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94–092 2015

[H.A.S.C. No. 114–5] 

FINAL RECOMMENDATIONS FROM THE 

MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION 

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

FEBRUARY 4, 2015 
(II) 

HOUSE COMMITTEE ON ARMED SERVICES 

ONE HUNDRED FOURTEENTH CONGRESS

WILLIAM M. ‘‘MAC’’ THORNBERRY, Texas, Chairman 

WALTER B. JONES, North Carolina 

J. RANDY FORBES, Virginia 

JEFF MILLER, Florida 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

ROB BISHOP, Utah 

MICHAEL R. TURNER, Ohio 

JOHN KLINE, Minnesota 

MIKE ROGERS, Alabama 

TRENT FRANKS, Arizona 

BILL SHUSTER, Pennsylvania 

K. MICHAEL CONAWAY, Texas 

DOUG LAMBORN, Colorado 

ROBERT J. WITTMAN, Virginia 

DUNCAN HUNTER, California 

JOHN FLEMING, Louisiana 

MIKE COFFMAN, Colorado 

CHRISTOPHER P. GIBSON, New York 

VICKY HARTZLER, Missouri 

JOSEPH J. HECK, Nevada 

AUSTIN SCOTT, Georgia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

RICHARD B. NUGENT, Florida 

PAUL COOK, California 

JIM BRIDENSTINE, Oklahoma 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

BRADLEY BYRNE, Alabama 

SAM GRAVES, Missouri 

RYAN K. ZINKE, Montana 

ELISE M. STEFANIK, New York 

MARTHA MCSALLY, Arizona 

STEPHEN KNIGHT, California 

THOMAS MACARTHUR, New Jersey 

ADAM SMITH, Washington 

LORETTA SANCHEZ, California 

ROBERT A. BRADY, Pennsylvania 

SUSAN A. DAVIS, California 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JIM COOPER, Tennessee 

MADELEINE Z. BORDALLO, Guam 

JOE COURTNEY, Connecticut 

NIKI TSONGAS, Massachusetts 

JOHN GARAMENDI, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia 

JACKIE SPEIER, California 

JOAQUIN CASTRO, Texas 

TAMMY DUCKWORTH, Illinois 

SCOTT H. PETERS, California 

MARC A. VEASEY, Texas 

TULSI GABBARD, Hawaii 

TIMOTHY J. WALZ, Minnesota 

BETO O’ROURKE, Texas 

DONALD NORCROSS, New Jersey 

RUBEN GALLEGO, Arizona 

MARK TAKAI, Hawaii 

GWEN GRAHAM, Florida 

BRAD ASHFORD, Nebraska 

SETH MOULTON, Massachusetts 

PETE AGUILAR, California 

ROBERT L. SIMMONS II, Staff Director 

DAVE GIACHETTI, Professional Staff Member 

CRAIG GREENE, Professional Staff Member 

COLIN BOSSE, Clerk 
(III) 

C O N T E N T S 

Page 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Smith, Hon. Adam, a Representative from Washington, Ranking Member, 

Committee on Armed Services ............................................................................ 2 

Thornberry, Hon. William M. ‘‘Mac,’’ a Representative from Texas, Chairman, 

Committee on Armed Services ............................................................................ 1 

WITNESSES 

Maldon, Hon. Alphonso, Jr., Chairman, Military Compensation and Retirement Modernization Commission; accompanied by Commissioners GEN 

Peter W. Chiarelli, USA (Ret.), ADM Edmund P. Giambastiani, Jr., USN 

(Ret.), Hon. Stephen E. Buyer, and Michael R. Higgins ................................... 4 

APPENDIX 

PREPARED STATEMENTS: 

Maldon, Hon. Alphonso, Jr., joint with Hon. Larry L. Pressler, Hon. 

Stephen E. Buyer, Hon. Dov S. Zakheim, Michael R. Higgins, GEN 

Peter W. Chiarelli, ADM Edmund P. Giambastiani, Jr., Hon. J. Robert 

Kerrey, and Hon. Christopher P. Carney ................................................... 54 

Thornberry, Hon. William M. ‘‘Mac’’ ............................................................... 53 

DOCUMENTS SUBMITTED FOR THE RECORD: 

Fleet Reserve Association Statement for the Record ..................................... 73 

Thirteen Commission charts displayed during hearing ................................ 83 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Forbes ......................................................................................................... 93 

Mrs. McSally ..................................................................................................... 95 

Mr. O’Rourke .................................................................................................... 93 

Ms. Sanchez ...................................................................................................... 93 

Mr. Takai .......................................................................................................... 93 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Shuster ....................................................................................................... 99 

Mr. Zinke ........................................................................................................... 101 

(1) 

FINAL RECOMMENDATIONS FROM THE MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, Wednesday, February 4, 2015. 

The committee met, pursuant to call, at 10:01 a.m., in Room 

2118, Rayburn House Office Building, Hon. William M. ‘‘Mac’’ 

Thornberry (chairman of the committee) presiding. 

OPENING STATEMENT OF HON. WILLIAM M. ‘‘MAC’’ THORNBERRY, A REPRESENTATIVE FROM TEXAS, CHAIRMAN, COMMITTEE ON ARMED SERVICES 

The CHAIRMAN. The committee will come to order. 

I am pleased to welcome our members, guests, and certainly our 

witnesses to today’s hearing on the Military Compensation and Retirement Modernization Commission report. This is a very important issue for the committee and for our country. 

You know, it is often said that people are our most valuable resource. And just because we hear it a lot does not mean that it is 

not true. It is a central truth of our country’s security that the men 

and women who serve are our most essential and valuable asset. 

And today we are asking more and more of those who serve, and 

various proposals and actions and inactions by Congresses and administrations over the years have certainly caused some of them at 

least to question our country’s commitment to them. 

Congress decided that we needed to take a comprehensive look 

at our pay and benefit structure, see what was working, what 

wasn’t working, and especially whether it will continue to be able 

to assist us in recruiting and retaining the high-quality folks that 

we need to serve our country in the military. 

Last week, the Commission on Military Compensation and Retirement Modernization issued their report, and we are very 

pleased to have many of the commissioners before us to testify and 

explain the report before us today. And I particularly appreciate 

the Commission’s work to help us understand what sorts of pay 

and benefits are most valued by the people who serve. Their proposals certainly deserve and will receive a thorough examination by 

this committee. 

As Congress reviews these recommendations, I think we will continue to ask what sorts of pay and benefits are working as intended, what sort are not working, and does this overall structure 

put the military in the best possible position to attract and keep 

the kind of top-quality people we need moving ahead. As we study 
2 

the Commission’s proposals and receive other opinions and suggestions, those will be the primary questions, at least on my mind. 

Let me turn to the distinguished ranking member, Mr. Smith. 

[The prepared statement of Mr. Thornberry can be found in the 

Appendix on page 53.] 

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM 

WASHINGTON, RANKING MEMBER, COMMITTEE ON ARMED 

SERVICES 

Mr. SMITH. Thank you, Mr. Chairman. I too want to thank our 

panel for taking on a very, very difficult task and doing an outstanding job. I think the proposals are thoughtful and really get 

into the difficulty of the issue, and I think it is good place to start 

for our committee. 

And really there are just two competing principles here. One, as 

the chairman noted, we need to take care of the men and women 

who serve in our military and their families. First of all, it is the 

right thing to do. Second of all, we have an All-Volunteer Force. We 

want to make sure that people join and stay, that we are able to 

attract the people we need and then to keep the people that we 

need. 

And obviously there are a lot of things that factor into that. But 

the compensation, pay, benefits, are a piece of it. And we want to 

make sure that we continue to be able to have that All-Volunteer 

Force, whatever debate one may have about whether or not we 

should have a draft or more people should be involved. We all know 

that is not happening. We are going to have an All-Volunteer 

Force, and we need to have a pay and benefit structure that attracts and retains them. 

At the same time, over the course of the last 20 years, the 

amount of money that we spend per service member, the personnel 

costs, has tripled. There is a very deceptive stat out there that 

shows that personnel costs as a percentage of the overall budget 

have stayed roughly the same, and that is true, but we have reduced the number of personnel, I think it is by roughly 900,000. 

So the per-person cost has gone up and gone up significantly. 

Healthcare costs are a pretty significant driver of that. 

And as we look at where we are at with the budget, in trying 

to figure out what we are going to do over the course of the next 

decade with sequestration, if it comes, and even without sequestration, we have less money to spend in the Department of Defense 

[DOD] than 3, 4 years ago we thought we were going to have. How 

do you make those choices? Because for me, the number one overall 

obligation is to make sure that whatever it is that we ask the men 

and women in our Armed Forces to do, they are trained and 

equipped and ready to do it. Having a hollow force is the one completely unacceptable outcome. 

And if we wind up spending a whole bunch of money on personnel costs or on other things and we don’t have the money for 

training, which is the situation we have been in for the last several 

years as readiness accounts have been raided to deal with, well, 

government shutdowns and CRs [continuing resolutions] and sequestration, then we wind up having a force that is not as trained 

and as ready as it needs to be. 
3 

So when we look at the budget we need to consider all of those 

questions, and personnel costs are parts of it. Is there a way that 

we can save money in those areas and still meet the obligation that 

the chairman said that we should, first and foremost, have to the 

men and women who serve and to make sure we continue to have 

a very effective All-Volunteer Force? 

That is not an easy thing to take on. And I think the proposal 

that you have put before us is a very thoughtful and good start for 

this committee. And I hope this committee will take it seriously, 

and I think it is absolutely critical that we do some kind of personnel reform in this Congress that winds up saving us some 

money long term. So we are going to have to start that process, and 

today is a good day to do it. 

I thank the chairman. I yield back. 

The CHAIRMAN. I thank the gentleman. 

I ask unanimous consent that my full opening statement be 

made part of the record. And after consulting with Mr. Smith, I ask 

unanimous consent that the statement of the Fleet Reserve Association on the Commission’s recommendations also be made a part 

of our record. Without objection, so ordered. 

[The information referred to can be found in the Appendix on 

page 73.] 

The CHAIRMAN. Let me now turn to our distinguished panel of 

witnesses. 

Honorable Alphonso Maldon, who has been chairman of the Compensation Commission. 

We also have with us Honorable Steve Buyer, who was once a 

member of this committee and I believe chaired our Personnel Subcommittee once upon a time. 

Mr. Michael Higgins, who has also been associated with this 

committee as one of our key staffers dealing with personnel as well. 

General Peter Chiarelli, who has not only a distinguished military record, but a distinguished record after he has retired from 

the military in dealing with some of the most difficult issues, including brain trauma, that our military folks have to endure. 

And Admiral Edmund Giambastiani, also someone I have known 

for a long time for whom I have tremendous respect. 

I also notice that our former colleague Chris Carney is sitting 

there, former Senator Larry Pressler, a commissioner is sitting 

there, all of whom served on the Commission. 

And you all know what thankless jobs in Washington are like. 

But know that your efforts here are not thankless, that they are 

very much appreciated. We needed this look. You all have done 

what we asked in coming up with serious proposals that, as Mr. 

Smith says, deserve our very serious consideration, and they are 

going to get it. 

So thank you all for your service. Thank you for being here. 

Mr. Chairman, the floor is yours. 
4 

† The Commission final report is also available online at http://docs.house.gov/meetings/AS/ 

AS00/20150204/102859/HHRG-114-AS00-20150204-SD001.pdf. 

STATEMENT OF HON. ALPHONSO MALDON, JR., CHAIRMAN, 

MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION; ACCOMPANIED BY COMMISSIONERS 

GEN PETER W. CHIARELLI, USA (RET.), ADM EDMUND P. 

GIAMBASTIANI, JR., USN (RET.), HON. STEPHEN E. BUYER, 

AND MICHAEL R. HIGGINS 

Mr. MALDON. Thank you, Mr. Chairman. Chairman Thornberry, 

Ranking Member Smith, distinguished members of the committee, 

my fellow commissioners and I are honored to be here today, and 

we thank you for this opportunity to testify before the House 

Armed Services Committee. We also thank you for your support of 

the Commission during the last 18 months and for your leadership 

in protecting service members’ compensation and benefits. 

I would like to request that our final report be entered into the 

record, Mr. Chairman. 

The CHAIRMAN. Without objection. 

[The Commission final report is retained in the committee files 

and can be viewed upon request.] † 

Mr. MALDON. The All-Volunteer Force is without peer. Their unwavering commitment to excellence in the service of our Nation has 

never been clearer than during the past 13 years of war. As commissioners, we recognize our obligation is to craft a valued compensation system that is both relevant to the contemporary service 

members and able to operate in a modern and efficient manner. 

We are unanimous in our belief that the recommendations we 

offer in our report strengthen the foundation of the All-Volunteer 

Force, ensures our national security, and truly honor those who 

served and the families who support them now and in the future. 

Our report is, of course, informed by our own lifelong experiences 

with military service, public policy, and as public servants. However, our recommendations are most informed by the insights of 

the service members, the veterans, retirees, and their families. 

The Commission and staff visited 55 military installations worldwide, listening to the views and preferences of hundreds along the 

way. More than 150,000 current and retired service members provided thoughts, very thoughtful responses to the Commission’s surveys, and we developed working relationships with more than 30 

military and veterans service organizations. 

Additionally, the Commission received input from more than 20 

Federal agencies, several Department of Defense working groups, 

and numerous research institutions, private firms, and not-for-profit organizations. 

The results of this process, including 18 months of comprehensive independent research, review, and analysis, are 15 unanimous 

recommendations that will improve choice, access, quality, and 

value within the compensation system. 

Our work represents the most comprehensive review of the military compensation and benefits program since the inception of the 

All-Volunteer Force. Consistent with our congressional mandate, 

we reviewed each program to determine if and how modernization 

might ensure the long-term viability of the All-Volunteer Force, en-
5 

able the quality of life for service members and families, and 

achieve greater fiscal sustainability for compensation and retirement systems. 

Our recommendations do this and more, improving choice, access, quality, and value within the compensation system. Our retirement recommendations propose a blended plan that extends retirement benefits from 17 percent to 75 percent of the force, leveraging the retention power of traditional military retirement to 

maintain the current force profiles, protect the assets of service 

members who retire at 20 years of service, and reduces annual 

Federal outlays by $4.7 billion. 

Our health benefit recommendations improve access, choice, and 

value of health care for Active Duty family members, Reserve Component members, and retirees, while reducing outlays by $3.2 billion. Our recommendation on commissaries maintains patrons’ grocery discounts, while also reducing the cost of delivering those benefits by more than $500 million annually. 

While these savings to the taxpayer are significant, the Commission did not engage in a cost-cutting drill. In fact, our recommendations to improve joint readiness, service members’ financial literacy, support for exceptional families, and transition assistance require additional funding to ensure program efficacy. 

In summary, our recommendations represent a holistic package 

of reforms that modernize the structure of compensation programs 

rather than adjust the level of benefits delivered to the service 

members. They sustain the All-Volunteer Force by maintaining or 

increasing the overall value of compensation and benefits for service members and their families. And they provide additional options for service personnel managers to design and manage a balanced force. 

This approach creates an effective and efficient compensation 

and benefit system that after full implementation saves taxpayers 

more than $12 billion annually, while sustaining the overall value 

of compensation and benefits to those who serve, have served, and 

the families who support them. 

Mr. Chairman, my fellow commissioners and I thank you again 

for the opportunity to testify before this committee, and we are 

honored to present our unanimous recommendation. And we now 

stand ready for your questions. 

Thank you, Mr. Chairman. 

[The joint prepared statement of the commissioners can be found 

in the Appendix on page 54.] 

[Commission charts displayed during the hearing can be found in 

the Appendix beginning on page 83.] 

The CHAIRMAN. Thank you, sir. And, again, I appreciate the work 

of all the commissioners. 

I am going to yield my time to the distinguished Personnel Subcommittee chairman, the gentleman from Nevada, Mr. Heck, who 

is recognized for 5 minutes. 

Dr. HECK. Thank you, Mr. Chair. Likewise, I thank all the commissioners for the incredible effort you put forth in developing this 

product. 

Some of the recommendations may be considered earth-shaking, 

maybe even seismic shifts. And what we have heard a lot in the 
6 

past is this idea of making sure that we don’t break the faith with 

either former or current service members. 

In fact, Miche`le Flournoy, who was the former Under Secretary 

of Defense for Policy before the HASC [House Armed Services Committee] roundtable last September, in a review on the QDR [Quadrennial Defense Review] had brought up the question, how do you 

define breaking the faith? Is it benefits, making sure that we keep 

a paying compensation program? Or is it about readiness and making sure that those that are serving are actually manned, trained, 

and equipped? 

Interestingly, just yesterday, Todd Harrison, in an article in 

Forbes, brought up that same question, stating, ‘‘Keeping faith 

with troops means more than protecting the existing compensation 

system. It means ensuring our military remains the best trained 

and equipped force in the world. Breaking faith with the troops is 

sending them into battle understaffed, undertrained, or with inferior equipment.’’ 

I would ask the Commission, in looking at the recommendations 

made, how did you balance or how do you view the balance between keeping the faith with those that are serving and have 

served with some of the recommendations that are generated by 

the report? 

Mr. MALDON. Thank you, Congressman, for that question. 

We spent quite a bit of time discussing just that. We know that 

there are competing interests here. And we have dealt with those, 

we believe, in a very thoughtful manner. 

