Options for Reducing the Federal Deficit

Congressional Budget Office: Options for Reducing the Deficit

March 12, 2018













After review of the options presented in the Congressional Budget Office’s Report, this paper discusses the use of Option 6: “Introducing out-of-pocket requirements under Tricare For Life (TFL),” as it pertains to hospitals. The Congressional Budget Office (CBO), introduces the option of proposing an out of pocket requirement for military retirees and their spouses, who are eligible Medicare members. As the law stands, these members pay virtually nothing out of pocket, because TFL covers any remaining costs after Medicare (CBO, 2016). In addition, the Department of Defense is a passive payer in TFL, and therefore pays out the costs, however, has no control or management over the use of services (CBO, 2016).

One cited advantage of option 6, is that beneficiaries will be more conscious of their use of health care services, especially ER visits, if they were required to pay out-of-pocket costs (CBO, 2016). Members would be less likely to use their emergency room services for things, other than an emergency, if they had to share the cost of those services, as private-payers do. The CBO estimates that this option would reduce federal spending by $27 billion in the years 2018 – 2026. In 2012, the Department of Defense (DoD), estimated that Tricare consumers, used 50% more outpatient services than their comparable civilian counterparts (CBO, 2014).

Another benefit of increasing out-of-pocket costs for TFL members, is that it forces providers to manage disease better. Instead of treating symptoms that people are coming in for, they are now forced to treat underlying illness. For example, instead of treating just the numb or tingling sensation in someone’s feet, providers should look into, does this person have an existing diagnosis of diabetes, and if so, what can they do to better maintain the disease, if not treat it all together.

In addition to requiring out-of-pocket costs, the CBO proposes to implement models that resemble more recent civilian value-based plans. Tricare was based on similar managed care plans common at the time of its founding (Hosek, Sorbero, Martsolf, & Kandrack, 2017). However, in more recent times civilian health care plans have moved away from managed care and fee-for-service, and towards value-based care. This Tricare reform, will force DoD to look at how to reform Tricare, so that it is still founded in quality based care (Hosek, et. al, 2017). Tricare can continue to have the best of both worlds, if they incorporate a hybrid model, that provides quality care, but still maintains its low out-of-pocket costs for its members. A hybrid model will decrease the federal deficit on health care spending, and maintain focusing on the overall health and wellness of its members.
















References

Congressional Budget Office. (2014). Approaches to reducing federal spending on military health care. Retrieved from https://www.cbo.gov/publication/44993

Congressional Budget Office. (2016). Options for Rducing the Deficit: 2017 to 2026. Retrieved from https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/52142-budgetoptions2.pdf

Hosek, S. D., Sorbero, M. E., Martsolf, G., & Kandrack, R. (2017). Introducing Value-Based

Purchasing into TRICARE Reform. Rand Health Quarterly, 6(2), 9.