Col. Mike Hayden, USAF (Ret.), deputy director of government relations for the nonpartisan Military Officers Association of America(MOAA), is concerned that the pace of these force reductions is driven by spending concerns, rather than by conditions on the ground in Afghanistan. “We’re not opposing the drawdown that has been put forward,” said Hayden. “We’re just concerned that – as has been the case with peace dividends in the past – we might start drawing down the force prematurely when the mission requirements haven’t been coming down at the same time. We don’t want to front-load these force cuts just so we can get to that budget number. Right now we’ve hurt the services, based on their dwell time.”

•Slower growth in active-duty military pay. The Pentagon proposes a 1.7 percent increase in basic pay beginning January 2013. The U.S. Code of Federal Regulations (Title 37, Section 1009) provides a permanent formula for an automatic annual military pay raise, indexing it to the annual increase in the Employee Cost Index. For six of the past eight years, Congress has added an additional .5 percent to this raise; this year, as in 2011, the legislature held itself to the indexing formula. For years beyond FY 2014, raises will be lower than the Employment Cost Index by an as-yet unspecified amount.

It’s understandable that military personnel would take exception to receiving lower pay increases than their private-sector counterparts – though for most of the past decade, annual military raises have been consistently a half-percent higher than in the private sector. Todd Harrison, senior fellow for Defense Budget Studies at the nonpartisan Center for Strategic and Budgetary Assessments (CSBA), describes pay increases as a casualty of the Budget Control Act. “They had to find the money,” he said. “And you save billions and billions just by slowing the rate of growth of military pay, because it’s one of the biggest components of the budget.”

Lower raises are still raises; they’re just smaller ones, and Hayden sees slower pay growth as a calculated risk by the Pentagon – and one that may come back to hurt the military. “They [DoD] are willing to assume some risks because retention has been so high and the job market has been so poor,” Hayden said. “The pay is very good right now, but our biggest concern is that when the economy actually does turn around, and the job market does open up, when you start putting caps on pay you’re going to have real problems with retention.”

 

The Military Health Care System: Shifting the Burden

The most hotly debated personnel proposals in the 2013 budget overview are those shifting Military Health System (MHS) costs out of the Pentagon and onto active-duty and retired service members. In its budget overview, the Pentagon introduces these provisions by explaining that the system, which now covers 9.6 million beneficiaries, costs more than twice as much as the $19 billion spent in FY 2001 – the FY 2013 request calls for $48.7 billion.

“To address these rapidly rising costs,” the proposal states, “the Department has taken a comprehensive look at all facets of the MHS health care model – emphasizing the need to balance the number one priority of continuing to provide the highest quality care and service, while ensuring fiscally responsible management for long-term sustainment of the MHS benefit.”

The budget overview’s proposed changes to the MHS over the next five years include:

•Higher enrollment fees for TRICARE Prime members. In a recent report entitled “FY 2012 National Defense Authorization Act: Selected Military Personnel Policy Issues,” the Congressional Research Service states that about 700,000 households, or 1.6 million beneficiaries, are enrolled in TRICARE Prime, the military’s health plan for working-age retirees.

While modest ($30 more annually per individual, $60 per family), the TRICARE Prime fee increases in the 2012 budget were the first since the TRICARE program was fully established in 1996, and Congress has authorized fees to be raised in future years by the same cost-of-living adjustment (COLA) applied to military retired pay. This is also modest, compared to the projected per capita increase in health care costs for Americans over the next decade, which is estimated at about 5 to 6 percent per year by the Centers for Medicare and Medicaid Services.

The 2013 budget overview proposes additional increases to TRICARE Prime enrollment fees in the future. For the highest-earning working-age retirees, the proposal calls for the current (2012) annual family enrollment fee of $520 to nearly quadruple, to $2,048, by FY 2017; for those in the lowest tier of retirement pay, it will increase from $520 to $893.

•TRICARE-for-Life Benefit Program annual enrollment fees. The proposal calls for the first-ever enrollment fees for military retirees 65 and older – for the highest-earning individuals, $115 annually, increasing to $475 annually over the next five years; for the lowest-earning, $35 annually, increasing to $158.