Before we actually get into talking a little bit more specifically, 

Congressman, about the question that you have raised, I have 

asked my colleague here, Commissioner Buyer, to actually respond 

by reading to you a statement here that we had talked about in 

some of our sessions that we have had. So with that, I am going 

to ask Commissioner Buyer to please respond to that. 

Dr. HECK. As long as he can do that and get to my question within the 3 remaining minutes. 

Mr. MALDON. I promise you, Congressman, we will do that. 

Mr. BUYER. It should not be lost on the committee that of the 

five commissioners, and actually the commissioners also sitting behind me, all of us have had military service, we are military retirees, we have served this Nation in war and in peace. And that this 

question about keeping the faith, for me and for my commissioners, 

it comes down to two questions. Will the recommendations keep the 

faith with the men and women who have served in the past and 

who are presently serving? 

The second question would be, do these recommendations in this 

report enable us to recruit and retain the force in a manner that 

the benefits will be sustainable and that will be structured in a 

manner that can ease return to civilian life. 

The answer to both of those questions is yes, and we enthusiastically support these recommendations to you. 

Dr. HECK. I am going to keep the real detailed questions for 

when we see you in subcommittee. But from the kind of strategic 

view, the 30,000-foot view, can you give some specific examples 

where you looked at the balance between keeping the faith and 

making some changes? 
7 

I mean, I think the idea between retirement with a grandfather 

clause shows some thought. But when you get into the healthcare 

issue and moving currently serving dependents out of the current 

system, some may argue that that is breaking faith, it is not what 

they signed up for. 

Mr. MALDON. Congressman, I am going to have Commissioner 

Giambastiani respond to that question next. 

Admiral GIAMBASTIANI. I am going to give you a top-level answer. As you said, in the subcommittee we can spend time drilling 

down into the details. I learned as a young junior officer, and I 

have lived by it for four decades of service, if you take care of your 

people they will take care of you. That is number one. And that 

goes to the chairman and the ranking member’s comments along 

with yours, sir. 

But we came up over a period of time to try to describe, for example, in the Navy, in my years when I was resourcing both personnel and modernization in combat programs, how can we describe what we are doing to support our soldiers, sailors, airmen, 

and marines? Most people talk about quality of life, but that mainly happens to be the types of things that we addressed here. 

Our view was that quality of service was the penultimate measure. Quality of life was part of that. All of these compensation programs, health care, et cetera, were a subset. But quality of service 

included all those things. Weapons systems, anything to prevent 

casualties, anything to lower combat casualties, anything to bring 

our soldiers, sailors, airmen, and marines home fell into that quality of service. 

And we can get into more detail at a different time. But I would 

just tell you that quality of service is how we as a Commission 

looked at this. 

Dr. HECK. All right. Thank you all very much. Again, I appreciate your efforts. Look forward to getting into the details with you 

in subcommittee. 

And I yield back, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. I will yield my time to 

Mrs. Davis, who is the ranking member on the Personnel Subcommittee. 

Mrs. DAVIS. Thank you, Mr. Chairman. 

And thank you to all of you. I know this has become very personal to you, the fact that you worked so diligently on this and 

came to these conclusions. 

And I wanted to perhaps follow up with Dr. Heck’s question as 

well. And maybe, because we are taking this larger look right now 

before we get into so many of the details, I wonder if and perhaps, 

Mr. Chairman, but the others as well could help us take us into 

the room, let us be a fly on the wall for a minute to a breakthrough 

time when you really sort of had one of those ‘‘aha’’ moments, this 

is the best way that we can come to that balance, that tension that 

we know exists and that we will have much testimony to deal with. 

I wonder if you could sort of let us in on that, what was key in 

that. 
8 

And the other question is, what would you be the most disappointed about if we are not able to kind of come together as a 

committee and deal with this issue? 

Mr. MALDON. Congresswoman, thank you very much for your 

question. Quickly, let me just mention to you, everything that we 

did, people that we met with, first of all, we had town hall meetings across the country, we actually had public hearings, we had 

sensing sessions. We talked extensively to families, to service members, Active, Reserve Component, and retirees, and we listened 

very carefully to what they had to say. 

We heard them express to us their concern for choice, wanting 

to have more choice, wanting more access. We heard them talk 

about what their preferences were. We received responses from the 

survey that we sent out where they actually told us, here is what 

we prefer as a value. 

And so what we did in our deliberation and spent lots of time, 

many discussions going through, discussing how we should be 

aligning compensation benefits to the preferences that the service 

members told us about. And so everything that we did, we ran it 

through that thread. 

We had 80 percent of the people told us they like the solutions 

of what we were doing, where we were going with this, providing 

more value, providing more access, more choice for them, which is 

very different from what we have done before. 

Mr. BUYER. Ma’am, there were three ‘‘aha’’ moments, if that is 

what you are asking for, for me. One was we had pretty extensive 

debates over BAH [basic allowance for housing]. And I know you 

have had them. And the Pentagon year after year will send over 

cuts or they will send over—we decided we would jump into that 

issue and we would debate it and we would try to figure out a new 

way of doing it and debate it again and again and again. 

And in the end, the ‘‘aha’’ moment came out of Mr. Higgins, not 

surprising to the committee, when he said, you know, I do believe 

that over the years that this compromise is founded about just 

right. And that is why we did not make any of the changes on 

BAH. 

So I want you to know, Chairwoman, we went into it extensively, 

drilled down to a level that has never been really done before. 

With regard to health care, an ‘‘aha’’ moment was how can you 

really create a health system that will increase the quality, give 

choice to the beneficiaries, improve access, improve quality, hit the 

value proposition. And we could do that when Admiral 

Giambastiani and General Chiarelli gave the recommendation to 

create this Joint Medical Command. And that was an ‘‘aha’’ moment. 

Mrs. DAVIS. Thank you. 

Anybody else want to—— 

Mr. MALDON. Could I have Commissioner Giambastiani to follow 

up, and then one more from my left, General Chiarelli. 

Admiral GIAMBASTIANI. This may surprise you, but my ‘‘aha’’ moment came when we transitioned from the draft to the All-Volunteer Force. 

General Chiarelli and I are kind of old geezers here, serving a 

hell of a lot of years, myself 41 years in uniform. And I came in 
9 

during the draft era, went to the Naval Academy. But I served 

with that draft force, fine individuals, men and women. But I have 

to tell you, this All-Volunteer Force is absolutely the best I have 

ever served with in my entire career. 

And that is the ‘‘aha’’ moment on how to maintain that All-Volunteer Force, maintain that professionalism, the training, but continue to bring in quality people. That has been a lifetime of ‘‘aha’’ 

moments on how we maintain that. 

And I would just tell you, I am impressed, there is no peer out 

there. And as a NATO [North Atlantic Treaty Organization] Supreme Allied Commander, I used to give talks around Europe to 

other NATO allies about the All-Volunteer Force. Many of them, 

including the Germans, would push back and say, our system is 

good. And I would say, fine, you do what you need to do. 

If you look at Europe today, even though their militaries are 

small, they have all moved to a professional force, just like us, because they understand how effective it is. So maintaining that is 

so important. 

The CHAIRMAN. Thank the gentlelady. 

Mr. Forbes. 

Mr. FORBES. The chairman has eloquently thanked and expressed the appreciation of this committee for your work. But I 

think your work merits an appreciation from all of us. So thank 

you both for what you have done on this Commission, but also 

what you have done and continue to do outside the Commission. 

General, you mentioned that one of the comments you consistently received from individuals was more choice. And so just two 

questions for you. One, did the Commission give any thought to 

making the new retirement system optional for everyone, even new 

people? If the system is as attractive as your research and analysis 

suggest, it does seem like most service men and women would opt 

in voluntary. And if it doesn’t get us all the way home, does it get 

us part of the way home? One. 

Second, the Fleet Reserve Association [FRA] put out a quote that 

said shifting benefits from 20-year career service members to service members with as little as 2 years of service with portable benefit is laying the groundwork for a catastrophic retention crisis. 

How do you respond to that? And what are your thoughts on that 

issue? 

Mr. MALDON. Congressman, thank you for the question. 

We spent a lot of time talking about and thinking about retention and recruiting and what does that mean, what do we have to 

do to make sure that we can ensure an All-Volunteer Force. I am 

going to have Commissioner Chiarelli to talk specific to that question. 

General CHIARELLI. I guess the kind of an ‘‘aha’’ moment for me 

is when we went to San Antonio and saw new medics and corpsmen who were at the beginning of their basic training to become 

medics. And, you know, that MOS [military occupational specialty] 

is not filled with a lot of lower GT [general technical] score people. 

These are all bright young men and women. And we asked the 

question to them, would you please raise your hand, if you stay in 

the military for 20 years, will you receive 25, 50, or 75 percent of 
10 

your base pay in retirement? And we had two people, I think, get 

it right out of a crowd of about 100. 

And it was clear to me at that moment that as a young medical 

corpsman, you are not necessarily joining the service and making 

the best decisions about your retirement plan. It is going to become 

important to you later on. And that really drove home to me the 

importance of what we are doing. 

If you look at the chart you will provide us, you will see that an 

E7 [enlisted grade] in any one of the services under this current 

plan, using the best financial estimates that we can make, not 

high, not low, will make more in the long run than he would have 

under the current system. 

[The chart referred to can be found in the Appendix on page 84.] 

General CHIARELLI. So I am totally comfortable that this retirement system that we have crafted is absolutely essential as we 

move forward and takes the best interests of our service men and 

women into account at all pay grades and ranges of service. 

Mr. FORBES. And, General, nobody could question your commitment to your troops and your service to them. Can you just elaborate a little bit on what it would do if we did make it optional? If 

it is that attractive, would that be a possibility if we did that? 

Mr. MALDON. Thank you. Congressman, I am going to have Commissioner Higgins to respond to that. 

Mr. FORBES. Yes, please. Thank you. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Congressman, we absolutely will make the new proposal optional 

for currently serving service members. And we believe that there 

will be a significant number of those service members, largely service members with less than 10 years of service, because as you 

grow closer to the defined benefit that we have today, of course, the 

draw there is very strong. But for those with less than 10 years 

of service, and particularly those with less than 5 years of service, 

we believe that the opt-in rate is going to be very high, very high 

indeed, perhaps in the range of 90 percent. 

Mr. FORBES. So everybody would have the option? 

Mr. HIGGINS. Yes, sir. That is correct. Everybody would. 

Now, regarding the FRA comment, we would disagree with the 

premise of their comment, because I think what they are suggesting is that people that stay for 20 years are going to pay for 

these new benefits that are not currently provided to service members in the Thrift Savings Plan [TSP]. And the answer is that we 

believe, and our analysis strongly supports, that these benefits for 

the 20-year retiree are going to be every bit as good as they have 

today, or better, and that we are still going to deliver this interim 

benefit for those that don’t choose to stay. 

Mr. FORBES. Thank you. 

My time is up. And I yield back, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Ms. Sanchez. 

Ms. SANCHEZ. Thank you, Mr. Chairman. 

And thank you all on the Commission for doing what is basically 

a very difficult job. 

I have three questions. The first has to deal with, I know in your 

report you mention that you weren’t necessarily looking at cost sav-
11 

ings, you were looking at what it would take to retain, what military compensation and the retirement system would look like to be 

effective for us. 

But I think since we are going through this whole issue of taking 

a look at everything, that cost should be an important piece of this, 

especially when we are bumping up against this whole issue of 

maybe a hollow force and making sure we have the money for not 

only future systems, but also for training our military. 

So my questions go to, first of all, TRICARE. The Commission 

recommends essentially replacing TRICARE with a selection of 

commercial plans in order to provide more option and accessibility. 

And in terms of the level of service and cost efficiency, how is replacing TRICARE better than essentially expanding health care? 

My second question is with respect to the consolidation of all the 

GI [government issue] Bills and educational issues. I am worried 

that if we go to that and we are in the transition period of what 

might be less than 1 year, but could be 3, 4, 5 years as we consolidate everything, that some of these benefits might fall under or 

really impact the soldier or the airman or what have you who are 

trying to get an education. So can you comment on how we might 

restructure that? 

And then the third issue goes back to the base housing allowance. And I just heard you all say that we looked at it, we looked 

at it, and pretty much we ended up with the same. But when we 

began with base housing allowance way back when it was at 80 

percent and now it is at a full 100 percent. And this is one of the 

largest areas of escalating cost for us. 

So would you speak please to the review of that and why we 

might not scale it back to, for example, 80 instead of 100? Thank 

you. 

Mr. MALDON. Congresswoman, thank you very much for the 

question. I am going to do a couple things here. We will try to 

break this out and respond to your question with regard to 

TRICARE, with regard to the BAH, and the GI Bill, the educational benefit piece of this. 

But let me first say that we took a very, very extensive look at 

the overall benefits here for the service members in terms of what 

they told us that they wanted, what they needed in order for us 

to be able to ensure an All-Volunteer Force. So as we looked at 

each one of these, we approached it in a way of wanting to achieve 

efficiencies wherever there is an opportunity to achieve those efficiencies. And so then cost came later. But we were totally not driven by cost. 

I want to start with having Commissioner Buyer to talk about 

the TRICARE piece. And then I will have him followed by Commissioner Higgins on the GI Bill piece and the BAH. 

Ms. SANCHEZ. Great. And when I am talking about costs, I mean, 

you really have to just oppose that against what is happening to 

the American public at large. And that means that many of them 

have lost higher-paying jobs. They are making less either for the 

same job with respect to what it costs to live or they have gone and 

found other jobs that don’t have benefits. Nobody has a pension, et 

cetera, et cetera. 
12 

So we are asking taxpayers to pay for our military when our taxpayers are not in the same position they might have been from a 

monetary and quality-of-life perspective of 20 years ago. 

Mr. MALDON. Commissioner Buyer. 

Mr. BUYER. Health care is a tremendous value benefit not only 

to the men and women who wear the uniform, but their families, 

and then the retirees, and then those of whom are disabled. So how 

do we now improve that benefit? At the same time, when we talk 

about cost or savings, it is not only to the beneficiary, but also to 

the taxpayer. And how can we do this? 

So we looked at TRICARE and said every year as the budgets 

come over, why are you dealing with these issues on TRICARE? 

Because when TRICARE was first installed, where it was then 

compared to where it is today, it has diminished in its value, diminished because it is now a very limited provider network. It is 

limited why? Because of the pressures that have been also placed 

upon the TRICARE contractors to go out there and get providers 

into the system and you pay below Medicare rates. 

So I will give you as an example, pick a specialty, orthopedics, 

Fort Bragg. Those of whom that are in the TRICARE, have signed 

up for TRICARE to do orthopedics at Fort Bragg, there are 12. If 

you look at the government employees health plan, there are 43 in 

that one. If you look at Blue Cross/Blue Shield at Fort Bragg, there 

are 163 orthopedics that are in it. Why only 12 of them if there are 

163 in Blue Cross/Blue Shield? It is because they don’t want to sign 

up for TRICARE because the reimbursement rates are so very, 

very low. 

Now I will ask you, of those 12, do you think they are at the top 

of that 163 that are in Blue Cross/Blue Shield? I think you know 

the answer to the question. 

So with regard to the quality—— 

The CHAIRMAN. I apologize for interrupting. But with the largest 

committee in Congress, we have to have some time—— 

Ms. SANCHEZ. Thank you, Mr. Chair. I will take those answers 

to those questions in writing, please. 

The CHAIRMAN. Well, I hope other folks will ask about the other 

issues too, because I think they are important and I would like to 

hear—— 

Mr. BUYER. We can answer for the record, Mr. Chairman. 

[The information referred to can be found in the Appendix on 

page 93.] 

The CHAIRMAN. And I appreciate that. 

Mr. MALDON. Thank you, Mr. Chairman. 

The CHAIRMAN. Chairman Miller. 

Mr. MILLER. I can’t believe you gaveled down Chairman Buyer. 

The CHAIRMAN. Note that for the record, please. 

Mr. MILLER. Again, thank you very much for the hard work that 

you have all done. I have one question. But I want to yield back 

to my colleague, Mr. Forbes, who wants to ask a clarification for 

the record. 

Mr. FORBES. Mr. Chairman, obviously you guys are the experts. 

I just want to make sure we have the record right. I think several 

of us misread the report. But I want to make sure that this new 

retirement system, as I understood the testimony, was that it 
13 

would be optional for everyone, even new people. Did we misread 

that? Because I know some writers have misread it too. And we 

just want to make sure everybody is on the same sheet of music. 

Mr. MALDON. Of course, Congressman. 

Commissioner Higgins, could you please respond specifically to 

that question? 

Mr. HIGGINS. Thank you, Mr. Chairman. 

We only envision the opt-in provision in terms of those that were 

currently serving when the law is adopted. New entries would be 

brought into the service under our proposal. There wouldn’t be an 

opt-in to the old system that currently exists today. 

Mr. FORBES. And that was what we had thought. At some point 

in time, just for the record, if you would give us your thoughts 

about making that optional as well. 

[The information referred to can be found in the Appendix on 

page 93.] 

Mr. FORBES. But I want to yield back to Chairman Miller for his 

questioning. 

Mr. MILLER. Thank you very much. 

We are all looking for efficiencies and the proper delivery of 

health care. And I just want to talk about the Military Readiness 

Command just a little bit. This is something that I think the Joint 

Staff should already be doing. 

So my concern is, do you foresee this creating another layer of 

bureaucracy within an already bloated system, if you will? And the 

question basically is, how will this help improve readiness, especially medical readiness? 

Mr. MALDON. Thank you very much, Congressman, for your 

question here. I am going to ask Commissioner Giambastiani to 

lead that for us. 

