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i 

94–230 2015

[H.A.S.C. No. 114–28] 

STAKEHOLDER’S VIEWS ON THE 

RECOMMENDATIONS OF THE MILITARY 

COMPENSATION AND RETIREMENT 

MODERNIZATION COMMISSION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON MILITARY PERSONNEL 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

MARCH 25, 2015 
(II) 

SUBCOMMITTEE ON MILITARY PERSONNEL 

JOSEPH J. HECK, Nevada, Chairman 

WALTER B. JONES, North Carolina 

JOHN KLINE, Minnesota 

MIKE COFFMAN, Colorado 

THOMAS MACARTHUR, New Jersey, Vice 

Chair 

ELISE M. STEFANIK, New York 

PAUL COOK, California 

STEPHEN KNIGHT, California 

SUSAN A. DAVIS, California 

ROBERT A. BRADY, Pennsylvania 

NIKI TSONGAS, Massachusetts 

JACKIE SPEIER, California 

TIMOTHY J. WALZ, Minnesota 

BETO O’ROURKE, Texas 

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 

Davis, Hon. Susan A., a Representative from California, Ranking Member, 

Subcommittee on Military Personnel ................................................................. 2 

Heck, Hon. Joseph J., a Representative from Nevada, Chairman, Subcommittee on Military Personnel ........................................................................ 1 

WITNESSES 

Bousum, Scott, Legislative Director, Enlisted Association of the National 

Guard of the United States ................................................................................. 3 

Gehrke, Brendon, Senior Legislative Associate, Veterans of Foreign Wars 

of the United States ............................................................................................. 4 

Hayden, Col Michael, USAF (Ret.), Director, Government Relations, Military 

Officers Association of America .......................................................................... 5 

Neiweem, Chris, Legislative Associate, Iraq and Afghanistan Veterans of 

America ................................................................................................................. 6 

Ruedisueli, Karen, Government Relations Deputy Director, National Military 

Family Association ............................................................................................... 8 

Stovall, John, Director of National Security, the American Legion .................... 9 

APPENDIX 

PREPARED STATEMENTS: 

Bousum, Scott ................................................................................................... 40 

Gehrke, Brendon ............................................................................................... 52 

Hayden, Col Michael ........................................................................................ 66 

Heck, Hon. Joseph J. ........................................................................................ 39 

Neiweem, Chris ................................................................................................ 82 

Ruedisueli, Karen ............................................................................................. 88 

Stovall, John ..................................................................................................... 123 

DOCUMENTS SUBMITTED FOR THE RECORD: 

MAZON: A Jewish Response to Hunger, Statement for the Record ............ 151 

National Association of Drug Stores, Statement for the Record .................. 157 

National Guard Association of the United States, Statement for the 

Record ............................................................................................................ 141 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

[There were no Questions submitted during the hearing.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

[There were no Questions submitted post hearing.] 

(1) 

STAKEHOLDER’S VIEWS ON THE RECOMMENDATIONS 

OF THE MILITARY COMPENSATION AND RETIREMENT 

MODERNIZATION COMMISSION 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON ARMED SERVICES, 

SUBCOMMITTEE ON MILITARY PERSONNEL, 

Washington, DC, Wednesday, March 25, 2015. 

The subcommittee met, pursuant to call, at 1:59 p.m., in room 

2212, Rayburn House Office Building, Hon. Joseph J. Heck (chairman of the subcommittee) presiding. 

OPENING STATEMENT OF HON. JOSEPH J. HECK, A REPRESENTATIVE FROM NEVADA, CHAIRMAN, SUBCOMMITTEE ON 

MILITARY PERSONNEL 

Dr. HECK. I want to welcome everyone to a hearing of the Military Personnel Subcommittee on the stakeholders’ views of the 15 

recommendations to modernize the military compensation and retirement system suggested by the Military Compensation and Retirement Modernization Commission. 

As we continue to study the Commission’s recommendations, we 

also need to consider the views of our current and retired service 

members through you, the organizations that represent them. We 

are committed to addressing the concerns and issues raised by 

members of the Military Coalition and others on the effects of the 

Commission’s recommendations on service members’ and their families’ willingness to serve and the effects on their quality of life. 

I want to continue to assure everyone that the Military Personnel Subcommittee is taking every opportunity to thoroughly review and discuss the recommendations. We are fully committed to 

improving the welfare and quality of life for both current members 

of our armed services and our veterans while ensuring we keep our 

nation safe and secure. 

Our purpose today is to understand how current and retired 

service members are viewing and discussing the Commission’s recommendations. The guiding consideration for our work is the viability of the All-Volunteer Force. Most importantly, we must not 

break faith with our service members and undermine our efforts to 

recruit and retain the best and brightest into our Armed Forces. 

