section would increase direct spending by about $1 million
in 2009.
Drydock Sales. Section 1011 would allow the Navy to convey
a floating drydock (known as AFDL-23), located in Aransas Pass,
Texas, to Gulf Copper Ship Repair and would require Gulf Copper
to pay the U.S. government an amount equal to the drydock's
fair-market value.
Based on information from the Navy, CBO estimates that the
sale of this drydock would generate about $1 million in
offsetting receipts in 2009.
Other Provisions. The following provisions would have an
insignificant effect on direct spending, primarily because they
would affect few individuals or because they authorize both the
collection and spending of funds so that the net budgetary
impact is quite small:
Sections 515 and 516 would delay some
retirements by allowing lieutenant generals in the
reserves to remain in an active status until age 66 and
by allowing medical officers and chaplains in the
Reserves to remain in an active status until age 68.
Section 544 would increase--from 25 to 125--
the number of defense industry employees who
participate in the Defense Product Development Program
at the Naval Postgraduate School. The Navy has the
authority to collect and spend any tuition they
collect.
Section 642 would allow certain survivors
who previously transferred their SBP benefits to their
children to begin receiving their benefits again.
Section 644 would allow certain active-duty
members who are eligible for retirement and who join
the selected reserves to have their retirement
annuities recalculated at age 60.
Section 645 would allow reserve retirees to
have their annuities recalculated for any additional
time served in an active status after the age of 60.
Section 646 would correct an inadvertent
reduction to the annuities of certain survivors that
resulted from the phase-out of Supplemental SBP.
Section 647 would allow the survivors of
military retirees kidnapped in Iraq or Afghanistan to
continue to receive that retiree's full annuity for up
to seven years.
Section 842 would expand the authority of
Secretaries of Defense and Homeland Security to retain
and spend fees received from trademark licensing.
Section 911 would extend a pilot program
that allows DoD to provide satellite tracking services
to non-U.S. government entities. Under this program DoD
is allowed to charge fees to cover the costs of
providing such services and to spend such fees.
Section 942 would permit the Secretary of
Defense to waive the reimbursement of costs associated
with personnel from nongovernmental and international
organizations attending DoD's Regional Centers for
Security Studies. DoD has the authority to retain and
spend such reimbursements.
Title XVI would allow the Department of
State to designate volunteers for the civilian reserve
corps as temporary federal employees, which could
result in small costs or savings to federal retirement
programs.
Section 3111 would allow the Secretary of
Energy to receive and spend contributions made to
assist in the disposition of excess weapons grade
plutonium in the Russian Federation. This authority
would expire on December 31, 2013.
Intergovernmental and Private-sector Impact: Section 4 of
the Unfunded Mandates Reform Act excludes from the application
of that act any legislative provisions that enforce the
constitutional rights of individuals. CBO has determined that
section 591 would fall within that exclusion because it would
amend the authority of the President to employ the armed
services to protect individuals' civil rights. Therefore, CBO
has not reviewed that section of the bill for mandates.
Other provisions of H.R. 5658 contain both
intergovernmental and private-sector mandates, but CBO
estimates that the annual cost of those mandates would not
exceed the thresholds established in UMRA ($68 million for
intergovernmental mandates and $136 million for private-sector
mandates in 2008, adjusted annually for inflation).
Increasing the end strength of the Armed Services
Sections 401 and 412 combined would increase the costs of
complying with existing intergovernmental and private-sector
mandates as defined in UMRA by increasing the number of
servicemembers and reservists on active-duty. Those additional
servicemembers would be eligible for protection under the
Servicemembers Civil Relief Act (SCRA), including the right to
maintain a single state of residence for purposes of state and
local personal income taxes and the right to request a deferral
in the payment of certain state and local taxes and fees. SCRA
also requires creditors to reduce the interest rate on
servicemembers' obligations to 6 percent when such obligations
predate active-duty service and allows courts to temporarily
stay certain civil proceedings, such as evictions,
foreclosures, and repossessions. Extending these existing
protections would constitute intergovernmental and private-
sector mandates and could result in lost revenues to government
and private-sector entities.
The number of active-duty servicemembers covered by SCRA
would increase by less than 1 percent. CBO expects that
relatively few of these servicemembers would take advantage of
the deferrals in certain state and local tax payments; the lost
revenues to those governments would be insignificant.