Admiral GIAMBASTIANI. Thank you, Chairman Miller. Great 

question. 

As we went through and debated the phenomenal medical success that we have had during this last 13 years of war and we 

looked at how overall the services have reduced combat casualties 

to a record low compared to World War II, Vietnam, even Desert 

Storm, down to about a death rate of about 10 percent of those very 

serious casualties, we looked at what did it take to do this. 

And medical care, combat medical readiness is much more than 

just doctors, nurses, corpsmen, medics on the battlefield. It happens to be the transportation systems, medevac helicopters, aircraft, the logistics and systems that allow them to do that, and all 

of those supporting structures out there that are beyond any medical command. 

Now, there have probably been 14 commissions over the years, 

30, 40 years, that have recommended establishing a Joint Medical 

Command. We looked at that. And this is the most contentious 

topic that we debated and discussed within our Commission. 

And unanimously we came out to the conclusion that the best 

way to deal with this is to embed a joint medical unit, if you will, 

a command unit within a Joint Readiness Command, and also create on the Joint Staff a significant structure called a J10, that was 

just solely medical as opposed to having it buried underneath 

transportation and the rest. 
14 

It is probably more than we can discuss in this forum during this 

timeline. And I would be happy to do that offline with you, as I 

know General Chiarelli would. But I think that we have come up 

with the right solution. 

Finally, although our report says that the costs in there are just 

under $300 million a year, frankly, all of the people pretty much 

have been transferred from the old Joint Forces Command to the 

Joint Staff, and that is the reason why the Joint Staff has about 

quadrupled in size. 

Mr. MALDON. Mr. Chairman, if you don’t mind, I would really 

like to have Commissioner Chiarelli to follow up on that very 

quickly. I am certainly concerned about the time. But I would love 

to have him say a few words. 

The CHAIRMAN. Sure. 

General CHIARELLI. Whatever you want, Mr. Chairman. 

The CHAIRMAN. Well, If you have a brief comment, General, because you have done so much work in this healthcare area. 

General CHIARELLI. The number one requirement for our health 

care in the military is to take care of deployed soldiers. Period. I 

mean, that is what makes it different. And we have to ensure that 

as we reorganize and look to make our MTFs [military treatment 

facilities] be able to be better training grounds, as the force gets 

smaller for our physicians and entire medical team. 

It is absolutely essential that somebody be able to go into the 

Tank, along with the Chairman of the Joint Chiefs of Staff, and 

make the argument for the tough decisions that are going to have 

to be made in order to maintain that capability. And I can go into 

that in great detail. 

The CHAIRMAN. That is helpful. Thank you. 

Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Mr. Higgins, I will just ask you directly on the retirement questions. Can you clarify for me, again, I think what Mr. Forbes was 

trying to get at, if the new law passes, this proposal passes, I am 

a new service member, I am immediately enrolled into the TSP as 

the Commission envisions it? 

Mr. HIGGINS. That is correct. 

Mr. LARSEN. And then what is my vesting period under the Commission’s plan? 

Mr. HIGGINS. It would be 2 complete years of service and your 

first day of your third year, you are vested. 

Mr. LARSEN. And then what percentage of my salary, what is the 

maximum percentage of my salary that I would be able to put into 

this TSP plan envisioned by the Commission? 

Mr. HIGGINS. Five percent would be the maximum matching at 

that time. Your automatic enrollment would be at the 3 percent of 

salary point. 

Mr. LARSEN. Automatically enrolled at 3 percent of salary? 

Mr. HIGGINS. Base pay to be specific. 

Mr. LARSEN. Base pay. And then my employer, the Department 

of Defense, would put in what? 

Mr. HIGGINS. After 2 years, they would match 3. 

Mr. LARSEN. After 2. 
15 

Mr. HIGGINS. Or if you invested 5 yourself, they would match 5. 

The 1 percent, the base amount that the government would contribute regardless of what the individual does, would always be 

there. So, in essence, it is 6 percent—— 

Mr. LARSEN. Right. 

Mr. HIGGINS [continuing]. For a service member who invests up 

to 5 percent of base pay. 

Mr. LARSEN. Does the Commission envision that this would be 

separate from the Federal employee TSP, this would be internal to 

the DOD? 

Mr. HIGGINS. No. This would be Thrift Saving Plan as currently 

used within FERS [Federal Employees Retirement System]. 

Mr. LARSEN. And it would become part of the existing TSP? 

Mr. HIGGINS. That is correct. 

Mr. LARSEN. And then just to clarify, I would not have the option 

to opt out of that as a new service member. I would be required. 

Mr. HIGGINS. Of the 3 percent on automatic enrollment? 

Mr. LARSEN. Yes. 

Mr. HIGGINS. No. They could the very next day go down to their 

finance office, not a very great hardship procedure, and remove 

themselves from the program. However, we believe that studies 

would indicate 97 percent of people would not do that. 

Mr. LARSEN. Right. 

Mr. HIGGINS. And I think that is healthy in terms of encouraging 

service members to think about financial matters. 

Mr. LARSEN. So just on the flip side, in the testimony provided 

by the Commission, 83 percent of enlisted folks receive no retirement savings currently. And if I am enlisted and served 2 years, 

get vested, I would at least start to have something, and 100 percent of my enlisted friends would start to have something. 

Mr. HIGGINS. That is correct. 

Mr. LARSEN. There are probably other questions to ask on that 

that others may have. 

I want to move to health care quickly. It seems that what you 

are proposing is more along the lines of where the rest of the 

world—not the rest of the world, maybe the rest of the country is 

going—but that DOD to me seems headed the other direction. They 

would rather consolidate, keep health care consolidated. 

And the Commission is essentially recommending health care 

should be distributed, healthcare provisions should be distributed, 

that is, commercial choice, see doctors of your choice within parameters in the individual plan. 

Have you received input at all from the Department on that particular recommendation? 

Mr. MALDON. Congressman, the thing that we focused on here 

after hearing from people across the country again and also just 

the overwhelming support that we got from people with regard to 

their responses to the commissioners’ survey, people kept saying to 

us that they wanted more choice. They wanted access to health 

care. They wanted increased value in terms of them being able to 

make the decision what was best for them. 

And let me just ask Commissioner Buyer if he would talk just 

specifically to that question also. 
16 

Mr. BUYER. We are trying to capture the trends of where the demographics are going. So not only are we doing it being responsive 

with regard to the TSP, we are also doing that with health care. 

At our opening meeting, it was Commissioner Higgins that said, 

let’s get to the question of paternalism. How paternalistic do we 

want to be? How paternalistic has the military always been? And 

where is America? And where is America going? Because that is 

what you have asked us to do, can we modernize and prepare for 

into the future. And that is what we are doing with health care too. 

So part of that empowerment is also an education piece, not only 

financial literacy, but also the literacy on how to make good choices 

for your family with health care. 

Mr. LARSEN. Thanks, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Turner. 

Mr. TURNER. Thank you, Mr. Chairman. 

Mr. Buyer, I am glad that you just ended on that comment because my question is for you. I remember serving on the VA [Veterans’ Affairs] Committee when you were the chairman of the VA 

Committee, you were always an impassioned advocate for 

TRICARE and one of the Members of Congress that I would say 

was probably the most knowledgeable of it. 

Now as we are looking at these recommendations, I thought you 

might want to give us some additional insight as to your thoughts 

on this, how it relates to your work in Congress, and how you see 

the evolution of this occurring. 

Mr. BUYER. Well, thank you very much. And thanks for your 

service. And congratulations with your new assignment. 

I look back, and personally I made some mistakes. We should 

have indexed the premiums on TRICARE for the gray area retirees. We should have done that. I remember the staff coming to me 

and asking me should we index it. And I said, you know, I want 

Congress to take an active role in these programs, and I believe 

that year after year, when Congress takes an active role, that they 

will do the right thing. 

It has not happened. The pressures on Congress to actually increase those premiums or copays or deductibles, when we first instituted TRICARE, that premium was 27 percent. It has eroded 

over time now to 5 percent. And the TRICARE as a network themselves has become so limited, bureaucratic, cumbersome, it has diminished its quality. And just trying to even perfect those contracts 

has become incredibly costly. To manage it, costly. You don’t have 

utilization management that can actually perfect savings. It is not 

really a good program at the moment. 

So the question, Congressman Turner, is can we do better? I 

mean, that is sort of the mandate that you have said to us, look 

at these things, let us know what you believe and what you think. 

And in the end, yes, we can do better. 

When you look at FEHBP [Federal Employees Health Benefits 

Program] and how OPM [Office of Personnel Management], with 

100 people, manage a program of similar size to what DOD is, with 

100 people, at $47 million, TRICARE takes almost 3,000 people at 

$350 million approximately. 
17 

And going to this selection of plans, it is not FEHBP. It is kind 

of like it. It is a variant. We actually take away some of the successes. We did that when we created Medicare Part D also. 

But the most important thing is our military medical readiness. 

How do we maintain the sharp edge of that readiness that has 

been perfected in 13 years of war and maintain that and sustain 

it? 

And we said, if you take the MTFs and we roll them as part of 

the network of the plans, utilizing this Medical Readiness Command to oversee, we can actually attract good procedures into the 

MTFs. Because when you look at the MTFs today, some of the procedures that they are doing, it will surprise America. When you 

look at some of our charts and figures, you will see that a lot of 

it has to do with delivery of babies, which is great. It is great for 

the perfecting of the cohesion of the medical team. But that is not 

what is happening on the battlefield. 

So attracting procedures into the MTF can be done as part of the 

network when we give them the ability to have different cost 

shares and provide those incentives. 

Am I being responsive to you, Mr. Turner? I hope so. 

Mr. TURNER. Yes. Thank you for your insight. 

And also for each of you, thank you for your service. And certainly this is going to be a very spirited discussion, but you certainly have started off well. 

And, Mr. Buyer, thank you for your context. 

Mr. BUYER. Thank you. 

The CHAIRMAN. Mr. Veasey. 

Mr. O’Rourke. 

Mr. O’ROURKE. Thank you, Mr. Chairman. 

To the chairman of the Commission, can you talk a little bit 

about the recommendation to improve collaboration between the 

Department of Defense and the VA [Department of Veterans Affairs]? And I am specifically interested in the recommendation that 

there is a unified health record. And I think your recommendation 

is to use the VA’s healthcare record through their VistA system. 

But if that is not the case, correct me. 

And tell me whether that is going to require an act of Congress 

or whether DOD and VA could administratively implement that 

recommendation. Because, along with other members here, I serve 

on the VA Committee, and that has been a significant frustration 

for us, the disconnect between DOD and VA on this. 

Mr. MALDON. Congressman, thank you for the question. 

We spent an inordinate amount of time amongst ourselves discussing the benefit of having better collaboration between DOD 

and VA. We have actually spent time talking to the Secretary of 

VA. We have spent time talking to the people within the Department of Defense regarding the position that they have taken on 

moving forward with their health care, electronic healthcare 

records, the way they want to approach it. 

We know that there is a lot of money that is spent between DOD 

and VA on how they do business. We believe that we can take better advantage of the taxpayers’ resources if, in fact, we had better 

standardization, shared services, we had better ways of actually 

conducting business between the two. 
18 

I am going to ask, because we spent so much time on this, and 

I know that Commissioner Buyer spent a lot of time when he was 

here and since that time he has been one of our lead in following 

through on these things in our discussion, so I am going to ask him 

if he would please respond briefly to that as well. 

Mr. O’ROURKE. Thank you. 

Mr. BUYER. Thank you for your service on the Veterans’ Affairs 

Committee, along with Sergeant Major and Chairman Miller for 

your years and your eyes on recommendation 8, on the collaboration. 

We looked into this on the JEC, so the Joint Executive Committee. We didn’t put it in our recommendation, but after having 

met with Secretary McDonald, I do believe they are correct, try to 

achieve parity there at the committee. Right now you have the 

Deputy Secretary of the VA meets with the Under Secretary for 

Personnel. It really should be the Deputy Secretary at DOD meeting with the Deputy Secretary of the VA. So I would ask that that 

establish a parity and put it in statute. 

And the other is with the Joint Executive Committee, it is what 

we talked about on the committee, about heterodox, when someone, 

you have given them a position, they have the authority, but they 

have no power to perfect or implement. And that is exactly what 

the Joint Executive Committee is. 

So we try to get these two Departments, the VA and DOD, to collaborate. But they can come up with great policy, they can come 

up with great recommendations, but they have no power to implement it. 

So what we are asking, Chairman Miller, is—I am sorry, I am 

talking to him because he can get this done, and you are also on 

the committee—pass it and make it law that they can actually implement. So in the areas on mental health, that you can actually 

blend those mental health drugs. We are not going to dictate to 

you, nor should you dictate to them what antipsychotics, antidepressants, pain medications, let the experts, let science lead, but 

then let’s make sure that that can happen. 

With regard to capital projects, never again should there be that 

situation down in El Paso where the Army builds an Army hospital 

and VA builds a hospital and they won’t put it on the same 

timeline. 

Mr. O’ROURKE. Let me apologize for interrupting. 

Mr. BUYER. So making sure that that committee has the power 

is important. 

Mr. O’ROURKE. I represent the community of El Paso and I wish 

they were building a VA hospital there. But it is alarming that we 

are spending $1.1 billion for an Army medical center, state of the 

art, with no provision made for the 80,000 veterans who live in 

that community who are going to be stranded at an existing clinic 

that today is collocated with the Army hospital, the new one is 

being built 9 miles away. 

So the benefits of these recommendations are obvious. Is there a 

specific number in terms of the savings of using a single medical 

record, collaborating when it comes to purchasing for medication 

and pharmaceuticals? Is there a dollar amount associated with this 

recommendation? 
19 

Mr. MALDON. Sir, the answer to the question is we don’t know 

exactly what that dollar amount is, Congressman. We didn’t go 

that far. That is not the kind of thing that we really looked into 

that deeply. We had discussions about it. We know that there 

would be some savings there if their processes were more streamlined. But we don’t know the extent of that. We would be happy 

to look into that for the record. 

[The information referred to can be found in the Appendix on 

page 93.] 

Mr. O’ROURKE. Thank you for the recommendation. 

Thank you, Mr. Chair. 

The CHAIRMAN. Thank you. 

Mr. Lamborn. 

Mr. LAMBORN. Thank you, Mr. Chairman. 

And I want to thank all of you for your service to the country, 

including your work on this Commission. 

And, Chairman Buyer, I enjoyed working with you on the VA 

Committee when you were ranking member there. And I am so 

glad that you are working on, among other things, collaboration between the Department of Defense and the VA. 

In my district in Colorado Springs there are about 100,000 veterans and about 40,000 Active Duty personnel, plus many, many 

thousands of dependents. So this issue of a better transition from 

DOD to VA is very important. And I am so glad to hear of the work 

you have done on this. 

And of course we have referenced recommendation number 8, 

and there is also number 12: Better prepare service members for 

transition to civilian life. 

What would you say there—and I will start with you, Chairman 

Buyer—would be your recommendation specifically on how to better prepare service members for a transition to civilian life? 

Mr. BUYER. I think Congress did a wonderful thing with the new 

GI Bill. It really did. That is a tremendous valuable product that 

helps prepare them. The recommendations, we enthusiastically 

support. 

I would like you to know that there are Governors out there that 

are frustrated with the Department of Labor, with regard to their 

vets program. So the DVOPs [Disabled Veterans Outreach Programs] and LVERs [Local Veteran’s Employment Representatives], 

if you were Governor of Colorado and your Department of Veterans 

Affairs—your State Department of Veterans Affairs, those DVOPs 

and LVERs, is a State grant that goes to the State Department of 

Labor. And the Governors were telling us that it is very challenging for their Department of Veterans Affairs to actually get 

them to work collaboratively together. 

And so we want to make sure that these grants that get to the 

States, if you have got your director of State Veterans Affairs who 

is responsible for that seamless transition that he can actually perfect and get his job done. You know, this idea of, well, this is my 

job and this is all I am going to do, I don’t do any other duties as 

assigned, that has got to end. And that is part of the genesis. 

Pete, do you have a—pardon me, Ed. 

Admiral GIAMBASTIANI. I would just say that General Chiarelli 

and I, having experience with numerous organizations, trying to 
20 

work the unemployment problem with veterans is a serious issue 

because of the disconnect between what we would call and what we 

think should be one-stop centers, where you have got Department 

of Labor, DOD, VA. Where they are working together in one-stop 

centers is probably the single most important thing to force in this 

area. 

Mr. LAMBORN. Well, thank you so much. 

And back to health care, and one idea I had that I put into the 

NDAA [National Defense Authorization Act] last year was a pilot 

project to be investigated on a joint DOD/VA healthcare facility in 

Colorado Springs, because there is such a need there with Active 

Duty and veterans, and we are behind the curve in supplying that 

health care that is much needed. What kind of collaboration has 

worked and that you would like to see working better together in 

the future? 

Mr. BUYER. You know, Congressman Lamborn, with your experience and what you have seen, I think members of the committee 

have, a lot of these collaborations are personality driven in particular localities. And those crucibles produce great ideas. Those 

great ideas don’t necessarily disseminate across the health system. 

When you have a joint executive committee [JEC] that has the 

power to implement, you take that crucible of an idea that was 

borne out of Colorado Springs and you send that to the JEC, the 

JEC can actually then move it centralized, and we get greater perfection and clarity across the system. 

Mr. LAMBORN. Mr. Chairman. 

