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From: “MOAA Legislative Update”
To: “Robert Baisden”
Sent: Friday, October 28, 2011 7:28:16 AM
Subject: MOAA Testifies on Retirement, Medicare Part B News

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Take Action | Access Member Benefits | Connect with MOAA | Chapters | Publications | Media Center | About MOAA

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October 28, 2011
Are You Doing Your Part?

Chief Baisden,

Through the end of October, MOAA members had sent more than 551,000 messages to Congress through MOAA’s web site. But all those messages were sent by a total of only 54,400 people. We need the voices of all 370,000 members to help influence Congress.

Protect your and your family’s interests by sending a MOAA-suggested message from our legislative alerts page.

In This Issue

MOAA Takes on Retirement Critics at Hill Hearing

Called to testify on retirement reform at a special House hearing on Tuesday, MOAA blasted proposals to impose dramatic military retirement cutbacks as “shockingly insensitive” to the sacrifices of the career force.

Part B Premium Surprise

When Medicare announced the new Part B premium rates for 2012, most people were surprised – in a good way.

Three Frights for Halloween

Halloween is upon us, and lots of scary things are in the works. Three issues are particularly frightful.

Super Committee Talks Spending

In their third public hearing, Super Committee members discussed defense spending, tax policy, and entitlements programs.

MOAA Takes on Retirement Critics at Hill Hearing

Testifying at an October 25 hearing before the House Armed Services Military Personnel Subcommittee, MOAA Government Relations Director Col Steve Strobridge (USAF-Ret), called proposals for dramatic military retirement cutbacks “shockingly insensitive” to the extraordinary sacrifices inherent in a multi-decade service career.

Subcommittee chairman Joe Wilson (R-SC) strongly agreed, specifically citing the “radical” plan proposed by the Defense Business Board to scrap the military defined benefit system in favor of a 401(k)-style plan that would defer receipt of any payments until age 60 or later. He took top defense leaders to task for failing to immediately disavow the proposal, but reserved special criticism for Business Board leaders for declining to appear at the hearing to justify their proposal.

Strobridge said that was only one of several recent plans that would have dramatically cut retired pay for career personnel. He said that would be a “formula for retention and readiness disaster that would have destroyed the career force if it had been in effect over the last 10 years of war.”

He reminded legislators the primary purpose of the military retirement package is to induce top-quality people to serve multiple decades under conditions few Americans are willing to endure even for one term.

The Defense witnesses acknowledged that the Defense Business Board proposal would have a negative effect on retention, and went a step further to refute claims by some critics that military retirement costs are spiraling out of control.

Dr. Jo Ann Rooney, Principal Deputy, Undersecretary of Defense for Personnel and Readiness, said the current system is “neither unaffordable, nor spiraling out of control,” noting that retirement costs as a percentage of pay have remained reasonably constant.

She said the Department is considering possible retirement alternatives as part of a review of the total military compensation package, and a top priority is to protect against negative recruiting and retention effects. She said the Pentagon has tasked Rand Corporation to do a study on alternatives to the system that could meet that goal, but no date has been set for the release of results.

Asked to comment on why the military system shouldn’t be more like plans available to civilians, Strobridge said, “The past decade only highlights the enormous demands and sacrifices that have no counterpart in civilian employment, including frequent relocations that disrupt spousal earnings and children’s education and the prospect of being deployed to a combat zone time after time after time, with ever-increasing odds of coming home a changed person.”

He noted further that the Pentagon already has considerable experience with adverse effects of previous efforts to impose retirement cutbacks. When Congress reduced 20-year retirement benefits in 1986 for future entrants, he noted that then-defense secretary Caspar Weinberger warned legislators that it would inevitably undermine military readiness. That prediction proved accurate, and Congress had to repeal the cut in 1999 at the urging of the Joint Chiefs of Staff.

“In contrast to Secretary Weinberger’s warnings,” Strobridge said, “[the two most recent Defense secretaries] have repeatedly expressed support for significant retirement cutbacks for future entrants, without a word about long-term retention risks. In our view, that’s an abdication of their responsibility to protect future as well as current readiness.”

Rep. Susan Davis (D-CA) asked whether the military should adopt a vesting system for the 83% of troops who leave service before the 20-year point “out of fairness” since that’s becoming standard practice in the private sector.

Strobridge replied that all of the vesting options so far would fund that expensive benefit by imposing dramatic cuts on retirement benefits for the 17% who do serve 20 to 30 years or more. He said there are good reasons only 17% are willing to endure military service conditions for 20-plus years.

