•TRICARE Standard/Extra fees and deductibles. There is currently no annual enrollment fee for the military’s fee-for-service programs, but the 2013 budget proposes a $140 annual fee for families, to be raised to $250 in 2017. In addition, the Pentagon proposes an increase in deductibles, from $300 per family in 2012 to $580 in 2017.

•Higher pharmacy co-payments. The Pentagon proposes higher co-payments in every category – generic, brand name, and non-formulary – over the next five years, with the exception of generic mail-order medications, which will remain free until 2017, at which time the fee will be $9. Under the proposal, non-formulary prescriptions will only be available by mail beginning in FY 2013.

TRICARE fees have been one of the most significant concerns for the Pentagon over the last decade-and-a-half. Three administrations have failed to increase individual premiums at all. The reason for this stagnation has been almost entirely political; few legislators have wanted to take a position that would raise the ire of service members and their advocates.

But the Pentagon’s health care expenses have tripled over the last decade, and the government-borne health care costs of military retirees under 65 – most of whom are working second careers in a civilian sector – have been a particular focus for reform. Because TRICARE fees remained frozen for 16 years, while health insurance premiums for families soared, most of these working military retirees, understandably, chose to stay with TRICARE Prime rather than enroll with their private employer – thereby shifting cost increases onto the Department of Defense, which has had to devote an ever-increasing portion of its budget to cover these health care costs.

“Because fees are so low, it’s incentivizing working-age retirees to go on the government military health care system instead of taking health care from the private employer,” Harrison said. “So you want to raise the fee high enough that people won’t have that incentive. It saves DoD a tremendous amount of money that they can put toward better training and better equipment for our troops. That’s the tradeoff: We’re either subsidizing health care for retirees, or we could use that money for better training and equipment for today’s forces.”

The Pentagon’s proposal to shift some of those costs back to individuals – about $13 billion over the next five years – would constitute a sizeable change. $2,048 is real money, but the Pentagon is betting that it can be borne by military retirees who are earning at least a $45,179 annual retirement pension – and most of whom, in addition to that pension, are earning another salary. Four times greater than the current annual enrollment fee is still less than half what the average American family pays in annual health insurance premiums – $4,728 in 2011, according to the annual index compiled by Milliman, an international actuarial and consulting firm. The annual TRICARE Prime fee paid by retirees in the lowest income bracket, $0 to $22,589 annually, will be a more modest $893.

In a release soon after the budget was revealed on Feb. 13, Vice Adm. Norb Ryan Jr., USN (Ret.), president of MOAA, made it clear that comparing military and private-sector health coverage was, in his organization’s view, assuming a false equivalence.

“Throughout a service career,” Ryan said, “military people have been told that their decades of service and sacrifice constitute the steep up-front premium that will earn them military health coverage in retirement. Now, after the fact, they’re proposing to change a service-based program to a need-based system that may be appropriate for welfare recipients, but is a gross insult to those who already have completed decades of service to their country.”

Ryan’s reference to the “need-based” system constitutes a major objection voiced not only by MOAA, but also by other military support organizations. While appropriate for entitlement programs such as Social Security and unemployment benefits, they argue, it’s hardly applicable to a benefit earned through service.

“We call it ‘means testing,’” said Hayden, “because it’s based on the amount of retired pay that the service member receives. It’s the only federal retirement program, or health care benefit for federal employees, that would be tiered based on the amount of income they receive. Federal retirees pay a specific premium, based on just being a federal retiree. This [proposal] would now place military retirees in a different class – and it only looks at their retired pay income. It doesn’t take even a look at what other income the individual could be making in the private sector.”