Mr. MALDON. Yes, Congressman, let me just say very quickly, the 

recommendations that we have provided here, we are proposing, 

the ones on TSP itself, that helps prepare service members as they 

transition from the military to civilian life. 

The ones that we have made with regard to health care, the insurance plan itself, that is more like—more closely associated with 

the kind of things they would experience as they go into civilian 

life from the military. So those are some of the things that we have 

done. 

And I would like to ask Commissioner Chiarelli to just speak 

briefly on that as well. 

General CHIARELLI. Well, I would like to tell you one thing you 

could do, and that is rationalizing the drug formularies between 

DOD and VA. I mean, it is absolutely unbelievable to me that we 

have soldiers—and I was a Vice [Vice Chief of Staff of the Army] 

for 4 years and did not know this—that we have soldiers that we 

put on antidepressants, antipsychotics, and pain medications. We 

give them 90 days’ supply. They show up at their VA on day 89. 

They ask to get their medications refilled and the doctor looks at 

them and says, I can’t refill that medication. 

Now, that is wrong. And quite frankly, I think that is breaking 

faith, breaking faith with those who have served and those who are 

in need of those medications, medications that have worked. And 

that would be a huge, huge thing that this committee could help 

us do. 

Mr. LAMBORN. Well, I will work with all my committee members 

on this and the VA Committee as well. 

Thank you for your good ideas and your work. 
21 

I yield back. 

The CHAIRMAN. As a matter of fact, there is a Member of Congress who is a practicing psychologist who has made this exact 

point to me. He tries to help people and they can’t keep them on 

the same medicine when they do this transition, and the enormous 

problems that come from that is unbelievable. 

Mr. Aguilar. No. 

Mr. Takai. 

Mr. TAKAI. Thank you, Mr. Chairman. 

And thank you, distinguished panel of commissioners. I appreciate your work. 

You know, it has been said before, but the services have been 

able to meet and exceed their recruitment and retention goals over 

the last 13 years while in war with our current compensation system in place. I am assuming we are here today because there is 

now a need or it is the right time to take a look at this and to 

change it, despite the fact that we have been successful in maintaining a significant, viable, All-Voluntary Force. 

So my question to you is, what are the impacts of your recommendations, changes to the future of this All-Volunteer Force in 

terms of recruitment and retention, and how were these impacts 

assessed? 

Mr. MALDON. Thank you, Congressman, for your question. 

Congressman, we believe that, and we believe this unanimously, 

that the recommendations that we have made are going to have a 

very positive effect on recruiting and retention. 

We have taken a look at what service members have told us that 

they want, what the senior enlisted advisors—as we talk to people 

across the country, they have been completely making us aware of 

the fact that things that they want, that they prefer are very different than what they were before, because, one, there is a totally 

different generation here. The contemporary workforce is changing 

and the environment is changing. 

The very people that we would be interested in recruiting and retaining in the military are the same kind of people that the industry are looking at. And so we wanted to make sure that we can provide benefits and meet the preferences that they have told us that 

they were concerned about so that we can compete against the industry for the same people. 

Commissioner Giambastiani, would you like to add to that? 

Admiral GIAMBASTIANI. Yeah. If I could just—thank you, Mr. 

Chairman. 

If I could just add that if I go back and look at our transition 

from the draft era to the All-Volunteer Force, many thought that 

that would not work. I was a submarine officer who was serving 

and was sent to Navy Recruiting Command as a recruiter, and on 

the staff there back in 1975 to help make that work. And I have 

to tell you that we have looked—and the reason why I give you this 

perspective is there were a lot of people who thought it wouldn’t 

work. 

What we have looked at here is 350 personnel programs that we 

have provided you in this interim report before, and yet, we have 

only made 15 general recommendations, which I think are important. We looked at 350 separate programs across health care, qual-
22 

ity of life, everything else, and we have made 15 recommendations. 

And behind those 15 recommendations are substantive surveys—as 

we have already mentioned—studies, and analysis. 

And all of that is referenced in footnotes and the rest in here. 

We have talked to a significant amount of people. We have talked 

to the personnel people, the personnel chiefs in the services. We 

have tried to use the extensive experience of us nine commissioners. And I think we have looked at how this impacts and how 

we assessed that we would have a positive impact. And we try to 

say the positive impacts that we would bring by the value of these 

programs in here. So that is a general answer, but I would just 

give you some historical perspective. 

Mr. TAKAI. Thank you. 

And I do appreciate the long, hard look that the Commission has 

done in regards to Guard and Reserve members, Drill Status 

Guard and Reserve members, and determining that the traditional 

methodology still works. So I appreciate that. 

My last question is in regards to TRICARE. As a former member 

of TRICARE, I do understand the challenges that we have facing 

us in terms of the number of providers accessible for TRICARE. 

Everything you say about this new program sounds good, but to 

me, it just sounds like it is going to cost a lot more money, because 

increased provider pay and other things. Can you just elaborate a 

little bit on what the cost is going to be, or if, in fact, there are 

savings and what specifically they are. 

And now that I am short of time, maybe if you could just prepare 

a response to us. 

Mr. MALDON. Yes, we will take that for the record and get back 

to you, Congressman. 

Mr. TAKAI. Okay. Thank you. 

Mr. Chair, I yield back. 

[The information referred to can be found in the Appendix on 

page 93.] 

The CHAIRMAN. Thank you. 

Dr. Wenstrup. 

Dr. WENSTRUP. Well, thank you, Mr. Chairman. 

And I want to thank all of you for your devotion to this country 

and to our troops. It is greatly appreciated. 

And in this particular realm today, I want to thank you for addressing the medical readiness of our providers, not only enhancing 

their skills but maintaining the skills that they have acquired over 

time and recognizing ways that we can and should do things better. 

I think as you look through this and you have the top 10 things 

that are taking place as far as treatments in a garrison medical 

treatment facility, it is pretty telling to what I found. I served in 

a CSH [combat support hospital] in Iraq in 2005, 2006, Reserve 

Component. 

Most of our surgeons were coming from Philadelphia, New York, 

Detroit, used to high levels of trauma. And then we get an Active 

Component coming in following us and they were deer in the headlights with what was going on, because they were doing things like 

appendectomies, which is not what was taking place in the battlefield. So I really appreciate you addressing that and the need that 

we have to maintain that high level of training. 
23 

And of course, we have programs like C–STARS, Center for 

Sustainment of Trauma and Readiness Skills. As a reservist, I participated with the Air Force a couple of years ago in Cincinnati, so 

those are some good opportunities. What we see at SAMMC [San 

Antonio Military Medical Center] in San Antonio, the opportunity 

to provide care with trauma. This is what we need more of, and 

I appreciate that you are addressing that. You have simulation 

training, but you have got real-time training too, and there is nothing better than the real-time training that takes place. 

So as a reservist still, I go to Walter Reed, and that is where I 

am honored to serve. Some of the surgeons there, now they are 

having their outside employment limited. They were going to Baltimore Shock Trauma, now they can’t go. They are losing their skills 

and a couple of them are getting out, because they said, you know, 

I am used to this high tempo of trauma. It slowed down. I have 

nowhere to practice these skills. We have got to maintain this at 

a high level, and I can’t tell you, again, how grateful I am. 

A friend of mine, Air Force trauma surgeon, reservist, deployed 

several times, both to Iraq and Afghanistan, and he brought up 

this point when I heard him speaking at one time, he said, ‘‘I used 

to, at the very beginning of these wars, tell our troops, ‘I am going 

to try and get you everything that you would have at home.’ ’’ He 

said, ‘‘Now it is just the opposite. I tell them, ‘I want to make sure 

people at home get everything that you are getting here at Bagram 

because of how far we have come.’ ’’ 

And so this partnership between civilian and military has got to 

exist at a greater level if we are going to be successful, because we 

never know when we have to turn that tempo up and be ready. 

And I think that the people are crying for it. So if you can address 

what you might see are some of the best practices as we move forward, both for Active and Reserve, to be able to participate in those 

types of scenarios, I would appreciate it, and try and drive that 

message. 

General Chiarelli, I know I have worked with you in uniform and 

out on many medical issues. 

I don’t know who would want to—— 

Mr. MALDON. Congressman, thank you very much. You know, 

you are hitting at the heart of something that we care dearly about 

and we heard quite a bit about as we travel extensively. In San Antonio, Texas, as an example, and Pensacola, Florida, we looked at 

the partnerships that were existing. In Chicago we looked at the 

partnerships that were existing, and so forth. 

I would like to have Commissioner Chiarelli talk to that because 

there was some very real lessons to learn there. 

General CHIARELLI. This was the toughest thing for me. I go 

through two combat tours in my time as Vice Chief of Staff of the 

Army, and you are trying to tell me that we need to change the 

way we deliver medical care in order to keep up the skills of our 

doctors and our medical teams. That was hard for me to take, and 

I was the one that was the hardest to convince. But I am absolutely convinced that our MTFs are on a death spiral right now. 

What no one has talked about is we are also lowering the number of people we have in the force. So even when you see the numbers up there, that was with a much larger force, the number of 
24 

caseloads they are going to see are going to be even fewer as the 

force gets smaller. And our recommendations don’t negate the 

MTFs; they give the MTFs the ability to attract and bring in the 

kind of cases that will do exactly what you have indicated, sir. 

And I applaud you, because that is what makes us different. You 

know, no one at Mass [Massachusetts] General is told on a moment’s notice to deploy a combat hospital to Iraq or Afghanistan, 

but all these armed services are. And it is absolutely critical that 

if your son or daughter is wounded on the 1st day of battle that 

they get the same kind of care that is being able to be delivered 

on the 13th year of battle. And that is what our recommendations 

are focused on. 

Dr. WENSTRUP. Well, that was very well put, 1st day and 13th 

year. It is very well put. So we will continue to drive that message 

and do all we can to work with you on that. Thank you. 

The CHAIRMAN. Thank you. 

Ranking Member. 

Mr. SMITH. Thank you, Mr. Chairman. 

First of all, I welcome the panel but I was remiss in not pointing 

out that General Chiarelli is actually a constituent, so I definitely 

want to welcome you. And as a fellow Seattleite, we just won’t talk 

about the Super Bowl. That is the way the ball bounces sometimes. 

And the guys from New England are smiling up here, and it is just, 

you know. 

But welcome. And I really appreciate your work in particular, I 

know the brain science work that you have done since you got out 

of the military, and the foundation you formed, the people you have 

worked with in the Seattle area. That is a great group of folks who 

I think are really making progress on a critical, critical area that 

affects so many diseases and so many injuries that impact people. 

And I want to talk about health care, so we will go to Mr. Buyer 

again. And health care is critically, critically important. And I had 

hip surgery about 3 months ago now. I had no idea how important 

it was until after that, and my level of appreciation and respect for 

the men and women who serve and the injuries they go through 

and what surgery really means—and I had, you know, relatively 

minor surgery—you know, the pain, the suffering, the difficulties, 

the, you know, medicinal choices that have to be made. It is an 

enormously important aspect of the military. It is also enormously 

expensive. 

And, I guess, the one thing that we really haven’t talked to—Mr. 

Takai made the allusion to it there and was going to go for the 

record, but—is the cost. Because what basically has happened, 

what has driven up the cost so much in health care is that—and 

I forget the exact statistic, but I think in 1997 the average service 

member paid about 27 percent of the cost of their health care. So 

whatever they paid for health care for a given year, 27 percent 

came out of their own pocket. 

By last year, that number was down to 10 percent. And what had 

happened was copays and premiums did not go up, but the cost of 

health care did. And that is an enormous difference. And I know 

we had our health care changed as Members of Congress, and we 

are now paying a lot more for it because we went to a higher deductible plan, and this is what is happening all across the country. 
25 

And bottom line is, copays and premiums and deductibles are 

higher. So there is more coming out of my family’s pocket, coincidentally had to be the year that we had massive amounts of health 

care needs, you know, before you get to that point. And I guess the 

question that isn’t answered here, and I guarantee you what we 

are going to get asked and the pressure that is going to be put on 

us by both retired and Active Duty, is what is coming out of my 

pocket. 

And, I frankly—and I think some of the changes you are talking 

about are great. The way you reform it gives more choice, does a 

bunch of different things that I think will improve the quality of 

health care. But at the end of the day, this really doesn’t work if 

there isn’t a little bit more coming out of the pocket of the average 

Active Duty and retiree. 

And just one example, we went through this with the TRICARE 

for Life folks. When we raised the premium, I think, I forget if it 

was like from $450 a year to $550 a year, and, you know, there was 

the huge revolt over that; $100 a year, most of us pay $500, $600 

a month. 

But the bottom line is, as you restructure this and as we find 

savings within the healthcare system, is there going to be more 

coming out of the pocket of either retirees on TRICARE or on this 

new system or Active Duty folks in terms of copays and premiums 

and higher deductibles? 

Mr. MALDON. Ranking Member Smith, let me just say a couple 

words here, then I will have my colleagues to follow on here. First 

of all, nothing changes with regard to our Active Duty military. 

That stays the same. 

And on the readiness issue, as I am going to ask Commissioner 

Buyer, as he speaks to this, to also cover readiness a little bit too, 

and then I would like to have again, I would really like to have 

General Chiarelli talk a little bit more about this as it relates to 

the readiness piece. 

But Commissioner Buyer, will you please take the first piece of 

that? 

Mr. BUYER. I think because of your surgery, you had to get up 

and walk around a little bit and you weren’t in the room when 

Congressman Turner asked me some of the questions about what 

have been the lessons learned over the years when we first created 

TRICARE, and I chaired the personnel committee to today. And I 

gave the admission that I made an error, and the error was that 

we did not index those premiums. And we should have done that. 

And that is my fault. Because Congress is—— 

Mr. SMITH. No, I heard that, but that doesn’t answer—— 

Mr. BUYER. Oh, okay. Well, but it goes to the heart of it. The 

present TRICARE system does not have utilization management 

ability. And that utilization management, the private sector does 

that with copays and deductibles. And when you go to the private 

plan—when you go to TRICARE Choice, when they have selection 

of plans, giving the ability to use utilization management, our modeling, we feel that the savings can come from better utilization 

management practices being implemented and the program management, just restructuring it, that is about $5.2 billion in savings. 

The cost share increases—— 
26 

Mr. SMITH. Just so I can be clear on that, by utilization management, you are saying that the service members will use health care 

less? 

Mr. BUYER. That is correct. 

Mr. SMITH. They will choose to use it less. 

Mr. BUYER. That is correct. Because now when you do the comparison between the utilization in the military versus an HMO 

[health management organization], a PPO [preferred provider organization] versus the HMO, you know, it is for in-patient versus out 

of patient. Gosh, it is almost a 73 percent increase, and for outpatient they utilize it 55 percent more than civilian. 

Mr. SMITH. How do you deal with the troubling aspect of whether 

or not that is a good thing? Because sometimes—you are absolutely 

right, I mean, you look at our healthcare system, we have more 

MRI [magnetic resonance imaging], we do more tests. And because 

we have a fee-for-service system, you are paid to do stuff, not necessarily to make health care better. 

But on the other hand, you can argue that, you know, if someone 

chooses not to get an MRI or chooses not to get an x-ray because 

of the cost and they miss a problem that they could have solved 

earlier, and believe me, I went through the health care debate 

more than I ever really wanted to, but I just, I never really saw 

the stat that sort of showed how you balance that. 

How do you know when over-utilization is a simple cost as opposed to a smart, preventive step? I guess, I am looking at you as 

the oracle to answer that impossible question. 

General CHIARELLI. I would argue—— 

Mr. SMITH. Go ahead. 

General CHIARELLI. I would argue you go to an emergency room 

and any one of our MTFs any night and you will see the over-utilization of health care. 

You will find an emergency room that is absolutely crammed full 

of people who could not get an appointment when they wanted to 

have an appointment, so they go and camp out in an emergency 

room—and I am not kidding you—for 8, 9, and 10 hours, absolutely 

filled. And it causes a triage to take place of patients that I would 

argue is probably not the smartest thing we could do. And I think 

this is going to reverse that in a huge, huge way. 

Mr. SMITH. And I think that all makes sense, but I guess I will 

come back to the final question, you know, what I opened with: 

What is going to be the out-of-pocket increase when it comes to 

higher deductibles, copays, and premiums of the proposal you are 

putting on the table? 

Mr. MALDON. Commissioner Higgins, would you respond to that 

question, please? 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Congressman, I think I would start by saying that the basic allowance for health care is going to cover for Active Duty service 

members many of those out-of-pocket costs that you are referring 

to. And when those out-of-pocket costs become—from some catastrophic injury or illness become greater, the top 5 percent, if you 

will, there will be a fund to help those families pay for those outof-pocket costs. And those plans that we sign them into, that they 

are going to choose themselves, all are going to have some kind of 
27 

a cap on catastrophic costs. And we are going to bridge them over 

those families that are severely—— 

Mr. SMITH. Okay. 

Mr. HIGGINS. Now—I am sorry, did you want to—— 

Mr. SMITH. Go ahead. 

Mr. HIGGINS. We are going to derive a lot of savings from this 

greater management arena. I will take myself for an example. I 

went to the emergency room one night and I had a call 2 days later 

from a nurse in my health plan wanting to know what she could 

do to help me prevent that emergency room stop in the future. And 

it made a huge difference in my life. That is management. That is 

management of utilization. It works, I believe. 

We see, and our analysts would see, and our analysts include 

people outside the committee staff, see savings—and I will just give 

you the rough numbers from the health care—$11.2 billion in savings. But what you are seeing in savings is the net, because there 

is a portion of that $11.2 billion that we are plowing back in and 

taking advantage of those health plans, better utilization—— 

Mr. SMITH. Right. 