Before I introduce our panel let me offer Congresswoman Davis, 

ranking member, an opportunity to make her opening remarks. 

[The prepared statement of Dr. Heck can be found in the Appendix on page 39.] 
2 

STATEMENT OF HON. SUSAN A. DAVIS, A REPRESENTATIVE 

FROM CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON 

MILITARY PERSONNEL 

Mrs. DAVIS. Thank you, Mr. Chairman. 

I also want to welcome our witnesses here today. Your perspective—those of you who are here to speak, and those in the audience, surely share the views from our constituents, and it is very 

important that we continue to discuss all of the Commission’s recommendations. 

We have had the opportunity, as many of you know, to hear from 

the Commissioners twice and have had two very good roundtables 

with the Commission staff and outside experts to discuss the recommendations. 

I know that the organizations are certainly not all in agreement; 

that would be an unusual thing. But we also know that it is very 

important to hear the basis of your views, and also important to 

solicit your thoughts on how to improve the recommendations or 

provide solutions to the problems, especially when it comes to 

TRICARE. 

As I have mentioned in earlier hearings, we are truly entering 

a new reality of fiscal pressures with a new generation of citizens 

entering the military, and so we have to look at this responsibly. 

I don’t believe that doing nothing will be an option for much longer, 

so how you come to frame these issues and help us to make some 

of the decisions in the future we value and we thank you for being 

here. 

Thank you, Mr. Chairman. 

Dr. HECK. Thank you, Mrs. Davis. 

We are joined today by an outstanding panel of stakeholders. We 

will give each witness the opportunity to present testimony and 

each member an opportunity to question the witnesses. 

We would respectfully remind the witnesses to summarize, to the 

greatest extent possible, the high points of your written testimony 

to 3 minutes because of the recent change in our vote schedule. 

Your written comments and statements will be made part of the 

hearing record. 

I understand the clocks may not be working in the countdown 

form for all of you, so we are going to go back to the old-fashioned 

2, 1, 30-second kind of cue cards behind me so that you know 

where we are at in the process. 

I ask unanimous consent to add written statements to the record 

from the National Guard Association of the United States, from 

MAZON: A Jewish Response to Hunger, and from the National Association of Drug Stores. 

Without objection, so ordered. 

[The information referred to can be found in the Appendix beginning on page 141.] 

Dr. HECK. Let me welcome our panel: Mr. Scott Bousum, Legislative Director for the Enlisted Association of the National Guard of 

the United States; Mr. Brendon Gehrke, Senior Legislative Associate, Veterans of Foreign Wars of the United States; Colonel Mike 

Hayden, United States Air Force, Retired, Director of Government 

Relations for the Military Officers Association of America; Mr. 

Chris Neiweem, Legislative Associate, Iraq and Afghanistan Vet-
3 

erans of America; Ms. Karen Ruedisueli, Government Relations 

Deputy Director of the National Military Family Association; and 

Mr. John Stovall, Director of National Security for the American 

Legion. 

With that, we will turn the clock over to Mr. Bousum, if you 

want to begin with your 3 minutes. 

STATEMENT OF SCOTT BOUSUM, LEGISLATIVE DIRECTOR, ENLISTED ASSOCIATION OF THE NATIONAL GUARD OF THE 

UNITED STATES 

Mr. BOUSUM. Thank you. 

Chairman Heck, Ranking Member Davis, esteemed members of 

the subcommittee, on behalf of 42,000 members of the Enlisted Association of the National Guard of the United States representing 

over 114,000 enlisted men and women of the Army and Air National Guard, their families, survivors, and tens of thousands of 

National Guard retirees, we welcome this opportunity to submit 

testimony for the record regarding our views concerning the Military Compensation and Retirement Modernization Commission’s 

recommendations. 

The report is public evidence that the Commissioners and their 

staff spent countless hours analyzing a gamut of military compensation issues, and they should be publicly commended for their 

efforts. The report will stimulate and has stimulated some meaningful discussions that need to take place that affect our National 

Guard members. 

Let me begin by stating that we believe the Commissioners set 

out to modernize systems currently in place. They did not look for 

ways to cut spending off the backs of service members and their 

families. 

The fact that the Commissioners’ recommendations save $31 billion from fiscal year 2016 to fiscal year 2020 by creating flexible 

mechanisms for future service members, current service members, 

and their families to choose health care and retirement packages 

that fit their individual needs means that success—means they 

successfully completed their mission. 

The fiscal environment currently faced in the Department [Department of Defense] puts Congress and the associations before you 

today in unfamiliar territory of late. We are no longer in a spend, 

spend, spend environment. Your colleagues on the Budget Committee appear to have set a new tone, at least for the time being. 

