A consensus is building among current and former military leaders and defense industry executives that rising military personnel costs threaten the viability of the all-volunteer force.
In July, two separate advisory groups reached the same general conclusions regarding what needs to be done to sustain the force. In the nearer term, they say, one step that must be taken is to make military retirees pay more out of pocket for their health care benefit.
“Unless retirees contribute more for their TRICARE insurance, medical costs will not be brought under control and the national defense they served, and for which they fought and sacrificed, will be harmed,” says the final report of the Quadrennial Defense Review Independent Panel.
The panel is co-chaired by former Defense Secretary William J. Perry from the Clinton administration and Stephen J. Hadley, who was national security advisor through President George W. Bush’s second term.
Longer term, panelists say, work must begin on designing new retirement, compensation and promotion systems to replace inefficient and rigid systems adopted after World War II. The situation is so critical that the Hadley-Perry panel asked Congress to establish a new National Commission on Military Personnel to lead the reform effort.
Arnold Punaro, a defense industry executive and retired Marine Corps Reserve major general, chairs a task force for the Defense Business Board that will deliver its final report to Defense Secretary Robert Gates in October.
Task force “initial observations” for cutting defense costs through best business practices, briefed to the board July 22, reinforces the notion that personnel accounts must be brought under control by modernizing retirement, pay, health benefits and the “up-or-out” promotion systems.
What both conclude, Punaro said, is consistent with findings of the 10th Quadrennial Review of Military Compensation and the 2006 Defense Advisory Commission on Military Compensation.
But with Defense Secretary Gates’ leadership and a new awareness among military leaders to the burden of mounting personnel costs, there’s a fresh groundswell for change, he said.
“I’ve heard a four-star military leader comment that DoD is turning into a benefits company that will occasionally kill a terrorist,” Punaro said in a recent phone interview. The remark plays off a popular critique of General Motors before its recent bail out, that union contracts had transformed it into a health care company that occasionally built a car.
Both the business board task force and the Hadley-Perry panel agree that the current force must be protected from the changes to retirement, pay or promotion policies needed to create a more efficient future force.“These are areas where any adjustment you make will take decades to change,” Punaro said. “With something like military retirement, you are not going to break faith with people who joined expecting a certain benefit, even though only 20 percent stay long enough to earn a retirement.”
Rapid expansion of military entitlements has become part of “the nation’s mandatory spending problems,” the task force found. Among “significant unsustainable trends” that the task force listed is paying military retirees and their families “for 60 years after they have served only 20.”
Another task force slide give details of how military entitlements have expanded “rapidly” over the last decade with Congress passing TRICARE for Life, a more robust pharmacy benefit, concurrent receipt for disabled retirees, extra-size active duty pay raises, an improved survivor benefit plan, sharp growth in housing allowances, a bigger death gratuity and more.
Punaro declined to criticize any specific initiative. But, he said, “nobody ever sat down and said, ‘What’s the cumulative effect of all this?’ ”
The effect, says the Hadley-Perry report, is personnel costs “have grown drastically on a per capita basis.”Punaro, who served as staff director of the Senate Armed Services Committee for eight years, noted that much of the recent entitlement growth has helped only retirees and their families, a population that now outnumbers the active duty community.
Punaro criticized military associations that, he said, push continually for benefits with little heed to more pressing defense priorities. Military leaders and lawmakers this decade have been complicit, he suggested.
“It doesn’t’ take a profile in courage to stand up and be for every benefit that anybody has ever dreamed up. That’s easy. It takes a lot of courage to be responsible….It looks to some of us that we’ve changed the slogan ‘Praise the Lord and pass the ammunition’ to ‘Praise the Lord and pass the benefit.’ I remember working with military associations when their number one goal was a strong national defense, not more benefits.”
UPDATE ON AGENT ORANGE ISSUES:
An estimated 200,000 Vietnam veterans suffering from three diseases newly associated with exposure to Agent Orange are closer to receiving disability compensation following an appeals court order Aug. 2 directing VA to publish a final implementing regulation within 30 days.
On a lawsuit brought by a coalition of veterans’ service organizations, the U.S. Court of Appeals for the Federal Circuit instructed VA to issue by Sept. 1 a final regulation authorizing payment of claims for ischemic heart disease, Parkinson’s disease, or B-cell leukemia for any veteran who stepped foot in Vietnam during the war, or their survivors.
VA has been urging veterans with these diseases to file claims immediately because payments, when they begin, will be retroactive to the filing date. VA lawyers did concede to the court that VA had missed several deadlines set in the Agent Orange Act for reviewing the latest science report and for publishing rules to expand claims eligibility to these diseases.
Still, they argued that VA could not publish a final regulation until the Office of Management and Budget completed its own review of the draft regulation. They also argued that the delays were reasonable given the complexity of the issues and the costs involved, and that veterans are protected from financial harm if they just file their claims immediately.
The appeals court rejected those arguments.
After final a regulation is published, VA must wait 60 days under the Congressional Review Act to begin paying claims, given the cost of adding these three diseases to the list of ailments presumed caused by exposure to defoliants used in Vietnam. That would give Congress time to block the regulation, though that seems unlikely given that funds have been approved for anticipated first-year and retroactive payments.
If OMB completes its review soon, allowing rule publication before Sept. 1, payments could begin in October. If VA waits until Sept. 1 to publish its regulation, payments wouldn’t begin before Nov. 1.
The Senate Veterans Affairs Committee intends to hold a Sept. 23 hearing on how VA officials and independent scientists reached their decision on presuming these diseases were caused by Agent Orange.
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