Mr. HIGGINS [continuing]. Better network. 

Mr. SMITH. There are others who want to get in here, so I will 

stop at that. I think that is all very good. 

But one of the things that I mentioned to some of you who we 

met with privately before this, I think we have to be really, really 

honest up front about some of the costs. And I appreciate what you 

say about, you know, should it index the premiums. I mean, that 

is part of it. 

And I, you know, gave a speech to MOAA [Military Officers Association of America] a year or so ago in which I said the people who 

serve in the military absolutely should have the best, cheapest 

health care that you can get in this country on the job, and they 

will and they should and even after that proposal they will. But it 

can’t be what it was in 1997. We just can’t afford to keep doing 

that. So it is going to have to be a little bit more that comes out 

of the pocket. I think we have to be up front and honest about that 

if we are going to be successful. 

Mr. BUYER. It will be the gray area retirees will see the higher 

deductibles, and the premiums will walk up 1 percent per year to 

the 20 percent, which doesn’t even get them to where we started 

at the 27 percent premium back in the 1993, 1994 timeframe. 

Mr. SMITH. Thank you. 

And thank you, Mr. Chairman. You have been very generous 

with the time. Thank you. 

The CHAIRMAN. I appreciate those insights. 

Mr. MacArthur. 

Mr. MACARTHUR. Thank you, Mr. Chairman. 

You know, I recognize that proposing sea change is much more 

challenging than incremental change. And as I read your report, I 

was struck that you have a balance of both. You propose incremental change in some spots and sea change in others. And so I 

just wanted to acknowledge that because that is hard work to do 

that. 

It also struck me, as I read your recommendations, that your 

work is really about a key human process. The men and women 
28 

that volunteer for our armed services have choices, and I wondered 

to what degree—and I wanted to ask you to talk about how you 

looked at the other environment that they have choices in, and that 

is the private sector. Because when men and women are thinking 

about their life, just like you and I thinking about our life, we look 

at all of our options, and that includes a pay and retirement and 

health care and quality of life and training and all of the different 

elements of thinking through a life. 

And so I just wanted to ask if you could talk about whether you 

went out to some of the larger private-sector companies and evaluated how they think about these same issues, about providing benefits and quality of life and a real future for people. 

Mr. MALDON. Congressman, thank you for the question. 

We did indeed do that. We spent an inordinate amount of time, 

again, bringing in people, bringing in the experts. We brought people, for example, in to talk to us about the millennials so that we 

could understand better what millennials value, what kind of 

things were important to them, and because that is important to 

recruitment in terms of who we need to go after and what it was 

going to take to be able to compete for those very people. 

We brought in other people from the healthcare side of things 

and talked to them to better understand the commercial healthcare 

insurance plans. We talked to the OPM people who would be managing such plans; Thrift Savings Plan people that have a better understanding of the health plans, the finances around that; what it 

is going to take with regard to financial literacy training to make 

sure that the service members had a better understanding of how 

to and knowledge of what it is going to take to be able to truly understand those plans. 

Everything that we did with regard to our recommendations, we 

did it, one, with an understanding that it must be the support 

readiness overall; and number two, we wanted to make sure that 

we address all of the preferences that the service members told us 

that they were interested in from the survey results that we got 

back and the people that we talked to. So we did this in kind of 

a holistic way. We wanted to make sure that we would understand 

what the second- and third-order effect was, so anything that we 

were to do in all of the 350-plus programs, benefit, compensation 

programs that we looked at as we went through them. 

So we think we took a very, very holistic approach to looking at 

that, and we believe that these 15 recommendations that we made 

took all of that into consideration. And these were the areas that 

we thought that we could achieve efficiencies in these areas without taking away any benefit from the service members but, in fact, 

to even improve upon those benefits in certain areas. And at the 

same time, we could actually maximize the cost effectiveness of 

those programs, which resulted into some significant savings. 

Mr. BUYER. Congressman, we spoke with the TRICARE contractors also. And take United and Humana as an example. They are 

operating plans in the private sector, yet they are also managing 

this very restricted, limited contract, and they are very challenged 

and frustrated because these are two different worlds. So there are 

monetary and non-monetary incentives they can do in the private 
29 

sector to affect human behavior when it comes to health care. They 

cannot do those things in the TRICARE contract. 

General CHIARELLI. And because the TRICARE contract is 5 

years, it usually ends up being 8 years after somebody protests. We 

end up with a situation where today we are sending people to National Intrepid Center of Excellence for the treatment of traumatic 

brain injury and post-traumatic stress, giving them a treatment 

plan. They go back to the United States Military Academy. They 

don’t have people that are trained in those skills, instructors, and 

now they go out on the outside to try to get their TRICARE benefit 

and they won’t cover 50 percent of the treatment plan we told them 

they needed to do in order to get better. And this will solve that 

problem. 

Mr. MACARTHUR. Well, my time is expired, but I applaud you for 

that. Thank you. 

The CHAIRMAN. Thank you. 

Mrs. Davis, do you have other questions? 

Mrs. DAVIS. Yes, thank you, Mr. Chairman. 

If I could just follow up, because General Chiarelli, I think what 

you were talking about are the two worlds. And by, I guess, basically creating a military Federal employee health benefit plan, 

what if we didn’t do that? I mean, did you have that discussion of 

whether the military folded into the existing robust plan that you 

keep talking about? Where was that in the discussion and what are 

the downsides, upsides to doing that? 

General CHIARELLI. We did consider that, but for a whole bunch 

of reasons that would probably be best taken offline, I can tell you 

we came up with the solution that we did. I absolutely think we 

have come up with the best solution. But the real thing that we 

have to ensure is the robustness of the MTFs [military treatment 

facilities]. And there will be a tendency, as we do this, as we go 

to those plans, because everybody is looking for savings, to only do 

that in the MTF which takes care of the Active Component individual who relies on an MTF. We can’t allow that to happen in 

every instance. 

What we have to be driven by in our MTFs is to maintain that 

combat medical readiness. And that is the reason why, we really 

feel, that this readiness command is so absolutely essential. Someone who can advocate to ensure that we don’t end up in the medical field the same way we ended up in the dentist field. 

I used to tell my fellow commissioners, in my entire 40 years in 

the United States Army, I was told that my dependents could get 

dental care as available, okay, and they never were able to do that. 

I think my wife told me, she said, ‘‘I was given one appointment 

from 6:00 to 7:00 in the morning at Fort Hood, Texas, because that 

is when the soldiers were running PT [physical training].’’ We 

downsized the dental corps only to take care of the Active Component, and there was none left for dependents, nor was there any 

left, as we all know, for National Guard, as we had to work so hard 

to get that fixed. 

Mr. BUYER. Congresswoman Davis, this idea of rolling everyone 

into FEHBP does not work for several reasons: Number one, we 

had to figure out how do we preserve the MTFs. And by making 
30 

them part of the risk pool, that is why our proposal is a variant 

of the FEHBP. 

They are also two completely different risk pools. So the risk pool 

that would be with DOD that is a much younger population, addressing different types of sicknesses and diseases, is far different 

than a much older population. So from the government standpoint, 

it doesn’t cost us as much as it would be enrolling in the FEHBP. 

Mrs. DAVIS. Although, some of those costs would be greater as 

well, I would think. But thank you very much. 

Thank you for your work, General Chiarelli. The formulary piece, 

yeah, we have got to fix that one. 

Thank you. 

General CHIARELLI. Please. 

The CHAIRMAN. Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

I want to thank you all for your work in this area. And I want 

to address one part of it specifically, and that is the reform of the 

modernization of our military retirement system, and I want to 

commend you at least on the direction. I mean, I think it is inequitable that we have a young person that comes to the military and 

doesn’t complete the 20 years and essentially walks with nothing. 

And I just don’t think that is appropriate, and I think that there 

ought to be something there, and in your plan you do recognize 

that. 

And I would also urge you to—my late father retired from the 

Army, Active Duty, I retired combination of 21 years between the 

Army, the Army Reserve, the Marine Corps, the Marine Corps Reserve, and some of the same problems existed. If I, in Colorado, 

went skiing and approaching my 20th year and was injured and 

then reported in for weekend drill and I was unable to perform the 

physical requirements in the Marine Corps Reserve, then I was ordered to go to a medical review board, and then if I was deemed 

unqualified at the 19th year mark in something that wasn’t service-related, I got zero. And so I think that the Reserve Component 

needs to be looked at as well. Some of the same considerations 

exist there that exist on the Active Duty side. 

But I just think, you know, we have a system that desperately 

needs to be updated. I was a young, enlisted Army soldier on Active Duty and a junior officer in the Marine Corps on Active Duty 

and then filled in the rest of the time in Reserves. But I would 

think that in both of those times I would have opted in for a system that would have enabled me to walk with something short of 

20 years rather than roll the dice and say, do I really know as a 

young person that I am going to be around for 20 years. 

And so I think it is so important to update the system. And I just 

thank you for coming up with some solutions to begin a discussion 

in terms of modernizing our system and to make sure that it fits 

the needs of the young people coming into the military today and 

who are serving in the military today to provide them that option 

to opt into the system. 

And but let me ask the question: Did you all consider the Reserve Component as well as the Active Duty Component when it 

came to retirement? And can you tell me what your recommendation is for the Reserve Component? 
31 

Mr. MALDON. Yes, Congressman. I am going to have Commissioner Buyer to talk to that as—with his Reserve experience specifically. 

Mr. BUYER. A lot of the benefits as we reviewed this, when it 

comes to the Reserve Components, was responsive to the, quote, 

‘‘Strategic Reserve,’’ end quote. And, you know, when you want to 

bring in the chiefs, you want to talk with them and say, so this Reserve Component we have today, is it an Operational Reserve or is 

it the Strategic Reserve? Because when I looked back at that last 

13 years of war, that was an Operational Reserve. Well, they don’t 

want to call it the Operational Reserve because they don’t want to 

fund it as an Operational Reserve. 

So when it comes to the benefits though, we felt it extremely important to be responsive. And so we are recommending on the 

health piece—and I will let someone else address the retirement 

piece—but on the health piece, yes, we want the reservists to have 

access to health care and the Reserve Components. And now what 

we are recommending, though, that they pay a 25 percent premium 

share into that plan. 

What that is going to do is perfect the continuity of care, because, as we know, with all these different types of duty status and 

being called Active Duty and not Active Duty and the impact upon 

family and out-of-pocket costs, we want to perfect that continuity 

of care, and we can do that by availing this opportunity to participate in the plans TRICARE Choice to the Reserve Components. 

Mr. MALDON. And Congressman, if I might, please, I am going 

to ask Commissioner Higgins to talk to the other piece of that. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Congressman, yes, we integrated the Reserve Components into 

our proposal, and, in fact, technically, it will operate in the same 

way for a reservist. And the service chiefs directed that we match 

the force profiles, and in our analysis the Reserve Component with 

our proposal, we are going to be exactly on target in terms of force 

profile. So recruiting, retention, and that force, the Reserve Components is going to be just as good as it is today. 

General CHIARELLI. If I can make one other point here. How better off would we be today after 13, 14 years of war asking young 

men and women to go on three, four, and five deployments, how 

better off would we be today that when we gave them the pink slip 

and said your service is no longer needed short of 20 years, that 

they had something that they left with? And that is really the sad 

thing, that we didn’t think about this a long time ago before we got 

into this 13-year conflict. Because literally, we are asking these 

young men and women to leave today, some of them while they are 

still deployed, and they leave with nothing if they have served 

short of 20 years. 

Admiral GIAMBASTIANI. The Commission listened to these young 

men and women talk to us about leaving with something. And obviously the force planners, the service chiefs, and the personnel 

heads would be very interested in making sure that we can retain 

the right balance of people even for those who leave with something. And we have spent a lot of time, as our chairman has said, 

working these proposals to make sure we balance retention along 
32 

with allowing people to leave with something. And I think we have 

designed this program in such a way to meet both demands. 

Mr. COFFMAN. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. Thank you. Ms. Gabbard. 

Ms. GABBARD. Thank you, Mr. Chairman. 

Good morning, gentlemen, and thank you all for your service on 

so many fronts and for being here today. 

There has been some mention about some of the contracts that 

are currently in place with TRICARE and this idea of opening it 

up to provide more options is something I think that is very interesting and necessary, especially in some places where access really 

is an issue. 

Over the last couple of years, we had an issue in my district in 

Hawaii where military families and retirees who lived on islands 

other than Oahu were outside of the TRICARE prime jurisdiction 

and were then left with very little access other than to jump on a 

plane and travel to Oahu, which is cost prohibitive for a lot of people. So opening that up for more options, I think, is something that 

would be very interesting to families like those. 

My question is about implementation, though. Given the current 

construct you mentioned, Mr. Buyer, the bureaucracy that exists 

within TRICARE now, what kind of timeline are we looking at 

should this proposal go through and continue to get to a point 

where these families would have these options? 

Mr. BUYER. The way the contracts are structured, I believe that 

we could actually bring those TRICARE contracts to fruition and 

move to implementation. Anytime you move these big programs 

you need glide paths, that is what I have learned. And I believe, 

you know, you can’t just say let’s do this next year. So wind these 

contracts down. You can do that here over the next 2 to 3 years 

and then move to this new plan model. But do this in a glide—— 

Ms. GABBARD. I ask specifically because the TRICARE contract 

that has made this change and that covers the jurisdiction in Hawaii will be up, I believe, in about a year. So my concern would 

be that, we would get locked into something else that would continue that limitation. 

General CHIARELLI. And make no doubt about it, the services 

have in fact, everyone has, in fact, used access as a way to control 

cost. The more pressure you put on to control health care costs, access becomes more difficult because the number of providers that 

are part of the network become fewer. 

Admiral GIAMBASTIANI. We also—— 

Mr. MALDON. We have a 2-year implementation timeframe here 

from the time that the recommendations would be adopted. 

Admiral GIAMBASTIANI. If I could just add one other piece too. I 

think it is important for members here to understand that we have 

worked very closely with the current OPM [Office of Personnel 

Management] director and his staff of which a former deputy director of TRICARE, Rear Admiral Christine Hunter, now retired, is 

working in OPM. So she’s seen the best of both worlds on each side 

and that really has brought a tremendous amount of assistance to 

us as a Commission and working not only to transition but how to 

structure the program. 

Ms. GABBARD. Right. 
33 

My next question that no one has brought up yet today is one 

that is core to all military families and that is the proposal to consolidate the commissary and exchanges. And I would like you to 

comment on how that change will affect them as well as the MWR 

[Moral, Welfare and Recreation] funds that the services currently 

receive through the exchanges. 

Mr. MALDON. Thank you, Congresswoman, for that—for your 

question. 

You know, we gave a lot of thought to this. We heard a lot about 

the commissaries. We had people all over the map, quite honestly, 

that when we traveled across the country and talked to people 

about their perceived value of the groceries discount. You know, 

the bottom line is after having looked at it carefully and talked to 

people, we had overwhelming support at the end of the day, where 

people said, you know, they believe there was a real value here in 

the commissary. 

So that is why we made the recommendation that we did in 

terms of just consolidating it back in operations for those—for the 

exchanges, the three exchanges and their commissaries. And we believe that we could, by doing that, we were going to continue to 

meet those needs of what the service members and the families 

said that they preferred here with regard to commissaries. 

So we are going to continue to meet that need that they have. 

And the culture belief is that there are some real savings there in 

the commissaries, and we did not want to take away from that. 

We also believe that we could bring about some efficiencies, 

though, by consolidating the exchanges and the commissaries, the 

back-office operations type, because you are going to take out a lot 

of the costs in logistics, the IT [information technology] training, 

and that kind of thing. 

The other piece of this, I think, with regard to cost, you know, 

we were going to be able to really deliver these goods still and take 

out $500 million of costs in that on an annual basis, and we 

thought that was a pretty good place to be. 

I am going to ask Commissioner Higgins if he’ll follow up too 

with some comments on the commissaries. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Congresswoman, I think what I would emphasize to you is that 

the core of our proposal is to preserve food, groceries, meats, 

produce at cost plus the surcharge. We are going to preserve that 

value. When we went around and talked to people, the response 

from the force was very mixed. The retirees are steadfastly very 

supportive of commissaries. The force is changing a lot, I believe, 

over my experience talking to the force over 30 years. There is a 

lot of mixed reviews. 

There should be no illusions that DOD is not going to come after 

commissary money year after year after year. They are going to 

target commissaries. You are going to have a very difficult time 

here in the Congress protecting commissary funding. That means 

services are going to erode. What we offer will preserve services, 

and if you erode services in the commissary, hours, store-day openings, that kind of thing, if you erode those in a retail environment, 

people are going to find other places to shop. 
34 

When they do that in commissaries, the exchanges are going to 

take a terrible hit. We need to reform single manager. We can cross 

over those cultures, negotiate deals, the deals to protect MWR 

funding. We can do that. Absolutely, we can negotiate and protect 

that. We can protect some of the cultural service interests that 

they have and the coordination. For instance, the Marine Corps is 

very heavily invested in manpower and coordinating their family 

programs as well as the exchange. The same people do both. We 

can work through all those things. 

Ms. GABBARD. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Ms. McSally. 

Ms. MCSALLY. Thank you, Mr. Chairman. 