In the spirit of the—one of the Commission’s core missions, retaining quality talent for 20 years, I would like to briefly state a 

growing concern that readiness shortfalls caused by less money toward training because of the budget control caps and sequestration 

directly relate to poor retention. If the service member does not get 

to do the job that he or she signed up to do or does not feel prepared for the fight, quality talent will leave the force. 

As the discussion continues in the committee and on the subcommittee, we look forward to working closely with you and your 

staff on these recommendations. 

Thank you. 

[The prepared statement of Mr. Bousum can be found in the Appendix on page 40.] 
4 

Dr. HECK. Thank you. 

Mr. Gehrke. 

STATEMENT OF BRENDON GEHRKE, SENIOR LEGISLATIVE ASSOCIATE, VETERANS OF FOREIGN WARS OF THE UNITED 

STATES 

Mr. GEHRKE. Chairman Heck, Ranking Member Davis, members 

of the subcommittee, thank you for inviting the VFW [Veterans of 

Foreign Wars] to testify today on the Commission’s recommendations. My comments today will focus on recommendation one. 

While this recommendation is often misunderstood, we believe 

that it will dramatically improve the current retirement system. 

The impassioned debate on how to best compensate service members, veterans, their survivors is as old as the founding of this 

country. 

In 1919 the American Legion and Veterans of Foreign Wars argued that our members deserve separation pay to balance out the 

difference between their modest military compensation and the 

high compensation enjoyed by civilian industry workers. A compensation measure worked its way through Congress by the fall of 

1922, but President Harding vetoed the bill to avoid unnecessary 

government cost. 

Undeterred, the Legion and VFW kept up the pressure and succeeded in gaining passage of the World War Adjusted Compensation Act of 1924. The Act was groundbreaking in that it completely 

ended the indigenous components of previous military pension legislation, and that it awarded all service members a pension in the 

form of a 20-year endowment. 

With the ending of two wars and DOD’s [Department of Defense’s] continuing efforts to reduce personnel expenses, the conversation about what it means to compensate and care for service 

members is just as important today as it has been at any other 

point in history. 

There is a common military phrase that summarizes our warrior 

ethos: Leave no man behind. Unfortunately, this ethos does not 

translate to the current military retirement system, which has left 

roughly 90 percent of all veterans behind their civilian counterparts in saving for retirement. 

Nearly 80 percent of full-time workers have access to employersponsored retirement plans, and 95 percent of employers with 

401(k) plans made a matching contribution to their employees. Unfortunately, the government contributes nothing to the retirement 

of those who often are the most deserving—those who bore the burden of battle. 

Take, for example, Corporal Quentin Graves, from San Diego, 

California. Corporal Graves deployed twice to Iraq in a 4-year timeframe, earning a Purple Heart during each deployment. Corporal 

Graves thought about reenlisting but didn’t think he would survive 

another tour. 

Despite his sacrifices, he didn’t receive any retirement contribution from the government. However, if Corporal Graves would have 

been employed by the private sector or in the military under the 

Commission’s proposed plan, he would have received approximately 

$6,500 in an employer-sponsored retirement plan. This relatively 
5 

small investment by the government would have compounded to 

nearly $100,000 for Mr. Graves for when he reaches retirement 

age. 

Another example is Staff Sergeant Alex Marovski, from Norwich, 

Connecticut. Staff Sergeant Marovski enlisted in 1999. He deployed 

to Kosovo in 2000 and reenlisted for 3 years in 2002. 

He deployed to Iraq during the invasion, was stop-lossed in 2005, 

and deployed again to Iraq where he was catastrophically wounded 

by an IED [improvised explosive device] in 2006. After his release 

from stop-loss, Staff Sergeant Marovski was discharged with a 

metal rod and fresh stitches in his arms, but received nothing in 

the form of retirement compensation. 

However, if Alex would have been working for another government agency or in the military under the Commission’s proposed 

plan, he would have received approximately $20,000 in retirement 

benefits, which would have compounded to over $211,000 by the 

time he hit retirement age. 

These examples show that if young service members aren’t saving today, they are losing the benefit of time compounding the 

value of their money. That growth cannot be made up later. 

In closing, ask yourself, if your son or daughter was about to join 

the military and they had the choice between the current system 

and the Commission’s proposed system, which system would you 

tell them to choose—a system that will definitely prepare them for 

retirement, or a rigged system where there is an 83 percent chance 

that they will receive nothing in retirement for their service? 

Thank you for your time, and I will gladly answer any questions 

the committee may have. 

[The prepared statement of Mr. Gehrke can be found in the Appendix on page 52.] 

Dr. HECK. Thank you. 

Colonel Hayden. 

