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Defense spending

Pensions and health on the table

October 13, 2011

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AS THE super committee on the deficit meets, seeking trillions in federal savings, even the Pentagon is beginning to acknowledge that everything needs to be up for discussion, including potential changes to the health and pension benefits of military retirees. While the nation can never pull back from its commitment to veterans, some cost-saving changes in health care and pensions are necessary and responsible.

Well before the current debate, rising entitlement obligations had been a concern for Pentagon planners. Military health care and pensions for both active and retired troops cost $100 billion a year out of a $700 billion annual military budget. It is a remarkable number, and includes extremely generous health benefits to those who’ve been in the military, regardless of whether they ever faced active duty.

Over just 10 years, personnel costs have risen over 50 percent; health care costs have gone up 100 percent. The Quadrennial Review of Military Compensation recommended in 2008 that the Pentagon reexamine the standards for pay raises and consider an increase in health care fees and co-pays for some former military personnel.

Despite the recommendation, the health care fee for the military’s health program, TRICARE Prime, has not risen in over six years, and beneficiaries contribute a mere fraction of what a civilian pays to the typical employer-based health plan. As for pensions, a 38-year-old man or woman who entered service at the age of 18 could retire at half salary, increased for inflation, for life.

Fiscal planners have provided recommendations about how the Pentagon can provide health and pension benefits in a way more that’s more in line with the rest of the public sector. Appropriately, under any recommendation, compensation levels for those who fought in wars would be protected.

Former Defense Secretary Robert Gates once remarked that the health care system was “eating the Defense Department alive.’’ He was right. Congress is unlikely to help much; it adds to the expense by consistently raising military pay at rates higher than the Pentagon requests. The Pentagon is wise to get ahead of the deficit committee and begin to manage its own albatross.