And thank you, gentlemen, for your work on this issue. I do want 

to comment on just even the opening remarks where we talked 

about how the cost of personnel has gone up over the last several 

years, especially with 13 years of war. I think we are all aware of 

that. We can see the math. But as we all know in this room and 

you all who served, we can’t be at war for 13 years and expect 

those costs not to go up. 

And the constant deployments, the health care responsibilities, 

when the men and women in uniform raise their right hand to 

serve and put their lives on the line, we have a covenant with 

them. And although I appreciate the work you are doing to try and 

see where we can gain efficiencies, I do want to just be on the 

record to say we can’t find those efficiencies on the backs, you 

know, of those who have served. And I know that is the work that 

you are trying to do, because we can’t do that on the cheap. 

You know, a lot of those costs have gone up because the compensation did not match what was happening in the private sector, 

again, increased health costs related to the deployments and the 

wounds of war, both physical and mental. And so we just need to 

make sure—and even with all that, we still have troops on food 

stamps, right. So we still have a problem here. And we have got 

to make sure that we recruit, retain the best and brightest, because 

freedom isn’t free and we know that. 

So I appreciate the work that you guys are doing in a very tough 

situation, but I am committed to make sure that there are no cuts 

to those who have served and those who are continuing to serve. 

And I appreciate the work you have done specifically related to 

access to child care. The unique concerns of women in uniform, especially those who might be a single parent, and the challenges 

that they have with the duty hours and the dynamics they have. 

I mean, child care is the number-one issue—not number one, but 

a top issue that I am hearing from many service men and women 

who are trying to serve and still be parenting with all the challenges. So I appreciate that work in your report. 

I will confess that I was one of the people who took your survey, 

since I am a retiree, so it is a little bit of undercover boss here. 

I will tell you I have some concerns with the survey having taken 

it. The way things were questioned, you know, and I am paraphrasing a little bit: You know, do you prefer the commissary or 

access to health care? Which is more important to you? And the re-
35 

action of any retiree, I think, is like, yes, yes, all of the above, and 

then firewall to the right. And then like, no, you can’t firewall to 

the right, okay. 100 and 99, 99, 99. 

So, I mean, I was a flawed data point to your survey, but I think 

I represent many retirees who just feel like even the questions 

being asked create concern that, oh, my gosh, what are you going 

to make us have to choose between based on our commitment to 

serve and the commitment to us to serve. 

So how much of your recommendations came from that survey? 

Because I have deep concerns about that survey, is my first question. And what is the feedback you have gotten from veterans service organizations so far on your recommendations? 

Mr. MALDON. Congresswoman, let me take your latter two questions here, and we will get some of the other commissioners to respond as well. 

First of all, with regard to the survey, you know, this survey was 

intended to really provide us with a point of data. It was not the 

only point of data that we were using in making our recommendations. Of course, it did, in fact, stack order one benefit against the 

other, and we needed that. That really kind of gave us a good indication of what service members really prefer in terms of value, so 

that was important to us. 

And then, you know, I will tell you that truthfully everything 

that you have said here we totally agree with, and that is the way 

we actually approach this. We took a lot of time looking at every 

program and trying to figure out what is the second- and thirdorder effect? If we made a recommendation on one program, one 

benefit, looking at one benefit, what did it do for the other five benefits? And so we took that holistic approach in going through it, 

whether it was health care, it was pay, it was retirement, and 

quality-of-life programs, the commissaries and the other programs 

and ECHO [Extended Care Health Option], the Space-Available 

travel, whatever the case might have been with regard to quality 

of life. Every one of those recommendations were made in the support of an All-Volunteer Force. 

We made sure as we went through this process that whatever we 

did we would either maintain those benefits for the service members—we all agreed to that early on—or we would improve those 

benefits. So I can assure you that we took that in consideration, 

and I hope that will address your concern in that regard. 

I am going to ask Commissioner Giambastiani to respond as 

well. 

Admiral GIAMBASTIANI. I would just say to you that I think we 

agree with the vast majority of your comments. I don’t think the 

survey was a flawed one because I know all surveys are flawed. 

And the problem is, is that you try to achieve the best balance of 

how to get input from the surveys. But more importantly, if you 

are smart, you not only do paper surveys or computer surveys but 

you go out and talk with people. 

And this Commission spent a huge amount of time engaging with 

the lowest enlisted up to the most senior officers, from the Joint 

Chiefs on down, up and down. And I have to tell you, our travels 

around the world and around the country really made a difference 
36 

and had a substantial impact. Also, with the family associations, 

if you will, wives’ clubs, you name it—— 

Ms. MCSALLY. Spouses’ clubs. 

Admiral GIAMBASTIANI [continuing]. Spouses’ clubs, you name it, 

and it just depends on where you go—— 

Ms. MCSALLY. Right. 

Admiral GIAMBASTIANI [continuing]. I would tell you that the 

input we received across the board was exceptionally helpful to 

help us temper these recommendations. 

Ms. MCSALLY. Great. Thanks. My time is expired. 

If you don’t mind in writing, your veterans service organizations, 

if you could get back on that, where they are, because my time is 

expired. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. MALDON. We will. 

[The information referred to can be found in the Appendix on 

page 95.] 

The CHAIRMAN. Mr. Walz. 

Mr. WALZ. Thank you, Mr. Chairman. 

And thank all of you for the incredible work you put in on this. 

To Colonel Buyer and Commander Carney, it is great to see both 

of you again. Thank you for your continued service. 

And I know how hard this was, and I know how difficult. This 

is the starting point of the discussion, and it is critically important. 

I think the gentlelady from Arizona’s point was right on and spoken as someone with experience, and I am grateful for that. 

We know and, again, some of the things you tackled, the DODVA collaboration, brilliant. We know that is where we need to go. 

And, General, your point was right on dental. I would add that 

I went down as a first sergeant the last year before an ETS [end 

term of service]. I couldn’t get a troop in because they knew VA 

would pay for it, and then that is the problem we come in. So you 

are right. Those are the things. 

Looking at SBP [Survivor Benefit Plan] offset, you tackled one 

that is tough. No one wants to grab this one. You did it. You offered up a suggestion, which I am grateful for. I think that premium, I don’t think anyone will take it, but you know what, it 

brought to light what it costs to do this. So, please, know that I 

approach it like this, and I am not coming at this as the caricature 

of the senior enlisted guy, but that little chip is on my shoulder. 

I don’t see any on the Commission. 

And what I am saying is, I hear you going out and talking, and 

the surveys, and the gentlelady brought up—oh there he is, yeah— 

brought up a good point in that the surveys are tough, because 

keep in mind that prior to last April the VA in Arizona had a 94 

percent approval rating in Phoenix. We as soldiers, how is the chow 

hall? Compared to what? It is good; that is the only place I go. And 

so keep in mind when they are asking this, those they are going 

to get. 

I say this out of reality because this is first and foremost, and 

I hear you echoing this, and this makes me feel confident, readiness and national security, those are our priorities, readiness and 

national security. But keep in mind what those troops are out 
37 

there. And I was with a group of 25 sergeant majors, none have 

any idea what was in this. 

And when I started to say some of those things, here is the 

things they come back to me with: Where’s the Commission on the 

700,000 civilian employees? Have we got any recommendations 

here of that? Of course, they are going to come to this: How big 

have the command staffs gotten and the support there? What have 

you guys done there? They ask me, what about weapons systems 

acquisitions and procurements? Have we looked at any waste 

there? 

Those are things they are asking for in saying we will make the 

hard choices, but we are not convinced everyone else has been 

asked. So I say this more to, not as a question because you have 

done the hard work and you have teed it up for us. We have got 

to get out there and make the case because this has to be buy-in, 

as you said. You are talking to a very small universe. 

If you go out and sell this to the American public, 90 percent 

have no idea and they will probably agree with you. If it saves 

money and you tell them it keeps them safe, they will agree with 

it. The problem that we have is most of our warriors come from the 

same families. And if there is a break in trust in those families, 

you break the system. 

And I say this only because, a small one, but I heard it and 

heard it and we are going to hear it, the transferability on the post9/11 housing. Granted, it is huge. If my daughter, I have benefits, 

she’s 14, she comes to DC to go to school, that is $85,000. That gets 

expensive and it gets expensive fast, but that is phasing out. 

So what I heard was this is, what about the promise made and 

the promise broken? So I said, when I tee this up, and it is more 

of a statement and asking all my colleagues here, we have got to 

get out and make the case on national security. We have got to see 

our veterans service organizations that the gentlewoman asked 

about not as a detriment that they are going to come in and protect 

their own and say, no. They want to have a solution because they 

care first and foremost about national security. They care about the 

warriors and they want to get this right. 

So I guess to my colleagues I say, we have been given a lot of 

thoughtful work and some very bold suggestions. Our job now is to 

see how it fits in the entire process and to get that buy-in, especially from that very small segment of the population that absorbs 

the huge brunt of this. 

So I would just—any feelings or comments or as you hear this, 

I know I am speaking to a group, but perceptions do matter and 

we have got to get that. 

Mr. BUYER. [Off mike.] 

Mr. WALZ. Thank you. We have been down this road a few times, 

Colonel Buyer. 

Mr. MALDON. Congressman, yes. Let me have Commissioner 

Chiarelli to respond specifically here, then we will have a couple 

more comments as well, if that is okay. 

General CHIARELLI. Sir, I would just ask you to realize that this 

is a package of recommendations. And any one of these recommendations, as you start to paramount and change them in any 

way, there was going to be second- and third-order effects. And I 
38 

would really ask that you work with us to understand what those 

second- and third-order effects are, because that is the thing that 

scares me the most. 

If you pull away a readiness command, I think that that causes 

some real issues as we look at how we are going to change the 

medical system, is an example. 

Mr. WALZ. Our stakeholders have to know this. 

General CHIARELLI. And I think it is just key that you work with 

us and our staff if at any time you feel that those kinds of adjustments need to be made. 

Mr. WALZ. Appreciate it. 

Thank you, Chairman. 

The CHAIRMAN. Taking the general’s point, I think it is a good 

point, but let me reassure the gentleman that a major part of the 

agenda of this committee is dealing with civilian overhead, bloated 

command staffs, and acquisition reform. I think the things the gentleman lists are exactly right. We may not be able to solve it all 

in a single swoop, but it is absolutely part of the agenda of this 

committee. 

One of the reasons I appreciate what this Commission did is they 

weren’t just out to find money to cut. They were there to see what 

works and what we need going into the future, and that to me is 

the heart of the matter that our committee has to look at, too. 

So I appreciate the gentleman and also the work that has gone 

on. 

Mr. Nugent. 

Mr. NUGENT. Thank you, Mr. Chairman. 

And I want to thank the Commission. And I have three sons that 

are currently serving, two Active Duty and one Army National 

Guard pilot. And they ask, Dad, what are you all doing? Are you 

cutting our benefits? I have one that is midrange, he is a major, 

one that is just captain, and they want to know what the future 

holds for them. And I think the general hit it. 

There are a lot of parallels between law enforcement, which I 

was 39 years, and then the military. When I first went in law enforcement, I didn’t care about retirement and I didn’t care about 

medical, I mean, because I was invincible, I was young. But when 

I got married and had a family, all of a sudden medical became a 

real big deal in regards to starting a family and all those types of 

things. 

Then as I got midterm and you start to decide, hey, listen, do I 

really want to continue doing this or can I make more money on 

the outside? And that is what I get hit with, two of my sons, I 

could make more money on the outside. So why should I stay? 

Do we care about those guys and gals? Is it important enough 

for us to look at their benefits? Because at that midrange level the 

benefits become more and more important to them than the recruit, 

at least in my experience. 

Just on the Reserve side of it, the TRICARE, I will tell you, is 

terrible, because my son, they were going to have a baby, and they 

had, guess what, that slice of physicians that were available was, 

like, zero compared to—unless they wanted to drive three counties 

away to get to that physician. There was none within that area. 
39 

And so that was a huge problem, and I couldn’t believe it, but that 

was the case. 

Even though the insurance was, you know, I think it was, I forget what company it was, but that doctor did it on the normal, but 

not on TRICARE, wouldn’t see them because, hey, you are not on 

the normal insurance, even though it is the same company that 

was handling it. Big problem. 

What you are trying to do I think is commendable. I am concerned, and I think those that you heard from, others that are retired, is that you can’t change the plan of those that signed up. 

When my kids raised their hand, you can’t change it midstream for 

somebody. And I think you have accomplished that, from at least 

what I have read, is that that is not in the mix, it is not changing. 

Now, the healthcare portion does change. And I am concerned 

about, Colonel; you said we made a mistake back then. I just hope 

we are not making the same mistake this time. And I think you 

have given it a lot of thought because you were down that road. 

Mr. BUYER. Absolutely. 

Mr. NUGENT. But I just want to make sure, because I have 

100,000-plus retirees in my district and they are pretty vocal. So 

I want to make sure that when I actually meet with some this Saturday at one of the vet fairs that we are doing, health fair, that 

I can say listen, you know—I want to have a better idea because 

I really don’t have a good handle on what it does, what it changes 

for those retirees. 

Your recommendation? 

Mr. MALDON. Congressman Nugent, let me just respond real 

quickly here to your question. 

First of all, I would separate the Active Duty military out because nothing changed there. Because of operation readiness, we 

made sure, we want to protect that industrial base of the MTFs, 

getting services there, and so forth. Nothing changes for the Active 

Duty service members. 

Let’s go to the other end of the spectrum. Nothing changes for 

those retirees that are Medicare eligible. They still have TRICARE 

for Life as we knew it. 

The TRICARE for Choice, the new proposal that we are making 

here, it really includes those people in between. Those are the retirees that are non-Medicare eligible with regard to cost sharing. People we have talked to have indicated to us that they understand 

that the timing is such that you can’t continue to stay at that 5 

percent cost-share level. We have been very comfortable there for 

a long time, and that has been a great thing, but people really 

knew that a time was coming when you have got to do a little bit 

more. 

What we have tried to do is take that into consideration and say, 

we are going to do a slow ramp-up of that in our proposal that goes 

from that 5 percent to 20 percent over a 15-year period of time. 

That is still a better deal than what the Federal employees get in 

their insurance plan. So they still would be paying a little bit less 

for health care than what a Federal employee would be paying, a 

nonmilitary person. 
40 

Mr. NUGENT. Just one last question quickly on the Reserve Component. The TSP match that you are talking about, is that also for 

Reserve Component? 

Mr. MALDON. It is. 

Mr. NUGENT. Okay. 

Mr. MALDON. It is. 

Mr. NUGENT. Because currently, you know, I talk to my son and 

say, listen, if you can put 20 bucks away, whatever it is. But if you 

are a Member of Congress or staff, they get a match to it and currently our Active Duty folks don’t get a match. So I think that is 

an excellent idea moving forward. 

Thank you. I appreciate it. 

Mr. MALDON. Thank you. 

The CHAIRMAN. Ms. Speier. 

Ms. SPEIER. Thank you, Mr. Chairman. 

And to the Chairman and members of the Commission, can I just 

say how remarkable your presentation has been. And while you 

have all given service to this country I believe on one level or another, I think your service that you have provided by virtue of this 

Commission is priceless. 

Your recommendations are bold. They are thorough. As I have 

listened to many of my colleagues push back on you, you had the 

answers. And I am just, I am wowed by it. 

Now, I just hope that we as members of this committee will emulate the boldness and the thoughtfulness that you have shown in 

your recommendations. 

One of the things that really amazed me was to hear that 

TRICARE—I have a brother who is retired, TRICARE, and we go 

into fisticuffs on holidays because he thinks I am trying to take 

something away from him. But what was most impressive to me 

was your representation, Congressman Buyer, that, in fact, 

TRICARE is not as good as—— 

Mr. BUYER. That is right. 

Ms. SPEIER [continuing]. What would be offered or what could be 

offered because the network is so small. 

And I think part of what we need to do, and maybe you will join 

us in doing so, is educate military retirees and military personnel 

on the myths that have kind of grown up with the expectation that 

somehow this was better than what they could be getting and, in 

fact, it is not. 

The fact that only 17 percent of those who serve actually retire 

in the military should give us also reason to pause because so 

much of those who have served to date in this 13-year war have 

been reservists. And I heard loud and clear from many of you that 

they want something out of this. So a TSP, some kind of a 

healthcare benefit, I think all of those things should, in fact, be 

factored in as well. 

I am also reminded, and it should be not lost on any of us as 

members of this committee, that if we do not act, and act soon, the 

cost of military personnel and retirees will gobble up the entire defense budget I believe by 2039. So we have I think a responsibility 

that is grave to address this and address it now so it can be phased 

in appropriately. 
41 

And I think for any of us who have served in any other level of 

government, having tiers of retirement benefits and health care is 

reality. Those who have retired get to keep it. Those who are newly 

employed are in oftentimes a second tier, a third tier, even a fourth 

tier. And I think that is something that we have got to come to 

grips with. 

I don’t recall whether or not you addressed the issue of the pensions that were offered up a few years ago for the three- and fourstar generals who we were told should have their pensions bumped 

to keep them on Active Duty. And as I understand it now, those 

pensions exceed the pension of the Commander in Chief by about 

50 percent. 

Did you address that issue at all? And I don’t know exactly how 

much money that would accrue, but I would be interested in anything you have to say on that. 

Mr. MALDON. Congresswoman, thank you for the question. We 

have two retired four-stars here on this Commission, and I am sure 

they are waiting to answer that question. I am going to start with 

Commissioner Chiarelli first. 

General CHIARELLI. We looked at it. I think someone is giving 

you an inflated figure, to say that my pension is 50 percent greater 

than the Commander in Chief. I don’t have his numbers at hand 

right now, but I doubt that very seriously. 

