The Congressional Budget Office has been tasked with an enormous responsibility – to find opportunities for cutting the federal budget and reigning in the federal deficit. On the docket are over 100 potential budget cuts, some of which would have a direct impact on military and veterans benefits.
These options come at an important time, because Congress needs to make budget cuts and get them signed into law before Sequestration initiates automatic budget cuts (Sequestration hasn’t been solved yet; the politicians have only come up with temporary solutions up to this point).
Areas singled out by the CBO include: Capping Military Pay Raises, Increasing TRICARE Fees, Changing Concurrent Receipt Rules, Changing VA Service-Connected Eligibility for Certain Conditions, Tighten Individual Unemployability Benefits.
Let’s take a look at some of the options on the cutting board (as seen in this article by Military.com):
Capping Military Pay Raises
Military pay has come a long way in the last 15 years, when the government made a concerted effort to bring military pay up to par with civilian standards. The effect was positive for troop retention, and in many cases, military pay was brought closer civilian standards (there will never be an apples to apples comparison between civilian and military pay, just as there is no apples to apples comparison to pay in a major city on one of the coasts vs. someone who lives in a small rural town in the South).
The problem is that pay rate changes are cumulative, and add up to a substantial burden over time, especially when it trickles into military retirement pensions. The option put on the table isn’t to cut military pay, but to cap the growth rate. Instead of seeing pay rates rise at the rate of a half-percentage growth above the civilian sector wage growth, the CBO lays the option of growing military pay rates at half a percentage point below civilian sector pay rate growth. The CBO doesn’t anticipate a major change to retention in the near term, and of course, they could always recommend wage growth in the event retention rates stalled or decreased.
Increasing TRICARE Fees
TRICARE is one of the most beloved benefits among troops, retirees, and their respective families. It is also one of the largest and fastest growing expenses related to military personnel. And with the rates that health care expenses are increasing, this isn’t expected to change soon. The CBO hasn’t listed any options for increasing TRICARE costs for active duty members and their families, but they do list increasing TRICARE fees for retirees as an option. And I don’t think this is the last we will hear about this.
The Congressional Budget Office lists two options for increasing TRICARE fees:
- Require TRICARE for Life members (retirees, spouses, and survivors age 65 and older) to pay the first $550 of medical care expenses not covered by Medicare, then pay 50% of the next $4,950 in expenses for a total out of pocket expense of $3,025 ($2,475 + $550).
- Make changes to retiree health care for retirees enrolled in TRICARE Prime, including raising fees, deductibles, and co-pays.
These changes would save the government billions of dollars over the next decade. unfortunately, they would also have a large impact on retirees and others on a fixed income – the people who can least afford to handle increased living expenses.
Changing Concurrent Receipt Rules
Concurrent Receipt is a law that allows military retirees with a service-connected disability of 50% or greater to collect both their full retirement pension and their service-connected disability compensation payment from the VA. Before this law was enacted, retirees who received service-connected compensation pay saw the same amount of money reduced from their retirement check each month (those with a service-connected disability rating below 50% continue to see this reduction in retirement pay).
According to Tom Philpott of Military.com, Concurrent Receipt was received by 420,000 retirees last year, at a cost of $7 billion. Removing this benefit could save the government well over $100 billion over the next decade.
The effect on retirees, of course, would be massive, as it would reduce their monthly pay and compensation.
Changing VA Service-Connected Eligibility for Certain Conditions
The VA usually defines a service-connected disability as a medical condition in which the symptoms first appeared, or worsened, during military service. However, the CBO points out that the VA is paying out service-connected disability payments to veterans for conditions that aren’t attributable to military service.
According to Military.com, Last year, the VA paid 520,000 veterans a total of $2.9 billion “for seven medical conditions that… are generally neither caused nor aggravated by military service.” And the VA could save $20 billion, from 2015 to 2023, if it stopped compensating veterans for the following: chronic obstructive pulmonary disease; arteriosclerotic heart disease; hemorrhoids; uterine fibroids; multiple sclerosis; Crohn’s disease and osteoarthritis.
The CBO also points out that the savings could be greater if Congress eliminated compensation for all disabilities unrelated to military duties.
Tighten Individual Unemployability Benefits
Individual Unemployability Benefits (IU benefits) are a type of disability compensation given to veterans who are disabled at less than 100%, but are deemed “unable to engage in substantial work.” Approximately 300,000 veterans receive this compensation each month, with the average compensation being $1,800 a month.
The CBO points out that about 1/3 of the veterans receiving this compensation are over the age of 65, which is an age at which many people retire and begin receiving full social security benefits. The CBO points out the government could save $15 billion between 2015 and 2023 if they stopped issuing IU to older veterans.
A note about this report: The Congressional Budget Office has gone on the record stating that these are not “recommendations” for budget cuts, simply options for cutting the federal budget. Also keep in mind that there are over 100 options listed. So they are not singling our military members or veterans.