Tricare, Military Pensions and Fairness

[Nords]

I think/hope by now people understand that Government made a lot of promises to a lot a people that it wasn't in a position to keep. Consequently we the people aka the Government are all going to have made additional sacrifices in the form or higher taxes and reduced benefits.

In this particular case, the beneficiaries fought back:
Bud Day - Wikipedia, the free encyclopedia

Among other endeavors, in 1996 Day filed a class action lawsuit for breach of contract against the United States government on behalf of military retirees who were stripped of their military medical care benefits at age 65 and told to apply for Medicare. Although winning the case in the district court in 2001, the judgment against the U.S. was overturned by the U.S. Court of Appeals in 2002. The U.S. Congress later redressed this situation by establishing the "TRICARE For Life" (TFL) program, which restored TRICARE military medical benefits for career military retirees over the age of 65, making the retirees eligible for both programs with Medicare as the primary payer and TRICARE as the secondary payer.

IIRC the basis of Day's case was the informal oral promises made by thousands of military recruiters over two generations. The Supremes passed on the case because they felt it was a matter for law-making Congress, neatly turning the public eye on the legislative branch during an election year.

Considering the horsepower (and time) it took to achieve TFL, I don't think this sort of feat can be pulled off again. Reading between the lines of Tom Philpott's article,
Top Doc's Focus is Troop Health, Not Higher Fees
I think higher Tricare fees are nearly a certainty.

If it makes you feel better, Heardoc, that article mentions OPM has already thrown the federal civil-service employees under the bus:

At a Sept. 28 armed services committee hearing, ranking Republican Sen. John McCain (Ariz.) seemed to be setting the table, asking Deputy Defense Secretary Bill Lynn, "Isn't the biggest cost escalation to DoD today in health care?"
Lynn conceded medical is the "largest account...growing at a substantial pace" and that in "the fiscal year 2012 budget I think we will be proposing to Congress some ideas about how to restrain health care costs."
Pressed by McCain, Lynn agreed health costs are growing "dramatically," in some recent years by 10 percent or higher.
That same day, at a breakfast meeting with reporters, Adm. Mike Mullen, chairman of the Joint Chiefs, called rising healthcare costs "unsustainable" and said, after 15 years, it's time to raise TRICARE fees.
A few days later the Office of Personnel Management announced health insurance premiums paid by federal civilian workers and retirees will jump in 2011 an average of 7.2 percent. That could apply more political pressure on Congress to accept some sort of TRICARE fee increase.

 

[Rustic23]

Clifp,
I have started this answer three times. While I don't think you meant it, IMO, it came across that if someone in the military gets hurt then we owe them, otherwise screw them.

You made me a promise when I risk my life. The fact that the North Vietnamese gunners weren't quite good enough is not my fault. Now that I am almost 70, and of no use to you, you want to change the deal.

Government is not so broke that it can not keep it's promises to those that served. Example: Why should the American Military retiree pay to support 99 weeks of unemployment? Because, it gets more votes for politicians! There are plenty of government programs that should be shut down before you decide to break your contract with the American Service man/woman again.

I feel the same way about fireman, police, and government workers. If you want to change what current workers get, be my guest, but not those that have already earned those benefits. If you have to shut down current services because you are unwilling to pay for both, so be it. You keep your promises, and honor you contracts.

 

[braumeister]

I'm with you, Rustic.
Underpaid and overworked for decades, but proud to do it because serving the nation was a great thing to do. Knowing that there was a good reward at the end of it was the final clincher that kept us from bailing out and getting a better job at higher pay with a chance at an actual life in the real world.

OTOH, I understand where some are coming from: they simply don't realize what we went through. If they did, they would most likely change their minds.

Renegotiate the contract? Well, OK, but can I have those years back and replay the tape?

 

[clifp]

Clifp,
I have started this answer three times. While I don't think you meant it, IMO, it came across that if someone in the military gets hurt then we owe them, otherwise screw them.


Government is not so broke that it can not keep it's promises to those that served. Example: Why should the American Military retiree pay to support 99 weeks of unemployment? Because, it gets more votes for politicians! There are plenty of government programs that should be shut down before you decide to break your contract with the American Service man/woman again.

I guess I'd argue that government has the highest obligation to care for injuried serviceman. It trumps existing programs, my taxes cuts being maintained, and even our obligation not saddle the next generation with obscene debts level.