Ms. SPEIER. The President of the United States will receive 

$200,000 a year in retirement benefits. We gave a particular bump 

I believe in 2008 or 2009 to three- and four-star generals, and their 

pensions now I think are at $270,000, something like that. 

General CHIARELLI. I can’t tell you the exact number. I don’t 

know it. But I can tell you that it is one of the things that got me 

and other folks to remain in the service throughout a 40-year career. You know, one way or the other, for those of us who served 

a long time, we looked at it and we left it where it is. 

Admiral GIAMBASTIANI. If I could jump in here, I would just like 

to put some perspective on this. What happened back in the 2006 

timeframe, since I happened to work on this, is that we were trying 

to encourage senior officers and senior enlisted to remain in the 

service beyond 30 years. 

Everybody thinks this is all about flag and general officers. But 

what we did is we started paying for retirement beyond 30 years 

for these senior enlisted and senior officers. And by senior officers, 

I am talking about warrants and LDOs, limited duty officers and 

warrant officers, senior enlisted, for example, Sergeant Major of the 

Army, Sergeant Major of the Marine Corps, Master Chief Petty Officer of the Navy, if you will, force and fleet master chiefs, these 

very senior guys. 

And let me give you perspective. There are 4,000 people in 2006 

who were serving greater than 30 years of service. Of that 4,000, 

3,000 were senior enlisted and senior officers below flag and general officer rank. And there are 1,000 of that 4,000. And this encouraged these very senior people to stick around. Having a command sergeant major who has been in for 36 years who will stay 

for another 4 really makes a huge difference. Tremendous amount 

of experience. 
42 

So please don’t think this was all about flag and general officers. 

They happened to be on the high end of this, as opposed to the 

other 3,000 who were being left behind. 

Ms. SPEIER. All right. My time has expired. Thank you. 

The CHAIRMAN. Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Gentlemen, I have been thinking over old stories, and I won’t call 

them war stories because I never served in the military, but I majored in risk management, insurance, and I was an insurance 

broker for 20 years. And so I sat on that side of the table many 

times explaining to employees benefit changes. 

And we all know that protecting the current system is not in the 

best interest of the men and women in our military or this country. 

And yet there seems to be the perception that any change is a takeaway. And I think it is probably harder here than anywhere else 

because of the politics of it. 

And I will tell you, I will just give you a perfect example. The 

House voted several months ago to make a minor change in costof-living adjustments. And we certainly had our colleagues on the 

other side of the Capitol, told a lot of stories, and there was the 

perception that people’s check was actually going to go down instead of not going up as fast. 

This has got to be done. And changes have to be made. And I 

think the financial literacy training is one of the most important 

aspects of anything that you can do in this. And we need people 

to know what the cost of the healthcare benefits are. 

And, General, as I heard you talking about the formulary for 

what in most cases would be antidepressants and the situation that 

you briefly described, that is a complex purchasing decision where 

we have hired a pharmacy benefit manager who has got different 

contracts with different drug manufacturers that, quite honestly, 

we need to have transparency there. And maybe we should have 

one pharmacy benefit manager for all of the, instead of multiples 

so that that formulary stays the same regardless of which agency 

or division or whatever we want to call it is providing the service. 

But there should also be transparency in those contracts so that we 

get to see what is being paid for it. 

And I want to give you just a great example of how paying more 

and getting more are two totally different things in health care. I 

have taken Zyrtec for probably 20 years now. I used to pay $10 for 

it. After the drug manufacturer continued to go up on its prices, 

the insurance carrier I was covered under said, no more, you are 

going to have to pay $40 for it. And that was for 1 month. Today 

I can buy a 90-day supply for $19. And until the consumer becomes 

responsible for paying more of the cost, the more we end up paying 

for it in the end because those costs are hidden. 

Now, I say that to get to the fact that I believe these changes 

have to be made. But I wonder if bumping the base pay of our people so that they know that there is not a dollar being taken away 

from them, that we are shifting the purchasing decision to them of 

what they do with their dollar, how much consideration there was 

given to that, and how much consideration was given to allowing 

somebody who is 2 or 3 years into their service to choose to move 
43 

to the new benefit plan instead of being forced to stay in the old 

one, at their choice, if they chose to move. 

Mr. MALDON. Congressman Scott, let me respond to the first part 

of your question, then I will have one of the other members on the 

Commission to respond to the second part of it. 

We looked at the pay table. We talked about the 350-plus programs that we looked at. This is part of it. The pay table was one 

of the first places that we went to. And having looked at it very 

carefully, we realized that it had served us very well over the last 

42 years, plus during the last 13 years of war especially, a sound 

structure. 

We didn’t think there was a need to go there to make any 

changes in that because that would have been a major overhaul of 

the compensation benefit system and we didn’t think that was necessary. What we wanted to do is to look for those opportunities to 

modernize the compensation program and the systems and that is 

what we did, that is what our recommendations provide here. 

I am going to also ask Commissioner Higgins to talk to the latter 

part of your question. 

If you would, Commissioner Higgins. 

Mr. HIGGINS. Thank you, Mr. Chairman. 

Mr. Scott, good to see you again, sir. And I believe you are referring to the retirement, about the choice, the 2, 3 years? 

Mr. SCOTT. If I am, I am referring to pretty much the retirement, 

but making sure that somebody who is just a couple of years in, 

if they so chose, none of them would be forced into the new system, 

but they could choose to go into the new system if they wanted to. 

Mr. HIGGINS. Oh, I see. The concern there is I think for the services, their observation would be that it would make their job a lot 

more complex with the uncertainty as to the choices that people 

would make. From a management standpoint, I think they would 

have concerns. 

Certainly from our position on the Commission, we would have 

concerns about how the cost of that could be modeled. We delivered 

modernization. We believe we have stepped up and given people 

precisely what they are looking for in their retirement plan. And 

we believe that we understand the implications on retention, recruiting, and cost. 

To open up that aperture soon after the individual arrives on Active Duty and give people the choice to stay in the old system 

versus entering our solution, our proposal, that would be very difficult to understand the implications of that on force structure and 

cost, and that would be a concern of ours, and why, frankly, we discussed that, but could not see a path forward to deliver what we 

think was necessary and include that kind of a proposal. 

Mr. BUYER. Mr. Scott, on health care, with regard to the retirees, 

we wanted to be very holistic in our approach. TRICARE for Life 

is preserved. The pharmacy benefit is preserved. For the gray area 

retirees, as their premiums increase, I am sure you will hear someone say, oh, my gosh, I am paying more, you are breaking the faith, 

how can you break my promise? Wait. Time-out. You are tangled 

right now in a subpar health system. 

You are delivering to them a better health system, that they can 

choose a plan that best fits their family’s needs, right, that is what 
44 

you sell when you talk to your employers, improve their access, improve their quality, and they have got their choice, and there are 

utilization management tools that benefit the employer. And with 

regard to the pharmacy benefit, we are going to protect that because we are going to recommend that that be rolled into the fund. 

So they are getting a tremendous bump up for a slight bump in 

cost. 

Admiral GIAMBASTIANI. I would also add that we are going to be 

in a long-term death spiral on TRICARE if we just stick the way 

we are and not change to this, if you will, smarter way to go. Why? 

Because as the amount of noncopayment or premium changes for 

these individuals, all the DOD can continue to do is either, one, put 

more money into the pot, which drives their costs up, or they will 

figure out ways to cut back on service, cut back on benefits continuously, and it is a death spiral. You just can’t sustain this program 

to the manner to which we think we won’t break faith with these 

individuals. 

Mr. SCOTT. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman. I apologize for being 

the last one between you and lunch, but I will be quick. 

Thank you all. This is really just an impressive effort. And I 

want to also give a shout-out to my friend Chris Carney back there 

who I know helped with the effort here. Again, this is really important work that you are doing. 

Admiral, you were just talking about the bad choices if we don’t 

do anything, and the narrowing of the networks, which Mr. Buyer 

referred to. I mean, in Groton most of the docs in that area treat 

TRICARE as charity care and just roll their eyes when they talk 

about dealing with the system. And L+M [Lawrence+Memorial] 

Hospital ends up being sort of the provider, default provider, because, again, there is just so little acceptance of TRICARE. So 

doing nothing really is not a solution to anything here. 

And, Mr. Higgins, maybe just walk me through again one more 

time real quick, and I will stop there, just the basic allowance for 

health care, just so if a sailor asks me about it back home I can 

kind of have some way to respond to it. 

Assuming, again, we have this new structure, they pick Blue 

Cross, there is a premium, there is a copayment, there is a deductible, I mean, how does the basic allowance, I mean, does that cover 

all of it? Does it cover part of it? And family size we have already 

heard some rumblings about as an issue. So maybe you could just 

address that. 

Mr. HIGGINS. I think what we are looking at here is trying for 

Active Duty family members, we want to make certain that their 

costs, their copays are covered as well as their premium amount 

that they would have to contribute to the health plan effort. 

Now, the big part of the health plan purchase is going to be paid 

by the government. It is the 28 percent that falls to the family. And 

they would receive that 28 percent, whatever that plan cost may 

be. The beauty of the proposal is that there would be a variety of 

plan costs out there to choose from. Whatever that 28 percent is, 

we are going to pick up the average of those selected plans by the 

population, and they are going to receive that in their paycheck 
45 

every month. It is going to be transferred immediately to the 

health insurance plan, that 28 percent. 

But on top of that, there will be a calculation of what the average 

out-of-pocket costs would be for the plan selected by the people in 

our system. And those out-of-pocket costs, we would believe, we 

have analyzed, would cover 85 percent of the out-of-pocket costs 

that could be expected. That means there is going to be some percentage of people that would have out-of-pocket costs, due to maybe 

events, illnesses, injury, that are greater than what would be provided to them. The important ingredient here is, if it is not higher, 

they get to keep that money that they received in their paycheck. 

Now, if it is higher, there is going to be some percentage that 

may have additional out-of-pocket costs. But we do protect, we have 

a cap where we can ensure that those that are stricken by catastrophic illness, injury, and indeed face very high, extreme out-ofpocket costs, will have a fund, we would propose that a fund be established that would afford those families additional assistance to 

gap them from their extreme cost level from what they received in 

their paycheck to the catastrophic caps in the individual plans. 

Mr. COURTNEY. Okay. So this network or exchange or whatever 

you want to call it where plans are going to be offered—— 

Mr. HIGGINS. Yes, sir. 

Mr. COURTNEY [continuing]. Is that going to be a national array 

of carriers or is it going to be sort of regionalized or localized? 

Mr. HIGGINS. It would be a mix. And I would defer to my colleague, Commissioner Buyer, to perhaps clarify on that. 

Mr. Chairman, with your permission. 

Mr. MALDON. Yes. Let me just say, number one, just on the 

BAHC [basic allowance for health care] itself, that is set regionally 

based on the average plan selected by the services, not the average 

plans that are out there on all of them, but the plans that are selected by the services. That is the answer. I just want to cover that. 

Mr. COURTNEY. Thank you for pointing that out. 

Mr. BUYER. And, yes, like at the FEHBP, you get that choice of 

national plans, regional plans, same type of thing that we would 

recommend. So, say, you are in a particular service and you are 

doing a lot of moving, you want to be in a national plan. I am in 

the Navy and I know I am going to be in San Diego for the next 

10 years, I probably am going to be on a local plan. 

But one thing that is really powerful about our holistic recommendations, it goes back to, I hate to be redundant, Mr. Chairman, but we are trying to empower the individual, whether it is 

in the financial literacy, about making those right judgments which 

would help them transition to civilian life, but also what are the 

best judgments for you with regard to your family on the health 

care. And that also helps them transition also to civilian life. So 

when we do that, it will have a tremendous impact upon our society also. 

Mr. COURTNEY. Thank you, Mr. Chairman. 

The CHAIRMAN. Just to take the burden off Mr. Courtney, I want 

to detain you just a moment longer and ask just a couple things. 

Mr. Chairman, a lot of what you all have to do is estimates of 

costs, of how people are going to react to various incentives, and 

so forth. Can you just give me a feel for your confidence in the esti-
46 

mates and modeling approach that you all used in understanding 

what the consequences of various proposals would be? 

Mr. MALDON. Thank you, Mr. Chairman. 

Yes, Mr. Chairman, we did our own analysis, of course. We had 

others that came in and we asked them to assist us with that. We 

used a company like RAND. RAND did on our retention, all of our 

retention stuff, they did the modeling for us there. On our health 

care, we had IDA [Institute for Defense Analyses] that actually 

provided a lot of modeling and analysis for us on the healthcare 

pieces of things. And there may have been some others here 

that—— 

Admiral GIAMBASTIANI. I think DOD Actuary, for example—— 

Mr. MALDON. Exactly. 

Admiral GIAMBASTIANI [continuing]. Is a place where we spent a 

lot of time, and they are well respected in this area. We have had 

staff engagement with the Office of Management and Budget, CBO 

[Congressional Budget Office]. This has really been quite across the 

board. And we have tried to reference, the staff has done a very 

good job of referencing where the analysis and data has come from 

and who did the analysis and who looked at the data for us. Obviously we are ultimately responsible for it. 

Mr. BUYER. Mr. Chairman, our confidence is high, but we welcome constructive critique. 

The CHAIRMAN. I think it is just important for us to know that 

you and the people who have helped you have done the homework. 

Nobody is perfect in predicting the future, but trying to understand 

as best we can what is going to happen. 

I guess the last thing I would do is just offer each of you an opportunity to mention either—Mrs. Davis asked about ‘‘aha’’ moment—but a key insight or a key consideration you think we need 

to keep in mind as we move forward on examining and considering 

the recommendations that you have made. And I would appreciate 

it if each of you could, if you have something, could share that with 

us. 

Mr. MALDON. Thank you, Mr. Chairman. 

Mr. Chairman, I think the ‘‘aha’’ moment here for me, and I believe I speak for the whole Commission when I say this, these recommendations we proposed, we proposed them in a holistic way 

and believing that they are best done or adopted as a whole as opposed to doing some of them separately, because they all are interrelated in a way. 

For example, financial literacy training, we actually put that recommendation in there because just the changes that we are proposing here with regard to health care and with pay, retirement, 

one needs to really understand what that means and how they can 

best benefit from those programs or take advantage of the benefits 

that are offered in those programs. So having financial literacy 

training, as an example, would be very important to the totality of 

those recommendations that we offered, as an example. 

For me, personally, we actually did 15 as opposed to doing 150 

recommendations because we really looked at this and felt like 

these 15 recommendations were absolutely important to actually 

modernizing the system, the pay and compensation system, so that 

it would be in the best interests of the service members. 
47 

And I will now yield to, let me start with Commissioner Chiarelli 

to my left. 

General CHIARELLI. I will tell you, I really believe that these recommendations are interrelated and so much of it is interrelated. I 

entered into the Commission thinking that it was Congress that 

had messed up TRICARE, that it was Congress who directed DOD 

to charge 10 to 15 percent below Medicare rates, only to find out 

that it wasn’t. Congress told DOD to come closer to Medicare rates 

and DOD kept going. 

I didn’t know that we used TRICARE certification of provider to 

control the network. You can control costs two ways. You can control cost by price and you can control cost by the size of the network and what is available for people to use. 

And that is one of the reasons why, if you get into the details 

of what we did in health care, we took very careful steps to ensure 

that people can’t get in and do the same thing with this benefit 

that we have laid out that they have done with other benefits in 

the past. And to me, that is a critical piece, and I think it demonstrates the interrelationship of a lot of what we have done and 

how complicated it really is. 

Mr. MALDON. Commissioner Higgins. 

Mr. HIGGINS. I can certainly tell you the happiest moment was 

very early in the process when we were sitting with Chairman 

Maldon and it became very clear that we were not going to be a 

cost-cutting drill. That was a very important moment to me. And 

I think we lived that spirit literally in everything we have done 

and I was most impressed with that. 

The second happiest moment I would say was when we began to 

formulate our proposals, that we found that we could deliver as 

good and better benefits to people and feel good about what we had 

done and still demonstrate that those proposals could be more efficient than what we are doing today. 

Thank you, Mr. Chairman. 

Mr. MALDON. Commissioner Buyer. 

Mr. BUYER. I think mine was on health care, Mr. Chairman, to 

answer the question, can we do better? 

And so when we looked at it and said, well, if we go to this 

TRICARE Choice and we bring the MTFs in and we want to preserve that high quality and the combat medical readiness at the 

MTF, what impact really is there going to be if we have better utilization management, better program management, there will be 

an increase in the cost shares for the gray area retirees, and if we 

then shift to an accrual funding for the non-Medicare-eligible retirees? Do the math. What is that really going to be? And when we 

did the math, we said, that is about $11.2 billion in savings and 

delivering a better quality product for all? That is an ‘‘aha’’ moment. 

Mr. MALDON. Commissioner Giambastiani. 

Admiral GIAMBASTIANI. As the anchorman here, let me say that 

I think if the House Armed Services Committee, you, Chairman, 

and all the members could take away, this is a 100 percent unanimous report. I know that doesn’t happen all the time. And if you 

could remember one thing, that it is a unanimous report. 
48 

The second item I would tell you is that in my four decades in 

the military and since retirement I have not seen any study or survey, and I am not saying this because I am on this Commission, 

but I have not seen anything anywhere that has been as comprehensive and all-encompassing as this. 