STATEMENT OF COL MICHAEL HAYDEN, USAF (RET.), DIRECTOR, GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF AMERICA 

Colonel HAYDEN. Chairman Heck, Ranking Member Davis, members of the committee, on behalf of the over 380,000 members of 

the Military Officers Association of America [MOAA], we welcome 

this opportunity to provide our views concerning the Commission’s 

report. MOAA sincerely appreciates the hard work and analysis 

that went into the Commission’s report. 

We commend the Commissioners and their professional staff for 

their extensive efforts. Their product provides the country with an 

instrument that we can use as a catalyst to begin the important 

thought discussions, analysis, and debates on vital issues that directly affect our service men, women, retirees, veterans, and their 

families, and their ability to ensure our national security. 

MOAA has reviewed the 15 recommendations, and overall we 

support 10 with some varying degree of concern. Two we believe require further study, and three we do not support. 

In my statement I will focus on the ones we recommend for further study: the retirement and health care proposals. As for the retirement proposal, we are very concerned that the new system 
6 

lacks the drawing power to sustain service members to 20 years of 

service. As for the health care proposal, we are concerned that the 

new system proposed would negatively impact overall medical readiness. 

Both of those recommendations produce a negative effect on the 

pocketbook of those whom the government needs to serve for a career of 20 years or greater. The combined effects of the Commission’s health care and retirement changes, if they were fully implemented today, on an E–7’s annual retirement value is over $6,400 

a year, for a loss of 27 percent, until they can start to draw from 

their thrift savings plan at age 591⁄2. 

A complete overhaul of the retirement and health care system, 

which itself serves 9.6 million beneficiaries, deserves thoughtful 

and careful consideration. Some of the findings in the Commission’s 

report align with concerns raised by MOAA and deserves addressing this expeditiously as possible, pending deeper consideration of 

the broader issues. 

Even so, the number one action Congress should take immediately is to demand that DOD, without delay, reform TRICARE 

under a truly unified military health care system, and not just the 

service members’ share of it. We are not advocating usurping the 

Surgeon General’s title 10 responsibilities, but without a unified 

budget and oversight, TRICARE as we know it will remain administratively stovepiped and suboptimized. 

Service members stationed around the world should not have to 

worry if they have selected the appropriate retirement fund or the 

appropriate health care coverage for their families. Making radical 

changes to the core retention programs, military health care and 

retirement, carries a significant risk of causing unintended negative effects to retention. 

Our primary concern is the AVF’s [All-Volunteer Force’s] health, 

welfare, and sustainability, and most important element of the 

AVF is the experienced, high-quality, midgrade NCO [noncommissioned officer] and officer corps. 

Thank you, and I look forward to your questions. 

[The prepared statement of Colonel Hayden can be found in the 

Appendix on page 66.] 

Dr. HECK. Thank you. 

Mr. Neiweem. 

STATEMENT OF CHRIS NEIWEEM, LEGISLATIVE ASSOCIATE, 

IRAQ AND AFGHANISTAN VETERANS OF AMERICA 

Mr. NEIWEEM. Chairman Heck, Ranking Member Davis, and distinguished members of the subcommittee, on behalf of Iraq and Afghanistan Veterans of America [IAVA] and our nearly 400,000 

members and supporters, thank you for the opportunity to share 

our views on the final report and recommendations of the Military 

Compensation and Retirement Modernization Commission. 

We applaud the Commission for putting forth some bold measures that merit serious consideration. However, we also look upon 

its report and recommendations as a mixed bag. Some of what is 

called for is consistent with recommendations we and other military and veterans service and advocacy groups have long sup-
7 

ported, while others raise serious questions and concerns for IAVA 

and our members. 

First, an area in which we are in strong agreement with the 

Commission is the need for increased DOD–VA [Department of 

Veterans Affairs] cooperation up to and including the sharing of 

systems and information. The process of transitioning from Active 

Duty to veteran status is still disjointed, and OEF/OIF [Operation 

Enduring Freedom/Operation Iraqi Freedom] veterans often report 

gaps in care and assistance when leaving the DOD and entering 

the VA system. 

While the report cited increased interdepartmental informationsharing, it also acknowledged poor oversight and inadequate accountability. The situation not only negatively impacts the new veterans’ health care experience, but it also prolongs the process of applying for disability compensation benefits after separation. Further, it frustrates the VA’s ongoing efforts to process disability and 

compensation claims in a timely manner. 

There is no doubt to us that the goal of quality continuous care 

requires a fully interoperable—preferably joint, but at least fully 

interoperable—data record, as well as a joint DOD–VA drug formulary, which I know the committee will be addressing at a later 

date. 