“It’s an odd concept of fairness, and a perverse retention incentive, that would dramatically cut compensation for those who serve and sacrifice longest to pay more to those who leave early.”

He also noted the government already extracted considerable retirement savings by capping military pay raises below private sector pay growth almost every year through the 1980s and ’90s. As a result, hundreds of thousands who retired under those depressed tables have had to forfeit thousands of dollars a year in retired pay for the rest of their lives.

Part B Premium Surprise

On Thursday Medicare officials announced the new Part B premium rates for 2012 – and they were significantly lower across the board than most people had expected. And for the first time in memory, large numbers of seniors will actually see their premiums drop significantly.

Most beneficiaries with incomes under $85,000 (or $170,000 for couples) will see a small increase in monthly premiums from $96.40 to $99.90 – an increase of 3.6%.

But for some in that category (specifically, those who first became eligible for Medicare in 2010 and 2011) the $99.90 rate will be less than what they paid in 2011.

Similarly, beneficiaries with incomes above $85,000 ($170,000 for married couples) will see their premiums drop by $20-$50 per month.

Why the declines? Because these two groups (new eligibles and upper-income beneficiaries) were hit with extra premium hikes for the past two years. That happened because the law generally bars any drop in Social Security benefits when there’s no COLA. That means most people had their Part B premiums frozen for the last two years. But new eligibles and upper-income people were exempt from the freeze, so they absorbed not only their share of the 2010 and 2011 hikes, but also had to cover the share of all of the “frozen” beneficiaries.

Now that the premiums for those 75% of beneficiaries who were held harmless are able to rise, Medicare was able to lift the extra premium burden previously imposed on the unprotected 25%.

The bottom line: almost every Medicare-eligible will be paying lower premiums in 2012 than had been predicted, and a significant number will be paying much less.

The following chart shows the 2012 premium rates.

2012 Medicare Part B Monthly Premiums:

Individual Income 2011 Premiums
2012 Premiums Change Gov’t Subsidy
Under $85K $96.40 $99.90 +$3.50 75%
$85+K – $107K $161.50 $139.90 -$21.60 65%
$107+K – $160K $230.70 $199.80 -$30.90 50%
$160+K – $214K $299.90 $259.70 -$40.20 35%
Above $214K $369.10 $319.70 -$49.40 20%

And one more piece of good news – Medicare also reported that the annual Part B deductible will drop to $140 for all beneficiaries in 2012 – a $22 drop from the 2011 deductible.

Three Frights for Halloween

Unemployment and the economy are still a problem, the national debt continues to grow, and so does the number of major, unsolved issues on Congress’ plate.

We’re confident America will rebound from these challenges in the long term, but in honor of Halloween we take a look at three scare-worthy issues:

Medicare/TRICARE Payment Cuts: It’s back. The flawed statutory formula which determines Medicare and TRICARE payments to doctors is scheduled to cut payments to physicians by almost 30% on January 1 unless Congress intervenes.

Allowing these cuts to go into effect would be devastating to access to health care for millions of Americans including much of the military community. No one in Congress wants to see that happen, but they keep squabbling over how to pay for a fix. The longer they wait the more difficult it gets to fund even short-term fixes, and we’ll likely be in for more brinksmanship in the coming months if Congress keeps delaying the cuts one or two months at a time.

Send your legislators a MOAA-suggested message asking them to act now to pass a fix.

The Super Committee and Sequestration: The Joint Select Committee on Deficit Reduction (Super Committee) has until November 23 to propose a way to trim the national debt by $1.2 trillion, and Congress has until December 23 to vote on that proposal.

If the committee fails to agree on a proposal, or if Congress rejects it, an automatic trigger mechanism called sequestration will cut spending across the board. Defense spending will be hit particularly hard – accounting for 50% of the cuts. This $600 billion in defense cuts would come on top of the $350 billion in cuts already agreed upon earlier this year. Defense leaders are on the record as saying that this level of cuts would be catastrophic and could “hollow out” our military.

No Defense Bill: With the legislative calendar winding down and major unresolved issues piling up in Congress, some again worry whether this may be the first year in decades that Congress fails to pass a defense authorization bill. Should that happen, it would be a major setback to a number of programs and a disruption to important retention bonuses. The House has passed its version of the bill, but the Senate still hasn’t set aside a specific time to consider this crucial piece of wartime legislation.