I certainly agree with you that there are tons programs that I'd rather see cut than see TriCare payments be raised. The problem is there also lots of programs that I rather see maintain and ask retired service personal to contribute a bit more for their medical care. I'd wage that even if you and I could agree on 50 programs which should be eliminated that would more than make up for tricare cost, there a bunch of other folks who'd argue with us as to why the things we want cut are in fact the government reneging on promises.

I think the problem is that WE THE PEOPLE (aka the government) made lots of promises to various groups; seniors for social security benefits, and healthcare, smart kids can go to college, poor kids can get free lunches, disabled people aren't thrown out onto the street, Pacific Islander who's islands we blew up in atomic bomb testing get treatment for radiation illness, poor countries and/or allies who do what we ask receive assistance, farmer who grow the right crops get money etc etc etc. WE THE PEOPLE made too many damn promises and it looks like we can't afford to keep them all. We have already saddled our kids (and I don't even have any) with a huge debt and now we are looking at debt level that exceeds our GDP. There is a good reason to be worried when this level is exceeded, example Greece.
I'd ask you and others to carefully consider what exactly was meant by free health care for life. I am perfectly happy as a tax payer to pay for the level of health care when you signed up to join the service. I am even fine with paying for level of health care when you retired, cause you certainly earned it. But new and improved and expensive medical procedure are constantly being invented. So when you retired twenty or so years ago, and you had bad knee that hurt like hell, they would have given you Advil and cortosone (sp) shots. Now days they'll give you a fancy new artificial knee. I am delighted that seniors in general and vets in particular like my Mom's partner benefit from these medical advances. But maybe if I or more importantly the politician/bureaucrats in charge had know how bloody expensive future health care they would have thought twice before using the word free and health care in the same sentence.

Don't get me wrong Rustic, I certainly understand why and you and your fellow vets would be pissed off about this. Frankly if this one of the deficit reduction battles that I and other deficit hawks lose, I won't be upset.

 

[GregLee]

WE THE PEOPLE made too many damn promises and it looks like we can't afford to keep them all. We have already saddled our kids (and I don't even have any) with a huge debt and now we are looking at debt level that exceeds our GDP. There is a good reason to be worried when this level is exceeded, example Greece.

I don't understand why we can't afford to keep our promises. I look around me and see a very prosperous people. We could afford to pay higher taxes. So far as I know, we could also increase our debt level substantially. You say "there is a good reason to be worried", but you don't say what that reason is. Are we in danger of being like Greece? Why is that? This is all just too nebulous to count as a real argument.

 

[Rustic23]

My point is the government has the means to keep it promises to the military. The question is are other vote buying schemes going to be favored over this responsibility. I put SS in the same boat. You took the peoples money, you gave them a promise. Medicare, is similar. Now you can look at all the rest. IMHO, all the rest are different. The government may have made them entitlements, but the people did not specifically earn them or pay for them.

 

[heardoc]

It may be inevitable ( I'm not a market timer, so nothing other than death is inevitable to me), but as I said, I'm not going to volunteer. They will get it from me kicking and screaming.
By the way, I think that some posters here need to make a distinction between "earned entitlements" and entitlements if you insist on rank ordering government obligations. Subsidizing college is an entitlement created by statute, paying for retiree's health care insurance is an earned entitlement created by an contractual obligation. Just saying....

 

[clifp]

I don't understand why we can't afford to keep our promises. I look around me and see a very prosperous people. We could afford to pay higher taxes. So far as I know, we could also increase our debt level substantially. You say "there is a good reason to be worried", but you don't say what that reason is. Are we in danger of being like Greece? Why is that? This is all just too nebulous to count as a real argument.

I think a lot of the prosperous people in Hawaii, have the bulk of their money tied up in real estate. A few years ago they may have had a $3 million house and a few rental properties in 500K-1,000K range. However today the house is probably only worth $2 million and the rental properties also down 30%. They probably have $2 million mortgage on the house and are only slightly above water on their rental properties. A nice house, a couple of leased BMWs, and a good job makes you affluent, it doesn't make you wealthy. It is an open question if they could afford higher taxes, in today's political environment there is zero political will to raise taxes.

As for taking on more debt. If the number from the debtclock aren't sobering I don't know what more to say. I thought 60 minutes interview with former Reagan OMB head David Stockman was also pretty compelling.