Additionally, we strongly agree with the Commission on the urgent need for increased financial literacy and benefit stewardship 

through education for service members and their families. We see 

the need is not only with countless examples of predatory lending 

targeting service members, but also some for-profit college institutions’ laser-beam focus on service members’ valuable post-9/11 G.I. 

Bill benefits. 

IAVA is continuing to take a deeper dive into the Commission’s 

recommendations regarding alternate treatment plan packages. In 

a recent survey of our members, 36 percent of respondents felt the 

military retirement system should be reformed. Of those respondents, when allowed to select multiple options, 67 percent favored a 

401(k)-style benefit for noncareerists, and 33 percent favored increasing the overall value of the current retirement benefit system, 

and 59 percent favored a partial early retirement benefit for 10 or 

15 years of service. 

Of those IAVA members surveyed, who are, by definition, combat 

veterans, there is a fundamental belief that it is fundamentally unfair that one could serve 10 or 12 years with three, four, five, or 

more deployments and leave the military with absolutely no retirement benefit at all, yet a careerist, and possibly never even deployed, could be entitled to a full benefit package. 

Therefore, IAVA is open to reforms that would amend the current system to allow not-career troops the opportunity for some retirement benefits. We will continue to analyze and assess the potential value of the Commission’s options while understanding and 

factoring in the long-term goal of maintaining a ready and relevant 

21st century force. 

Mr. Chairman, I will just go ahead and close here. Apologize, this 

microphone doesn’t work, so hopefully that was loud enough. 

Happy to answer any questions you may have for IAVA. 
8 

[The prepared statement of Mr. Neiweem can be found in the Appendix on page 82.] 

Dr. HECK. Thank you. 

Ms. Ruedisueli. 

STATEMENT OF KAREN RUEDISUELI, GOVERNMENT RELATIONS DEPUTY DIRECTOR, NATIONAL MILITARY FAMILY ASSOCIATION 

Ms. RUEDISUELI. Chairman Heck, Ranking Member Davis, and 

members of the subcommittee, thank you for inviting me to speak 

on behalf of the National Military Family Association [NMFA] and 

the families we serve about the Commission’s recommendations. 

While our written statement addresses several recommendations in 

detail, today I will focus primarily on the Commission’s TRICARE 

Choice proposal. 

Any changes to the military health care benefit must address the 

unique conditions of service and the extraordinary sacrifices demanded of service members and their families. With this guiding 

principle in mind, we believe the Commission’s TRICARE Choice 

proposal merits further study and serious consideration. 

The Commission’s health care proposal has the potential to provide military families with a more robust and valuable health care 

benefit than one that would address many beneficiary complaints 

about the current system. To achieve these benefits, we believe a 

lengthy implementation period is vital and must include mechanisms for readily adjusting policies, processes, and commercial 

plans to ensure TRICARE Choice achieves the desired outcomes. 

While we support in principle the concept of moving families to 

high-quality commercial plans, there are three areas where more 

information and analysis are needed before we can fully endorse 

the Commission’s proposal. First and most importantly, we believe 

a change of this magnitude demands a more thorough analysis of 

the potential impact on military treatment facilities to avoid unintended consequences for beneficiaries and military medical readiness. 

Second, military families are concerned about out-of-pocket costs 

under TRICARE Choice. Active Duty families worry how a health 

care allowance based on averages will support larger-than-average 

families or those with special needs. 

Third, TRICARE Choice implementation details are lacking in 

the Commission’s proposal, and we need assurances on the specifics. 

Before I wrap up, I would like to briefly address a non-health 

care issue that many military families find concerning: the Commission’s proposal regarding G.I. Bill transferability. The Commission recommends eliminating the housing stipend for dependents 

starting in 2017. 

Our association understands and appreciates that G.I. Bill transferability is a retention tool and must be optimized for greater effectiveness and modified as retention goals change, and we support 

changes on a forward basis. However, reducing the value of the 

transferred G.I. Bill benefit after extracting the wartime service 

commitment is unacceptable. Service members with existing G.I. 
9 

Bill transferability contracts must be grandfathered in at the full 

benefit value. 

In an era of budget constraints, when military families see any 

proposed changes in benefits as just another attempt to cut costs, 

it is important to rebuild their trust and show them their service 

is valued. We hope the Commission’s proposals prompt a thorough 

discussion on military compensation and benefits, including the 

best way to deliver the health care benefit to military families. 

Thank you, and I look forward to taking your questions. 

[The prepared statement of Ms. Ruedisueli can be found in the 

Appendix on page 88.] 

Dr. HECK. Thank you. 

Mr. Stovall. 

