House Bill Would Give Military 1.8 Percent Pay Raise

Members of the military would receive a 1.8 percent pay increase in 2014 under legislation the House Armed Services Committee is considering on Wednesday.

Lawmakers are proposing a higher annual raise for service members next year than the 1 percent pay increase that President Obama recommended in his fiscal 2014 budget. Current law mandates a 1.8 percent boost for service members for 2014; the formula for determining service members’ annual pay increases is based on the Bureau of Labor Statistic’s Employment Cost Index and the growth in private-sector wages.

Service members received a 1.7 percent pay increase for 2013.

The full committee will mark up the fiscal 2014 National Defense Authorization Act on Wednesday, which includes the pay provision.

The current legislation also rejects most of the administration’s proposed increases to TRICARE fees for retirees and other changes to the military’s health care system. “The committee has already put TRICARE on a sustainable path through reforms in several recent NDAAs,” stated a summary of the bill. Congress has modestly increased some TRICARE enrollment fees and prescription drug costs for retirees during the past few years but has opposed the White House’s more aggressive proposals, including establishing an enrollment fee for TRICARE-for-Life beneficiaries, who are aged 65 and older.

Retired TRICARE Prime beneficiaries now pay between $39 and $79 more in annual fees than they paid nearly two decades ago. At the end of 2012, Congress rejected an administration proposal to tie TRICARE fees to retired recipients’ income and impose higher co-payments for pharmacy drugs. Requiring TRICARE beneficiaries to pay more for their health care is a politically sensitive topic. No one wants to be seen as breaking faith with troops, their families or retirees, and military service organizations are a powerful lobby in Washington.

Some lawmakers also are critical of the Pentagon’s management of TRICARE. “DoD’s record of incorrectly calculating TRICARE costs and their repeated requests to transfer billions in unused funds out of the program to cover other underfunded defense priorities raises questions about repeated claims by the Department of Defense that the Defense Health Program is unsustainable,” said the fact sheet on the legislation.

The current bill includes a provision that would enable military retirees who are losing access to TRICARE Prime in October to stay in that health care plan. The provision, originally stand-alone legislation sponsored by Rep. John Kline, R-Minn., would allow affected TRICARE Prime enrollees to make a one-time decision to remain in the more affordable health insurance plan instead of moving to the program’s fee-for-service option. The Defense Department is reducing the number of Prime service areas to save money and will automatically switch 171,000 TRICARE Prime beneficiaries to the TRICARE Standard option on Oct. 1. The change affects beneficiaries who live more than 40 miles from a military clinic, hospital or Base Closure and Realignment site -- about 3 percent of the current 5.3 million TRICARE Prime enrollees.

In addition, the committee’s fiscal 2014 NDAA recommends excluding the salaries of select contractors’ top five earners from allowable expenses on Defense contracts and freezing the current employee compensation baseline, with only future adjustments based on inflation. But the legislation does not cap industry salaries at the pay level of the president and vice president, as some support. “The Chairman [Howard ‘Buck’ McKeon, R-Calif.] believes this is an inappropriate and arbitrary comparison that will drive talent from the nation’s defense industrial base,” said the fact sheet. “Instead reform should focus on reasonable expenses given the market conditions that determine what a contractor needs to pay to recruit and retain talent.”