Super Committee Talks Spending

With its November 23 report deadline looming, the Joint Select Committee on Deficit Reduction held its third public hearing on Wednesday, focusing on federal discretionary spending.

Dr. Douglas Elmendorf, Congressional Budget Director, testified on defense spending, tax policy, entitlement programs and the budget impact of the troop withdrawal from Iraq.

Discretionary spending (money that Congress controls through annual appropriations) totaled about $1.35 trillion in 2011 — about 40% of the federal budget.

More than half of that goes for defense, with most of the remainder covering education, training, employment, and social services; transportation; income security (housing and nutrition); veterans’ benefits; health-related research and public health; international affairs; and the administration of justice.

Despite multiple reports of good-faith efforts by Super Committee members, they have yet to overcome what seem to be fundamental political differences. Most Democrats are concerned that entitlement programs (Medicare, Social Security, etc) are not severely slashed in any deal, whereas most Republicans balk at revenue-raising measures.

The November 1 committee meeting promises to be interesting as it hears from former Senator Alan Simpson (R-WY) who co-chaired last year’s National Commission on Fiscal Responsibility and Reform. Simpson is adamant in his belief that a sound deficit reduction plan cannot be accomplished without both budget reductions and additional revenues.

More from MOAA
Quote of the Week
“[Military retirement costs are] neither unaffordable, nor spiraling out of control.” (Dr. Jo Ann Rooney, Principal Deputy, Undersecretary of Defense for Personnel and Readiness, when asked during a House Armed Services Military Personnel Subcommittee hearing if the costs of the current military retirement system were sustainable.)

TRICARE Young Adult Prime Delays
The TRICARE Young Adult program – which allows dependent children up to age 26 to remain in the TRICARE system – will roll out its TRICARE Prime coverage option in January 2012. Originally expected to be available by October, the implementation of this option has suffered delays.

Legislative Update is published weekly by MOAA, 201 N. Washington Street, Alexandria, VA 22314.

You are currently subscribed to MOAA Legislative Update as r.baisden@comcast.net. Manage Subscription
©2011 MOAA, All rights reserved.

MOAA – Military Officers Association of America
One Powerful Voice.®
201 N. Washington Street
Alexandria, VA 22314

——————————————————————————–
From: “MOAA Legislative Update”
To: “Robert Baisden”
Sent: Friday, October 28, 2011 7:28:16 AM
Subject: MOAA Testifies on Retirement, Medicare Part B News

Having trouble viewing this message below? Open in a web browser.

Take Action | Access Member Benefits | Connect with MOAA | Chapters | Publications | Media Center | About MOAA

Join | Manage Email Subscription
October 28, 2011
Are You Doing Your Part?

Chief Baisden,

Through the end of October, MOAA members had sent more than 551,000 messages to Congress through MOAA’s web site. But all those messages were sent by a total of only 54,400 people. We need the voices of all 370,000 members to help influence Congress.

Protect your and your family’s interests by sending a MOAA-suggested message from our legislative alerts page.

In This Issue

MOAA Takes on Retirement Critics at Hill Hearing

Called to testify on retirement reform at a special House hearing on Tuesday, MOAA blasted proposals to impose dramatic military retirement cutbacks as “shockingly insensitive” to the sacrifices of the career force.

Part B Premium Surprise

When Medicare announced the new Part B premium rates for 2012, most people were surprised – in a good way.

Three Frights for Halloween

Halloween is upon us, and lots of scary things are in the works. Three issues are particularly frightful.

Super Committee Talks Spending

In their third public hearing, Super Committee members discussed defense spending, tax policy, and entitlements programs.

MOAA Takes on Retirement Critics at Hill Hearing

Testifying at an October 25 hearing before the House Armed Services Military Personnel Subcommittee, MOAA Government Relations Director Col Steve Strobridge (USAF-Ret), called proposals for dramatic military retirement cutbacks “shockingly insensitive” to the extraordinary sacrifices inherent in a multi-decade service career.

Subcommittee chairman Joe Wilson (R-SC) strongly agreed, specifically citing the “radical” plan proposed by the Defense Business Board to scrap the military defined benefit system in favor of a 401(k)-style plan that would defer receipt of any payments until age 60 or later. He took top defense leaders to task for failing to immediately disavow the proposal, but reserved special criticism for Business Board leaders for declining to appear at the hearing to justify their proposal.

Strobridge said that was only one of several recent plans that would have dramatically cut retired pay for career personnel. He said that would be a “formula for retention and readiness disaster that would have destroyed the career force if it had been in effect over the last 10 years of war.”