STATEMENT OF JOHN STOVALL, DIRECTOR OF NATIONAL 

SECURITY, THE AMERICAN LEGION 

Mr. STOVALL. Chairman Heck, Ranking Member Davis, and distinguished members of the subcommittee, on behalf of the 2.3 million members of the American Legion I appreciate the opportunity 

to provide our views on the Military Compensation and Retirement 

Modernization Commission’s recently released recommendations. 

The Commission put many months of hard work into developing 

and refining the 15 proposals, and reviewing these proposals, the 

American Legion was chiefly mindful of three guiding concerns: 

first, to preserve and to protect the integrity and strength of the 

All-Volunteer Force; second, to recognize that many of these recommendations are interconnected by their very nature, and considering reform means to consider the impact that they will have not 

solely on the force, but on the other recommendations; and finally, 

that while it is easy to think of these recommendations in terms 

of their impact on the DOD, some proposals will have profound impacts on other agencies of the government, especially the VA. 

The American Legion believes strongly in protecting the integrity 

of the All-Volunteer Force. As such, the American Legion is concerned by any changes to the military system which would reduce 

the incentive to enlist or reenlist. 

The American Legion urges Congress to maintain continuous 

oversight of DOD personnel policies to ensure satisfactory retention, recruitment, morale, health, and effectiveness of the Armed 

Forces. The American Legion is committed to ensuring that any 

benefit in force at the time of initial enlistment is a sacred promise 

that must remain in force throughout the entire military career 

and retirement of a service member. 

Within the scope of those guidelines set forth to protect the morale and motivation of those who serve, there is still room for reform of benefits within the military. 

Where is there redundancy? How can efficiency be improved 

without sacrificing vital programs? Where programs appear to 

overlap, can the individual components of those programs be protected through any merger so critical functions are not lost? 

These are difficult questions and are unlikely to be answered in 

a few simple weeks of analysis. 

The American Legion is diligently working to evaluate the proposals of the Commission, to use the proposals as a jumping off 
10 

point for discussion, and to try to tackle the thorny problems planners face preparing the military for 21st century operations. We 

look forward to continued discussion with Congress, the DOD, and 

other stakeholders to work toward a solution. 

And finally, because of the interconnected nature of the military 

and veterans side of the equation, the American Legion would call 

on this committee to reach out to and conduct joint hearings with 

their counterparts on Veterans Affairs to explore the impact of 

these changes both to the Active Duty service members as well as 

the veterans who will benefit from future programs. 

And to wrap up, Mr. Chairman, the American Legion is an eager 

participant in this discussion and forthcoming discussions, and we 

are happy to answer any questions you might have. 

[The prepared statement of Mr. Stovall can be found in the Appendix on page 123.] 

Dr. HECK. Great. 

Thank you all for your testimony. Again, I apologize for the short 

3 minutes each of you were provided, but we really want to make 

sure we allowed enough time to get to the questions of the members. 

So we will begin a 5-minute round of questioning by the members. We have been joined by the gentleman from Oklahoma, Mr. 

Russell. 

I ask unanimous consent that he be allowed to participate and 

ask questions after all the members of the subcommittee have had 

an opportunity to ask questions. 

Without objection, so ordered. 

Okay, so I will start—put myself on the clock. So again, appreciate all of you and your testimony. 

You know, in looking through the 15 recommendations I think, 

you know, in my view there are 3 that are the real heavy lift: the 

retirement, the health care, and the commissary exchange issues. 

The rest probably to some degree or another, with some minor 

modification, make reasonable sense. 

So I would like to, one, talk a little bit about the retirement recommendation. It seemed that obviously there is some differing of 

opinion amongst the members of the panel, which is to be expected. 

But I guess it is all about how you look at the benefit and how 

you calculate and make sure—we have all got to make sure that 

we are looking at the same numbers. And so again, remembering 

that this is prospective, so nobody who is currently retired is going 

to be affected, and one of the Commission’s charges was to look at 

how the millennials, those folks coming into the service, what are 

they looking for, in order to try to attract people to come into the 

service. 

So, yes, so you get 40 percent of your annuity going forward, as 

opposed to the 50 percent at 20 years, and you start to build up 

your 401(k), vesting after 2 years, and 1 percent automatic matching up to 5. And yes, as Colonel Hayden pointed out, when you retire at 20 the amount that you are going to get paid from year 20 

till you have reached full retirement age is going to be less than 

you otherwise would get—in some cases significantly less. 

But if you look at what your lifetime—if you go out to, like, age 

85 and you kick in the 401(k), overall it seems to appear, using 
11 

conservative TSP [Thrift Savings Plan] numbers, that you are actually making more money when you go out over your lifetime, from 

age 65 to, let’s say, age 85. 

Colonel Hayden, your response to the idea that in the long term 

you might be making more even though in the short term you 

might be getting less when—and I hate to use this phrase because 

a lot of folks have used it—but while you are considered a workingage retiree and expected to actually have another job after you 

leave at, let’s say, age 38 or age 40? 