Now, I have to commend you and the Senate for giving us the 

tools and the funding to hire an incredibly professional staff to support these nine commissioners in coming up with this very significant look, the first real look at how the All-Volunteer Force has 

done over the years. It has confirmed the structure of a lot of it. 

But we hope we have given you the kind of recommendations that 

will sustain us into the future. 

The CHAIRMAN. Well, all of us have seen lots of reports in this 

town, some of which are less than helpful. But I just want to repeat 

what I said at the beginning, you all have done what we asked you 

to do. 

And, Mr. Chairman, you have been blessed, as I am sure you 

know, with some outstanding folks who have worked with you on 

this Commission. And we are incredibly grateful for the work that 

each of you have contributed. 

This committee is going to work on the proposals you have made 

very seriously. And I am sure that we will continue to draw upon 

you, both at the subcommittee level and as we work with the Senate, to see exactly what we move ahead with in legislation. 

So, again, thank you all for being here. Thank you for your work. 

And with that, the hearing stands adjourned. 

[Whereupon, at 12:37 p.m., the committee was adjourned.] 
A P P E N D I X 

FEBRUARY 4, 2015 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

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DOCUMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 4, 2015 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

FEBRUARY 4, 2015 

(93) 

RESPONSE TO QUESTIONS SUBMITTED BY MS. SANCHEZ 

Mr. MALDON. The Commission’s recommendations do not ask taxpayers to pay 

more. The Commission’s health care recommendations, taken in their entirety, save 

taxpayers more than $2.7 billion annually, in FY2016 dollars, once they have been 

fully implemented. These savings do not diminish quality of care, but actually improve it by offering greater choice and access for the beneficiaries. [See page 12.] 

RESPONSE TO QUESTIONS SUBMITTED BY MR. FORBES 

Mr. MALDON. Offering Service members who join after the new retirement system 

is implemented the option of selecting the current retirement system would be problematic in that it would create inequities and pragmatic issues. People who opted 

in to the old retirement system and then left service before retirement would lose, 

relative to their peers, because they would not have received any government-funded retirement savings. Those who opted for the old system and then stayed to retirement would have differing retirement values, and ultimately would be compensated 

differently for their service than their peers. New Service members could also select 

retirement systems based on the cultural difference of their respective Service, creating an inequitable system among Services. Offering this option also would create 

a long-term issue of different normal cost contributions into the Military Retirement 

Fund and might make retention analysis more difficult because retention models 

are based on a standardized retirement system. [See page 13.] 

RESPONSE TO QUESTIONS SUBMITTED BY MR. O’ROURKE 

Mr. MALDON. It is difficult to determine a specific dollar amount associated with 

this recommendation. The GAO Electronic Health Record report (February 2014) indicated there is no evidence of DOD/VA collective cost analysis of the abandoned 

iEHR compared to the separate VA (VistA evolution) and DOD (Commercial Acquisition) course of action currently in progress. A strategic uniform formulary would 

likely translate to increased costs for VA; however, the costs can be off-set by using 

joint contracting with DOD, prime vendor contracts, Federal Supply Schedule (FSS), 

and Federal Ceiling Price (FCP). Adding pharmaceuticals to the formulary does not 

require actually purchasing and having an inventory on hand. VA could use the 

Pharmaceutical Prime Vendor (PPV) contracting mechanism for real-time ordering 

and inventory. The Commission was unable to determine the costs of a strategic 

uniform formulary. This cost can only be determined when the formulary has been 

developed jointly by DOD and VA and all procurement options have been explored. 

For resource sharing in general, the VA and DOD do not have a centralized tracking 

mechanism for resource-sharing generated savings. It is difficult to estimate future 

savings without a baseline or agreement on a standardized way to measure savings.

[See page 19.] 

RESPONSES TO QUESTIONS SUBMITTED BY MR. TAKAI 

Mr. MALDON. The Commission made four health care recommendations. Taxpayer 

outlays for the health care recommendations would be $0.3 billion for Recommendation 5 (joint readiness), ¥$3.2 billion for Recommendation 6 (health care), and $0.2 

billion for Recommendation 7 (ECHO). Net funding changes for Recommendation 8 

(DOD–VA collaboration) are dependent upon the initiatives that are pursued by the 

Departments and were not included in the Commission’s cost estimates, although 

the Commission anticipates this recommendation would create a net reduction in 

federal outlays. The Commission’s health care recommendations, taken in their entirety, save the taxpayers more than $2.7 billion annually, in FY2016 dollars, once 

they have been fully implemented. The effect on the defense budget of each recommendation is provided in the table below (values in parentheses indicate savings): 
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For federal outlays (as opposed to budget authority), the costs (savings) are provided in the table below: 
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[See page 22.] 

RESPONSE TO QUESTIONS SUBMITTED BY MRS. McSALLY 

Mr. MALDON. The Commission recognizes the value of feedback from Veterans’ 

Service Organizations (VSOs), and engaged in extensive conversations with the Military and Veteran Service Organizations during the last 2 years. However, the Commission feels that the VSOs are in the best position to express their positions and 

thoughts on the recommendations. [See page 36.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

FEBRUARY 4, 2015 

(99) 

QUESTIONS SUBMITTED BY MR. SHUSTER 

Mr. SHUSTER. To what degree did your survey conclude that issues pertaining to 

health and benefits are a primary driver for people to leave the military? 

Mr. MALDON. Although survey results clearly showed Service members view various aspects of health care benefits for their families as important, it is not possible 

from the data collected to measure Service member intentions to stay or leave military service. The Commission’s survey measured the degree to which Service members prefer alternative features and levels of particular pay, retirement, health care, 

and other compensation benefits. For example, the survey showed strong preferences for an expanded health care benefit for family members, along the lines of 

the Commission’s recommendations. Active Component (AC), Reserve Component 

(RC), and retirees all identified choice of health care provider as the highest valued 

attribute from a list of six health care attributes. Access to a large network of providers was the second most valued attribute for AC and RC members and third for 

retirees. 

Mr. SHUSTER. Do you believe that this package of recommendations will slow the 

loss of top talent from the military? 

Mr. MALDON. Yes, the Commission’s recommendations enable the Services to 

maintain current force profiles as reflected in retention modeling by RAND. They 

also provide additional flexibility that enables the Services to adjust force profiles 

based on their respective personnel requirements. For example, the Commission recommends a new Continuation Pay at 12 years of service (YOS) that would provide 

additional mid-career retention incentives. The recommendations also would allow 

the Services to adjust YOS requirements to qualify for the defined benefit portion 

of the retirement plan, which in turn could allow the Services to retain members 

longer in key career fields and slow the loss of top talent from the military. 

Mr. SHUSTER. You state that more than 150,000 current and retired Service members responded to the Commission’s survey. What where the most common items of 

concern raised by survey respondents pertaining to the changes the commission is 

suggesting? 

Mr. MALDON. The Commission’s survey did not explicitly probe for areas of concern, but instead explored Service members’ preferences for current and alternative 

features of various components of their compensation. For example, the survey 

asked about various levels of health insurance premiums and copayments compared 

to what Service members currently pay. It also asked about automatic enrollment 

in the Thrift Savings Plan and possible government matching contributions. The information gathered by the survey enabled the Commission to better understand the 

features of a compensation system that Service members would most prefer. Although the survey provided important insights into Service member preferences for 

various alternative features and levels of pay, retirement, health care, and other 

compensation benefits, it was only one of several sources of information the Commission relied on to inform its deliberations and decision making. 

Mr. SHUSTER. Do you believe these changes will disproportionately affect any specific element of the Active Duty, Reserve, or retired force? 

Mr. MALDON. The Commissions’ retirement recommendation will have a positive 

effect on junior Service members and those who do not reach 20 years of service. 

These Service members will receive a benefit (retirement funds) for which they are 

ineligible under the current system. The Commission’s recommendation also will 

have a positive effect on Active Component (AC) family members and members of 

the Reserve Component (RC) by offering them more choice, access, and value in 

their health care options without additional costs. Retirees also receive additional 

choice, access, and value in their health care, but the Commission recommends the 

premium cost share of retirees increase 1% per year over 15 years. Additionally, the 

Commission’s recommendations will benefit AC and RC members, retirees, and their 

families by protecting access to and savings at commissaries and exchanges, improving access to DOD-sponsored child care, safeguarding education benefits, better preparing Service members for transition to civilian life, ensuring Service members’ nutritional needs are met, expanding Space A travel, and tracking the effects of military life on children’s school work. The Commission is confident that its rec-
100 

ommendations maintain or improve the overall value of the current benefits package. 

Mr. SHUSTER. You cite utilization management as a way to achieve some degree 

of cost savings. Do you foresee any negative effects on preventative health as a result of these anticipated lower utilization rates? How do you define ‘‘overutilization’’? 

Mr. MALDON. The Commission does not foresee a negative effect on preventative 

health as a result of any reduction in beneficiaries’ utilization of health care services. Under the proposed TRICARE Choice model, the Commission anticipates 

health care plans would fully capitalize on available techniques for improved care 

management, which would in turn reduce over-utilization of health care and improve health outcomes. Over-utilization occurs when health care resources and procedures are used even when the care is not warranted on medical grounds, the care 

could produce greater harm than benefit, or the additional expense of a more costly 

service outweighs the added benefits the service was intended to provide. Currently, 

TRICARE beneficiaries use health care services at a substantially greater rate than 

civilian health insurance beneficiaries. Enrollees in TRICARE Prime used inpatient 

services 73 percent more than civilians with HMOs during FY 2013. Similarly, 

TRICARE Prime outpatient utilization rates were 55 percent higher than those for 

civilians. The design of the current TRICARE system does not allow for effective 

management of the rate at which users consume health care because it has limited 

use of monetary and nonmonetary incentives to influence beneficiaries’ behavior and 

promote better health outcomes. The relatively low out-of-pocket expenses—deductibles, copayments, and coinsurance—experienced by TRICARE beneficiaries compared to their civilian counterparts encourage over-utilization in the TRICARE system. TRICARE does not employ nonmonetary tools available in the private sector, 

such as identifying high-risk patients, managing complex cases, keeping chronic diseases under control, and promoting wellness and preventative services. These tools 

lower utilization by reducing avoidable emergency room and urgent care visits, addressing health care needs before a hospital admission becomes necessary, shortening inpatient stays, and avoiding readmission. Additionally, many argue that nonmonetary techniques also lead to better health care outcomes. Under the proposed 

TRICARE Choice model, the Commission anticipates health care plans would use 

the complete range of both monetary and nonmonetary techniques to affect beneficiary behavior and improve health care outcomes through disease management, 

wellness, and better coordination of care. 

Mr. SHUSTER. The many different Reserve statuses were formed over time to differentiate between changing authorities and funding requirements. Would the reduced number of statuses restrict any State or Federal authorities? Further, did the 

services express any concerns with their ability to implement these changes such 

as significant changes to information technology infrastructure? 

Mr. MALDON. The reduced number of statuses would not restrict any state or federal authorities. Before making its recommendation, the Commission consulted extensively with leadership of the Reserve Component, human resource specialists in 

the different Services, and reserve members who would be affected by the change. 

The Commission received consistent support for its proposed changes, especially 

since consolidating statuses would improve the consistency of Service members’ benefits. The proposed system would also alleviate RC member mobilization difficulties. 

While there may be some associated information technology and training costs, the 

Commission believes that they are worthwhile given the advantages of streamlining 

RC statuses. 

Mr. SHUSTER. Medical billing and insurance oversight are not current core competencies of our military medical providers. In your opinion, what actions must the 

services first take before they would be able to implement the types of changes 

you’ve provided in medical care? Information technologies, training programs, personnel increases, etc.? 

Mr. MALDON. In the civilian sector, medical providers do not typically handle 

medical billing or insurance. These functions are usually handled by administrative 

or support services. There are companies that provide billing services to major 

health systems in the United States today. The companies also provide training for 

coding, billing procedures, collections, and related processes. The Military Health 

System (MHS) could use such a professional service. Alternatively, the MHS could 

expand its current third-party billing activities to handle the medical billing. If this 

approach were taken, the MHS would need to ensure that existing administrative 

personnel were trained to perform such duties and that efforts currently underway 

to modernize MHS information technology (IT) would support this task. In 2014, 

DOD awarded a contract to General Dynamics to build the Armed Forces Billing 

and Collection Utilization Solution (ABACUS) to generate medical claims, pharmacy 

claims, invoices, and governmental billing forms at 136 military medical treatment 
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facilities globally. ABACUS will replace legacy IT systems and automate, consolidate, and centralize the Army, Navy, and Air Force’s separate health billing and collection IT systems. Regardless of which approach to billing is chosen, adequate time 

will be required to set in place coding, billing, collections, and related systems, 

which is, in part, why the Commission’s proposed legislation includes a 2-year implementation period before moving beneficiaries into the new system. 

Mr. SHUSTER. I recently received a constituent complaint regarding the inconsistency in care the member has experienced while transitioning from active service to 

the care of the VA. If the committee’s recommendations were accepted, how long do 

you think it would take to reach the level of collaboration and standardization required to prevent these types of issues? 

Mr. MALDON. The transition from DOD health care to VA health care presents 

challenges on many fronts. The DOD–VA Joint Executive Committee (JEC) already 

exists to coordinate efforts between the two agencies. The Commission recommended 

the JEC be granted additional authorities and responsibilities to standardize and 

enforce collaboration. The JEC should develop a strategic plan for DOD–VA collaboration and require certification for common services and planned expenditures. Creating a stronger JEC requires on-going implementation and may take 2 to 3 years. 

The Commission recommended the JEC be given authority to create a process by 

which a strategic uniform formulary is developed to include all drugs determined 

by the JEC to be critical for transition from the DOD health care system to the VA 

system. It is important that the JEC begin immediately with aligning DOD and VA 

drug formularies for the pain and psychiatric classes of drugs. The Commission 

views the uniform strategic formulary as a relatively easy means to implement improvement, and believes it could be accomplished within 6 months. 

The Commission also found that a single electronic health record (EHR) system 

is the ideal solution for improving Service member health care and minimizing overall EHR costs. To that end the Commission recommended the JEC require VA to 

establish health care records for all current military members. The legislative language proposed by the Commission indicates this record should be created within 

180 days of enactment of the recommendation. The Commission also recommended 

that the JEC require EHR compliance with national Health Information Technology 

standards for both DOD and VA. The standardization of data transfer between DOD 

and VA EHRs is likely to take longer to implement. 

An electronic health care record compliant with national data standards, a uniform formulary, and healthcare resource sharing between DOD and VA are critical 

to an initial framework, but are not a final solution in delivering seamless health 

care. 

QUESTIONS SUBMITTED BY MR. ZINKE 

Mr. ZINKE. Under the fifth recommendation, it states ‘‘Congress should establish 

a four-star command to oversee all joint readiness, especially medical readiness.’’ 

How does the establishment of another four-star command decrease the bureaucracy 

and lower the cost to DOD? 

Mr. BUYER. The establishment of a four-star Joint Readiness Command (JRC) to 

oversee joint readiness, especially medical readiness, is intended to fill a critical 

gap, rather than increase bureaucracy. Currently, joint medical requirements generation and service medical requirements validation; joint and service medical readiness monitoring and reporting; and joint medical sourcing and standardization do 

not fall under any DOD entity’s responsibility. This situation presents a critical gap 

in operational medicine. In addition to filling the gap, the concept of Essential Medical Capabilities (EMCs) warrants a four-star champion who can elevate joint medical readiness and training to the level of readiness and training of the line components. The cost estimate of standing up a four-star command presented by the Commission is conservative, in that it assumes no use of already designated funds. Some 

of the functions and personnel resources of the disestablished Joint Forces Command exist in J7, J7-Suffolk, J4, and TRANSCOM and, along with combat service 

support functions from the Defense Health Agency, could be reorganized into the 

proposed JRC, thus reducing costs. 

Mr. ZINKE. If these recommendations were to be adopted with no changes, would 

any existing member (active or retiree) be forced to change anything in their plans 

in the immediate? In other words, if a member and their family are completely satisfied with their current coverage, retirement and/or compensation package would 

they be allowed to keep everything the same or would they be forced to make any 

changes in the immediate? 
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Mr. BUYER. The retirement pay of those who are currently serving and those who 

have already retired will not be affected by the Commission’s recommendations; as 

required by NDAA FY 2013 it is ‘‘grandfathered.’’ Individuals serving at the time 

the recommendations are enacted will have the option to switch to the new retirement plan if they prefer. Similarly, the Commission’s Survivor Benefit Plan (SBP) 

recommendation would give members an additional SBP option, but would also offer 

the opportunity to choose the present plan. The Commission’s health care recommendations will require Service member’s families, Reserve Component members, and non-Medicare-eligible retirees to decide on a health insurance plan offered 

in TRICARE Choice. Health care for active-duty Service members and Medicare-eligible retirees will not change, nor will pharmacy benefits change for any beneficiaries. The proposal for nutrition assistance will sunset the FSSA program (which 

only enrolled 285 Service members in 2013) in the United States and other territories. The Commission expects and encourages eligible beneficiaries in the United 

States to apply to the Supplemental Nutrition Assistance Program (SNAP), which 

is typically more generous. The Commission’s recommendations would also sunset 

the housing stipend for dependents using transferred post-9/11 GI Bill benefits 

starting in 2017. The Commission’s recommendations for joint readiness, DOD–VA 

collaboration, commissaries and exchanges, family members with special needs, Reserve Component statuses, financial literacy, transition assistance, the military student identifier, space available travel, and child care maintain or improve Service 

member benefits while reforming the programs to make them more effective and efficient. 

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