He reminded legislators the primary purpose of the military retirement package is to induce top-quality people to serve multiple decades under conditions few Americans are willing to endure even for one term.

The Defense witnesses acknowledged that the Defense Business Board proposal would have a negative effect on retention, and went a step further to refute claims by some critics that military retirement costs are spiraling out of control.

Dr. Jo Ann Rooney, Principal Deputy, Undersecretary of Defense for Personnel and Readiness, said the current system is “neither unaffordable, nor spiraling out of control,” noting that retirement costs as a percentage of pay have remained reasonably constant.

She said the Department is considering possible retirement alternatives as part of a review of the total military compensation package, and a top priority is to protect against negative recruiting and retention effects. She said the Pentagon has tasked Rand Corporation to do a study on alternatives to the system that could meet that goal, but no date has been set for the release of results.

Asked to comment on why the military system shouldn’t be more like plans available to civilians, Strobridge said, “The past decade only highlights the enormous demands and sacrifices that have no counterpart in civilian employment, including frequent relocations that disrupt spousal earnings and children’s education and the prospect of being deployed to a combat zone time after time after time, with ever-increasing odds of coming home a changed person.”

He noted further that the Pentagon already has considerable experience with adverse effects of previous efforts to impose retirement cutbacks. When Congress reduced 20-year retirement benefits in 1986 for future entrants, he noted that then-defense secretary Caspar Weinberger warned legislators that it would inevitably undermine military readiness. That prediction proved accurate, and Congress had to repeal the cut in 1999 at the urging of the Joint Chiefs of Staff.

“In contrast to Secretary Weinberger’s warnings,” Strobridge said, “[the two most recent Defense secretaries] have repeatedly expressed support for significant retirement cutbacks for future entrants, without a word about long-term retention risks. In our view, that’s an abdication of their responsibility to protect future as well as current readiness.”

Rep. Susan Davis (D-CA) asked whether the military should adopt a vesting system for the 83% of troops who leave service before the 20-year point “out of fairness” since that’s becoming standard practice in the private sector.

Strobridge replied that all of the vesting options so far would fund that expensive benefit by imposing dramatic cuts on retirement benefits for the 17% who do serve 20 to 30 years or more. He said there are good reasons only 17% are willing to endure military service conditions for 20-plus years.

“It’s an odd concept of fairness, and a perverse retention incentive, that would dramatically cut compensation for those who serve and sacrifice longest to pay more to those who leave early.”

He also noted the government already extracted considerable retirement savings by capping military pay raises below private sector pay growth almost every year through the 1980s and ’90s. As a result, hundreds of thousands who retired under those depressed tables have had to forfeit thousands of dollars a year in retired pay for the rest of their lives.

Part B Premium Surprise

On Thursday Medicare officials announced the new Part B premium rates for 2012 – and they were significantly lower across the board than most people had expected. And for the first time in memory, large numbers of seniors will actually see their premiums drop significantly.

Most beneficiaries with incomes under $85,000 (or $170,000 for couples) will see a small increase in monthly premiums from $96.40 to $99.90 – an increase of 3.6%.

But for some in that category (specifically, those who first became eligible for Medicare in 2010 and 2011) the $99.90 rate will be less than what they paid in 2011.

Similarly, beneficiaries with incomes above $85,000 ($170,000 for married couples) will see their premiums drop by $20-$50 per month.

Why the declines? Because these two groups (new eligibles and upper-income beneficiaries) were hit with extra premium hikes for the past two years. That happened because the law generally bars any drop in Social Security benefits when there’s no COLA. That means most people had their Part B premiums frozen for the last two years. But new eligibles and upper-income people were exempt from the freeze, so they absorbed not only their share of the 2010 and 2011 hikes, but also had to cover the share of all of the “frozen” beneficiaries.

Now that the premiums for those 75% of beneficiaries who were held harmless are able to rise, Medicare was able to lift the extra premium burden previously imposed on the unprotected 25%.

The bottom line: almost every Medicare-eligible will be paying lower premiums in 2012 than had been predicted, and a significant number will be paying much less.

The following chart shows the 2012 premium rates.