Colonel HAYDEN. We have done quite a bit of analysis, and actually in conjunction with the Commission back and forth, taking a 

look at the variables. The one aspect associated with the current 

retirement system is it is extremely predictable. 

You can go out to the calculators that are on the DOD Web site 

and see exactly what the paycheck is going to be. And you true it 

in terms of a paycheck, what the retirement check will be and what 

it will provide. 

But under this proposal, it depends on variables. It depends exactly on what the service member is going to contribute. Will they 

be making the—we know that they get a 1 percent government 

contribution, if you would, but will they also be getting, if you 

would, the—will they be making the 3 percent match, they make 

the 5 percent match? 

Will they be doing it at the very beginning on the onset when 

they first come into the service, and then carry that out until they 

retire, or until they leave the service? 

So the question is how that value will grow and, of course, it depends on the economic aspects along with it. Mentioned, for instance, the average TSP. If they get a 7.3 percent rate of return, 

that is wonderful and it will be a richer benefit at the time they 

leave at age 85, if you would, when the actuaries say you are not 

supposed to be around after that. 

But what it really comes down to is if you only get a 5 percent 

rate of return you will never make up the difference. There will 

still be a gap. 

There are other proponents associated with this. The little components associated with the proposal, the first this is for those that 

stay beyond 20 years of service, they don’t make up the difference. 

So there is that portion that would have to be fixed if you were 

looking at the retirement proposals to continue doing dollar matching beyond 20 years of service. And then the other piece is to take 

a hard look at the disability aspects. 

Those that receive a disability compensation under this proposal—disability retirement, that they are now going to be receiving a 20 percent less if—when you look at the differences between 

that in currency and the values that then come into play. So that, 

because the multiplier is less, they are going to be seeing a less of 

income, if you would, the net, based on this type of retirement proposal. 

Yes, they will have some type of transportable career device, but 

our bigger concern is by providing a transportable career device, 

does it incentivize more people to leave or more people to stay? 

Dr. HECK. Well, I think the Commission tried to, you know, look 

at that with the idea of the continuation pay is at roughly year 12, 
12 

again, giving some leeway to the Secretary to slide that either right 

or left depending upon the shaping of the force and what was necessary. So, you know, as the retention tool, let’s say at 12 you get, 

you know, a significant amount of continuation pay; if you agree 

to serve 4 more that puts you at 16, when most people will say, 

‘‘Okay, now I am within 4 of 20. I might as well stay.’’ 

I am going to stop there because my time is almost up. Hopefully 

we will get around to a second round of questions. 

And I will recognize the ranking member, Mrs. Davis. 

Mrs. DAVIS. Thank you, Mr. Chairman. 

And perhaps to just ask all of you whether—it’s the discussions 

that we are going to be having of trying to really get more detail 

and more study, is that something that you feel comfortable with 

generally, as opposed to, you know, basically saying that the provisions that are included within the Commission report are things 

that you just really don’t want to go beyond? Is it fair to say that 

you are comfortable with the discussions going forward with more 

detail? 

Mr. GEHRKE. We would encourage Congress to move forward this 

year with the retirement portion. We think it is high time for a 

change, and that there is some modernization and really that the 

current system is unfair. 

By not providing retirement parity between civilian and military 

sectors, we fear that we are sending a message to the troops that 

the country does not value their military service. And if you look 

at how troops are rating their pay now compared to how they are 

rating it 5, 6 years ago, when they were getting tax exemptions 

and large bonuses and incentive pays, they are rating it much 

lower at 44 percent. 

In addition, you are seeing a 10 percent drop in people’s desire 

to reenlist. A lot of that is due to lack of pay raises, to perception 

that Congress and DOD is taking them for granted and trying to 

lower their personnel experiences. 

We feel that if there is—start to be a retirement contribution immediately, or as soon as possible, that service members will get 

that TSP annual statement and see what the government is contributing and see that the government values their service, and see 

the long-term value of staying in that service watching that interest compound, as well as set them on a retirement path. 

As for the health care portion, we feel that needs to move forward but it is going to need a lot of thorough study to understand 

any unintended consequences. 

Mrs. DAVIS. Thank you. 

You know, rather than maybe trying to hear from everybody, I 

will go on to the health care. I am sure we will have a chance to 

double back on the retirement, as well. 

But I think in many ways,—I—we all know that there are challenges in TRICARE, and I wonder if you could speak to what you 

see needs to be changed or improved—not necessarily focusing on 

the Commission recommendations per se, but where do you see the 

problems? What would you like to see come forward, really, as a 

way to change the system? 
13 

I think that there is a need to possibly have retirees pay more 

than the low premiums that they are paying now. That might be 

something that people have talked about in the past. 