 

[clifp]

It may be inevitable ( I'm not a market timer, so nothing other than death is inevitable to me), but as I said, I'm not going to volunteer. They will get it from me kicking and screaming.
By the way, I think that some posters here need to make a distinction between "earned entitlements" and entitlements if you insist on rank ordering government obligations. Subsidizing college is an entitlement created by statute, paying for retiree's health care insurance is an earned entitlement created by an contractual obligation. Just saying....

I agree there is a difference between entitlement that politician just gave in the interest of fairness or just vote buying and entitlements that are earned like Veteran health care. I'll am saying is did veterans earn a platinum health care where everything is free no matter how expensive or of limited medical effectiveness or did they earn a bronze health care which only covers the basic necessities. What Nord's describe sounds closer to the Platinum level of my Kaiser plan, than the Bronze level I'm paying $250/month. I think the best of all worlds would be for the VA to offer a free bronze Tricare and platinum Tricare for additional money.

 

[heardoc]

I agree there is a difference between entitlement that politician just gave in the interest of fairness or just vote buying and entitlements that are earned like Veteran health care. I'll am saying is did veterans earn a platinum health care where everything is free no matter how expensive or of limited medical effectiveness or did they earn a bronze health care which only covers the basic necessities. What Nord's describe sounds closer to the Platinum level of my Kaiser plan, than the Bronze level I'm paying $250/month. I think the best of all worlds would be for the VA to offer a free bronze Tricare and platinum Tricare for additional money.

Platinum ? Hardly. The number of available providers is severely restricted due to poor reimbursement rates. In this area of the country, with two military bases within 10 miles of each other, many practices are not taking on any more Tricare patients. If you aren't active duty, good luck on finding a primary care practice.

 

[GregLee]

As for taking on more debt. If the number from the debtclock aren't sobering I don't know what more to say. I thought 60 minutes interview with former Reagan OMB head David Stockman was also pretty compelling.

I viewed these links. I don't see how they substantiate your views at all. The Debt Clock is fun to look at, but it's just a bunch of numbers without intrinsic significance. Stockman is saying we shouldn't cut taxes, just as we shouldn't have during the Reagan administration. Well, okay, I don't think we should cut taxes, either. How does this get us to the conclusion that when the debt exceeds the GDP there will be a big economic collapse? I don't get it.

We can increase the debt so long as we can find people willing to buy Treasury bonds, right? So far as I know, investors still love US bonds, one important reason being the political stability of the US.

So, I still don't see the problem in increasing the debt.

 

[Nords]

I think a lot of the prosperous people in Hawaii, have the bulk of their money tied up in real estate.

Not only is their money tied up in "dead equity" but the typical cash-on-cash return is a miserable 2-4% instead of the Mainland's double or even triple returns. Hawaii may have low property-tax rates, but just try and raise them to balance the budget as mandated by the state constitution!

How does this get us to the conclusion that when the debt exceeds the GDP there will be a big economic collapse? I don't get it.
We can increase the debt so long as we can find people willing to buy Treasury bonds, right? So far as I know, investors still love US bonds, one important reason being the political stability of the US.
So, I still don't see the problem in increasing the debt.

The problem I see is that we'd no longer be in charge of determining how to make Treasury bonds attractive to investors. Instead we'd keep raising the yields and hoping [-]the PRC[/-] somebody shows up at the auction.

I think a fiscally-conservative policy will afford more independent options rather than accidentally maintaining the distinction of being the least-corrupt country. During 2008-09 it was very surprising (and not a little scary) to see the rest of the world's "flight to quality" in buying dollars & Treasuries. Japan has led the way in showing what happens when your fiscal obligations exceed 100% of GDP, let alone tax revenues.

The recurrent point through this thread is that for at least three generations of politicians, the pensions & benefits were easy to raise because people rarely had to account (in the accounting sense) for them. Now that the standards have finally been applied everyone is shocked, shocked I say, that the crisis has reared its ugly head. I suspect that over the next generation most of the pensions will achieve a more fully-funded status... maybe even adequately funded. But the only appropriate way to do it is by raising taxes and fees to a self-sustaining level.

It sure hasn't been achieved by cutting programs, has it?

 

[GregLee]

The problem I see is that we'd no longer be in charge of determining how to make Treasury bonds attractive to investors. Instead we'd keep raising the yields and hoping [-]the PRC[/-] somebody shows up at the auction.