2012 Medicare Part B Monthly Premiums:

Individual Income 2011 Premiums
2012 Premiums Change Gov’t Subsidy
Under $85K $96.40 $99.90 +$3.50 75%
$85+K – $107K $161.50 $139.90 -$21.60 65%
$107+K – $160K $230.70 $199.80 -$30.90 50%
$160+K – $214K $299.90 $259.70 -$40.20 35%
Above $214K $369.10 $319.70 -$49.40 20%

And one more piece of good news – Medicare also reported that the annual Part B deductible will drop to $140 for all beneficiaries in 2012 – a $22 drop from the 2011 deductible.

Three Frights for Halloween

Unemployment and the economy are still a problem, the national debt continues to grow, and so does the number of major, unsolved issues on Congress’ plate.

We’re confident America will rebound from these challenges in the long term, but in honor of Halloween we take a look at three scare-worthy issues:

Medicare/TRICARE Payment Cuts: It’s back. The flawed statutory formula which determines Medicare and TRICARE payments to doctors is scheduled to cut payments to physicians by almost 30% on January 1 unless Congress intervenes.

Allowing these cuts to go into effect would be devastating to access to health care for millions of Americans including much of the military community. No one in Congress wants to see that happen, but they keep squabbling over how to pay for a fix. The longer they wait the more difficult it gets to fund even short-term fixes, and we’ll likely be in for more brinksmanship in the coming months if Congress keeps delaying the cuts one or two months at a time.

Send your legislators a MOAA-suggested message asking them to act now to pass a fix.

The Super Committee and Sequestration: The Joint Select Committee on Deficit Reduction (Super Committee) has until November 23 to propose a way to trim the national debt by $1.2 trillion, and Congress has until December 23 to vote on that proposal.

If the committee fails to agree on a proposal, or if Congress rejects it, an automatic trigger mechanism called sequestration will cut spending across the board. Defense spending will be hit particularly hard – accounting for 50% of the cuts. This $600 billion in defense cuts would come on top of the $350 billion in cuts already agreed upon earlier this year. Defense leaders are on the record as saying that this level of cuts would be catastrophic and could “hollow out” our military.

No Defense Bill: With the legislative calendar winding down and major unresolved issues piling up in Congress, some again worry whether this may be the first year in decades that Congress fails to pass a defense authorization bill. Should that happen, it would be a major setback to a number of programs and a disruption to important retention bonuses. The House has passed its version of the bill, but the Senate still hasn’t set aside a specific time to consider this crucial piece of wartime legislation.

Super Committee Talks Spending

With its November 23 report deadline looming, the Joint Select Committee on Deficit Reduction held its third public hearing on Wednesday, focusing on federal discretionary spending.

Dr. Douglas Elmendorf, Congressional Budget Director, testified on defense spending, tax policy, entitlement programs and the budget impact of the troop withdrawal from Iraq.

Discretionary spending (money that Congress controls through annual appropriations) totaled about $1.35 trillion in 2011 — about 40% of the federal budget.

More than half of that goes for defense, with most of the remainder covering education, training, employment, and social services; transportation; income security (housing and nutrition); veterans’ benefits; health-related research and public health; international affairs; and the administration of justice.

Despite multiple reports of good-faith efforts by Super Committee members, they have yet to overcome what seem to be fundamental political differences. Most Democrats are concerned that entitlement programs (Medicare, Social Security, etc) are not severely slashed in any deal, whereas most Republicans balk at revenue-raising measures.

The November 1 committee meeting promises to be interesting as it hears from former Senator Alan Simpson (R-WY) who co-chaired last year’s National Commission on Fiscal Responsibility and Reform. Simpson is adamant in his belief that a sound deficit reduction plan cannot be accomplished without both budget reductions and additional revenues.

More from MOAA
Quote of the Week
“[Military retirement costs are] neither unaffordable, nor spiraling out of control.” (Dr. Jo Ann Rooney, Principal Deputy, Undersecretary of Defense for Personnel and Readiness, when asked during a House Armed Services Military Personnel Subcommittee hearing if the costs of the current military retirement system were sustainable.)

TRICARE Young Adult Prime Delays
The TRICARE Young Adult program – which allows dependent children up to age 26 to remain in the TRICARE system – will roll out its TRICARE Prime coverage option in January 2012. Originally expected to be available by October, the implementation of this option has suffered delays.

Legislative Update is published weekly by MOAA, 201 N. Washington Street, Alexandria, VA 22314.

You are currently subscribed to MOAA Legislative Update as r.baisden@comcast.net. Manage Subscription
©2011 MOAA, All rights reserved.

MOAA – Military Officers Association of America
One Powerful Voice.®
201 N. Washington Street
Alexandria, VA 22314

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