CBO does not have sufficient information to estimate
precisely the increased costs of complying with the existing
private-sector mandates in SCRA. Servicemembers' utilization of
the various provisions of the SCRA depends on a number of
uncertain factors, including how often and how long they are
deployed. Nonetheless, because the increase in the number of
active-duty servicemembers covered by SCRA would be so small,
CBO expects that the increased costs also would be small.
Providing benefits to state and local governments
This bill contains several provisions that would benefit
state and local governments. Some of those provisions would
authorize aid for certain local schools that serve dependents
of defense personnel and convey certain parcels of land to
state and local governments. Any costs to those governments
would be incurred voluntarily as a condition of receiving
federal assistance.
Previous CBO estimates: On March 4, 2008, CBO transmitted a
cost estimate for H.R. 1084, the Stabilization and
Reconstruction Civilian Management Act of 2008, as ordered
reported by the House Committee on Foreign Affairs on February
27, 2008. Title XVI of H.R. 5658 contains provisions that are
similar to those in H.R. 1084, and CBO's estimate of the costs
for title XVI is identical to our estimate of the costs for
H.R. 1084.
Estimate prepared by: Federal costs: Defense Outlays--Kent
Christensen; Military construction and multiyear procurement--
David Newman; Military and civilian personnel--Dawn Regan;
Military retirement and health care--Matthew Schmit; Operation
and maintenance--Jason Wheelock; Reserve education benefits--
Camille Woodland; Stockpile sales and foreign affairs--Raymond
J. Hall.
Impact on state, local, and tribal governments: Neil Hood.
Impact on the private sector: Daniel Frisk.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Shipbuilding and Conversion, Navy (Correction)
The budget request contained $920.0 million for procurement
of two Littoral Combat Ships. The committee understands that
the Navy owns residual materials procured under the cancelled
contracts for LCS-3 and LCS-4, which could be provided as
government furnished equipment for the construction of at least
one of the ships to be procured in fiscal year 2009. The
Shipbuilding and Conversion, Navy, tables in title I of part 1
of the committee report (H. Rept. 110-652) accompanying the
Duncan Hunter National Defense Authorization Act for Fiscal
Year 2009 incorrectly indicated that the committee recommended
a decrease of $80.0 million for one Littoral Combat Ship. The
committee recommends $840.0 million, a decrease of $80.0
million, for two Littoral Combat Ships. The corrected table
follows:
Research, Development, Test, and Evaluation (Correction)
The Tactical Airborne Reconnaissance table in title II,
Research, Development, Test and Evaluation, Navy of the
committee report (H. Rpt. 110-652) accompanying the Duncan
Hunter National Defense Authorization Act for Fiscal Year 2009
incorrectly indicated that the committee recommended a $5.0
million increase for the Peer-Reviewed Research Extremity War
Injuries within this account. The Medical Advanced Technology
table in title II, Research, Development, Test and Evaluation,
Army, should be increased by $5.0 million to reflect the
amendment passed by the committee on May 14, 2008. The
corrected tables follow:
Compliance With House Rule XXI (Correction)
Pursuant to clause 9 of rule XXI of the Rules of the House
of Representatives, the committee is required to include a list
of congressional earmarks, limited tax benefits, or limited
tariff benefits, as defined in clause 9(d), 9(e), or 9(f) of
Rule XXI of the Rules of the House of Representatives, which
are in the bill or the report.
The following supplemental list represents those items
omitted from the list contained in part 1 of the committee
report (H. Rept. 110-652) accompanying the Duncan Hunter
National Defense Authorization Act for Fiscal Year 2009 due to
inadvertent clerical oversight. This list does not include any
new programs or projects, but rather a list of member requests
that duplicate a request for a program or project which was
made by other members and disclosed in the original report. The
committee notes that although the Rules of the House of
Representative do not require that the list of congressional
earmarks, limited tax benefits, or limited tariff benefits be
comprehensive, in the interest of transparency, the committee
strives to include all such member requests in its list.
Record Votes (Appended)
Pursuant to Rule 17(d) of the Committee on Armed Services
rules, the following pages contain four appended record votes
contained in part 1 of the committee report (H. Rept. 110-652)
accompanying the Duncan Hunter National Defense Authorization
Act for Fiscal Year 2009 to reflect the members of the
committee who were unable to vote during the committee markup
because they were in attendance at other committee,
subcommittee, or conference committee meetings. The members are
noted by asterisks.