"The problem you see"? Where is the problem, actually? If investors lost confidence in our ability to repay, then we would really have to "keep raising the yields" to try to sell Treasury bonds, but that hasn't happened. What reason is there to expect that it will happen? Why pursue a "fiscally-conservative policy" which makes people dial down their lifestyles without an objective reason?

 

[Nords]

"The problem you see"? Where is the problem, actually? If investors lost confidence in our ability to repay, then we would really have to "keep raising the yields" to try to sell Treasury bonds, but that hasn't happened. What reason is there to expect that it will happen? Why pursue a "fiscally-conservative policy" which makes people dial down their lifestyles without an objective reason?

I'm not trying to use any political codewords. My political parties are "skeptical" and "cynical".

When I say "fiscally conservative" I just mean things like "trying to spend less than you earn, or at least pay off your debts once in a while". I'm not opposed to deficit spending when appropriate, but it'd be nice to make some progress toward deficit elimination as well.

I'm not trying to make people "dial down their lifestyles without an objective reason". I clearly understand the difference between LBYM and deprivation is in the eye of the beholder, not the taxing authority. I'm just suggesting that we should all pay for the services we're getting without running up a tab, or else cut back on the services. For example Lowenstein's book "While America Aged" pointed out that San Diego went for decades with the nation's lowest municipal tax rates... and now they're playing catch-up ball.

I'm not opposed to paying a few more bucks a month for my healthcare insurance. I'm also not opposed to paying my fair share of taxes. I'd be even more in favor of spending less of my taxes in the first place so that other social programs (like philanthrophy) could help paper over the cracks, but I suspect some sort of safety net will always be necessary... and regrettably that appears to be sponsored most effectively by government.

In short, the "problem I see" is the problem caused by governments consistently spending more than their tax revenues.

 

[GregLee]

I'm just suggesting that we should all pay for the services we're getting without running up a tab, or else cut back on the services.

I understood that was your suggestion. Do you understand what I am asking? What is wrong with running up a tab? Why cut back on services?

 

[Nords]

I understood that was your suggestion. Do you understand what I am asking? What is wrong with running up a tab? Why cut back on services?

I certainly do understand what you're asking, which is why we're tearing into this like a mongoose in a bird's nest. Feel free to provide some links or references of your own, too. Your repetitive queries regarding my intellectual capacity and ability to comprehend your questions are not exactly sharing the resources & knowledge that would move this thread down the road.

I agree that governments, with their license to tax, are the ideal entities to practice deficit spending. Heck, in a recession or a depression it's their duty to do so. I also agree that paying back one's debts with ever-more-deflated currency is a workable strategy. It damn well better work because we don't seem to have any intention of exploring other solutions.

However it requires the buyer of that debt to keep on buying, or for us to find new buyers. Eventually the supply of buyers could run out, or they'll refuse to buy on what we would hope would be acceptable terms. I don't know if it'll happen, let alone when, but I suspect that the longer we continue the practice then the higher the probability of something bad happening.

Instead of pursuing this strategy (hopefully just short of catastrophe), why not retain more control over our future instead of abdicating that control to the buyers? Why not deficit-spend like crazy when it's necessary, and then afterward either tax the heck out of the citizenry or cut back on spending? I don't have much faith in govt bureaucracy to do its fiduciary duty with my tax revenue, so I'd rather see spending cutbacks that keep my taxes flat (or lower). I also kinda like the idea of lower taxes freeing up the citizenry to start more businesses and raise productivity to generate more revenue through corporate taxes instead of through personal income taxes.

Perhaps an analogy would be the homeowners who put no money down into their residences and then proceeded to finance their lifestyles with HELOCs. Life was good as long as someone would buy their home for at least the price they paid plus some inflation or other appreciation. However when home values dropped and credit tightened, the entire country darn near locked up. I'd hate to see that equivalent happen at a Treasury auction. I'm not sure what collateral a foreign govt would accept for Treasuries-- the 30-year tax-revenue stream of a rapidly-deflating currency? What if something better comes along to surprise the heck out of all of us, like a euro or some other rock-solid currency?

Your concept will work. My concept could work. Yours just has, in my opinion, a higher probability of bad stuff happening. I suspect that we could both marshal several platoons of highly-respected economists to "prove" why the other's reasoning is flawed.

 

[tjscott0]

"I put SS in the same boat. You took the peoples money, you gave them a promise."


Actually the Supreme Court decided in the Flemming vs Nestor that "there is no contractual right to receive Social Security payments."
Flemming v. Nestor - Wikipedia, the free encyclopedia

Also anyone that that looks at their annual Social Security Statement of estimated benefits should look at the *.

*-"Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2037, the payroll taxes collected will be enough to pay only 76 percent of scheduled benefits."

Of course any representative propose a cut in benefits is putting their political career in harm's way. But eventually the math dictates a reduction in benefits, increase of eligibility age, increased SS tax, or some combination of the three.

Just wanted to set the record straight regarding SS benefits.
I don't mean to hijack the thread.

Carry on.

 

[GregLee]

I suspect that we could both marshal several platoons of highly-respected economists to "prove" why the other's reasoning is flawed.

I don't see how my reasoning could be flawed. What reasoning? I just asked what evidence you had to support your view.

 

[DangerMouse]

I don't understand why we can't afford to keep our promises. I look around me and see a very prosperous people. We could afford to pay higher taxes. So far as I know, we could also increase our debt level substantially. You say "there is a good reason to be worried", but you don't say what that reason is. Are we in danger of being like Greece? Why is that? This is all just too nebulous to count as a real argument.

If you are only seeing prosperous people around you maybe you should look a bit harder. Sure there are people who could stand to pay a few more bucks in tax to help out the situation, however there are a lot of people who are lurching from paycheck to paycheck and an increase in taxes could be the end for them.

I understood that was your suggestion. Do you understand what I am asking? What is wrong with running up a tab? Why cut back on services?

My only question on this would be would you do this with your personal finances? Eventually someone has to pay so rather than burden future generations with unlimited amounts of debt why not look at ways of controlling expenses now?

 

[samclem]

My point is the government has the means to keep it promises to the military. The question is are other vote buying schemes going to be favored over this responsibility. I put SS in the same boat. You took the peoples money, you gave them a promise. Medicare, is similar.

I'd actually put SS and Medicare in a different, lower, basket compared with the promise made to military members for future payment. In the case of both SS and Medicare, the government sets the tax rate and everyone pays it. No exceptions. You expect to get some benefit when your time comes, but there's no aspect of two informed parties making a contract. If you want to work, you'll pay the taxes. In the case of the military member, the retirement pay and promised medical care in retirement were part of a package of compensation that was promised in exchanged for services to be rendered. Every military member made an appraisal of this offer and counted on the government keeping it's word when deciding on where they wanted to work. That's a lot different from SS. I'm sure there's a Latin legal term for this distinction, but being just a slug I don't know it.

 

[GregLee]

My only question on this would be would you do this with your personal finances? Eventually someone has to pay so rather than burden future generations with unlimited amounts of debt why not look at ways of controlling expenses now?

I owe nothing, myself, and I think that frugality pays off for individuals. But nations are not people. You say "eventually someone has to pay", but how do you know that?

 

[zinger1457]

I owe nothing, myself, and I think that frugality pays off for individuals. But nations are not people. You say "eventually someone has to pay", but how do you know that?

Everyone who pays taxes is paying on the interest on our debt which is now about 10% of the Federal budget. Since more of our debt is being bought up by foreign countries more and more of that interest payment is going overseas, ~50%.

 

[tjscott0]

I owe nothing, myself, and I think that frugality pays off for individuals. But nations are not people. You say "eventually someone has to pay", but how do you know that?

Isn't a nation made up of individuals?
The tab is passed to children & grandchildren. Contrary to what Cheney said to Paul O"Neill; deficits DO MATTER.

 

[GregLee]

The tab is passed to children & grandchildren.

But is it really? Are you now paying off the national debt that was incurred in your parents' day?

 

[clifp]

But is it really? Are you now paying off the national debt that was incurred in your parents' day?

Yes in the from of higher interest payments. The debt clock shows the annual interest payments per citizen of $10,500 this is an increase of $3,000 from 2004 and the forecast that by 2015 will be $13,625 per citizen in interest payments. Now you may not think this has consequences but I suspect that if you talked to folks in Iceland, or Greece, or the countless citizen in numerous countries that IMF has enforced austerity measures they would strongly disagree.