But what areas of that do you think actually you would like to 

see more improvements in the TRICARE system itself? 

Mr. BOUSUM. Ranking Member Davis, if I may, from the Guard’s 

perspective who are currently serving, there is a lot of friction 

when they are called to Active Duty and having to get off of, say, 

their employer-sponsored health care plan or—and they are mostly 

concerned about their dependents, so when they move over their— 

say their child can no longer see the same doctor that he or she 

saw before, and so that stoppage of service that they are looking 

for is—that is problematic. That is something that our currentlyserving would like to see changed. 

Colonel HAYDEN. One of the things that we are—we have been 

looking at is that we believe that the health care delivery should 

actually change its entire model for TRICARE, going more to, if 

you would, value-based type of delivery of health care versus the 

fee-for-service that we have, if you would, just kind of the volume— 

the way providers are actually reimbursed. 

And we have created within TRICARE is we have created incentives, if you would, where, because we have undercut, if you would, 

the way we are providing payments back to the providers, we are 

actually limiting the network. We are going to constrict it. 

We have also done it with the—limiting the prime service areas. 

We have restricted the benefits, so it becomes, as some have said, 

instead of TRICARE it is try-to-find-care, and that becomes the 

problem. 

Once you have access, once you have found the care, it is—people 

have—at least what we are getting from our own members is that 

they are very satisfied with the care once they have gotten it. But 

it is the actual access to the care that is the major problem. 

And part of it is that the Department itself has done it to themselves. And even the Commission highlighted this, that they have 

done it to themselves. 

So what we have been doing is the way to find the—to try to improve the benefit has been to try to shift more cost onto the beneficiaries, have them pay for more, and they are getting less of a 

benefit at the end of the day. From what we are seeing, the one 

positive aspect associated with the Commissions is they are asking 

you to pay more but you are going to supposedly get better access 

at the end of the day. 

What we need to do is to take a look at TRICARE and see if we 

can get rid of some of the policy aspect that they are doing, come 

up with a unified what we think is a central budget authority that 

is looking at that enterprise completely and not this stovepipe—the 

services are going to restrict this, they are going to turn a MTF 

[military treatment facility] and shut it down, or constrict it, and 

they are not looking at what it does to the enterprise overall. And 

we can see some savings there. 

Mrs. DAVIS. Thank you. 

Dr. HECK. Thank you. 

Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 
14 

I just have a question on the quality of life programs, some of 

them, and one is the consolidation of commissary and exchange 

systems into one entity. Many of the veterans service organizations 

cite concerns over the potential of diminished access to savings if 

the Defense Commissary Agency and the various military exchange 

systems are consolidated into one organization. 

If combining these organizations achieves overall efficiencies and 

cost savings to the DOD and the current level of savings are realized by service members and retirees, then would this reform continue—then would you continue to oppose this reform? And if so, 

why? 

Would anybody like to comment on that? 

Mr. GEHRKE. The VFW does not oppose the reform, and, in fact, 

we support it so our—so much as we can retain the overall value 

of the commissary savings. If we can do that we are all for finding 

efficiencies and merging the two, is ensuring that the savings stay 

there for the service member. 

Mr. BOUSUM. For brevity’s sake, I agree. 

Mr. COFFMAN. Anyone else? 

Ms. RUEDISUELI. We have some concerns about the consolidation. 

Specifically, it seems to eliminate the assurances of the 30 percent 

savings, which is a critical component of non-cash compensation for 

military families. 

And we are also concerned because the—changes to the commissary and exchange, the consolidation, if it doesn’t go well it has 

the potential to impact so many military families that rely not only 

on the savings, but also on the access to groceries in remote and 

isolated areas as well as overseas. 

Mr. COFFMAN. But simply by merely consolidating and creating 

administrative savings from that, you have concerns about that? 

Ms. RUEDISUELI. Well, we do feel that it introduces risk that the 

30 percent savings might be eroded or that the access might be 

eroded. 

Mr. COFFMAN. Okay. 

Anyone else? 

Mr. STOVALL. Congressman, I would echo Ms. Ruedisueli’s concerns. However, to your point, if efficiencies could be realized 

through a consolidation without a net negative impact to military 

families, either in terms of payment or accessibility, it is not something that we would oppose. 

Mr. COFFMAN. Okay. 

Anyone else? 

Colonel HAYDEN. We are also in support of the same comments 

out of NMFA and Karen. I think the bigger issue also that you 

have to look at is the—what we also put at risk with this is the 

possibility of the MWR [Morale, Welfare, and Recreation] funds, 

and that is another piece that we think needs to be reviewed. 

We know that there is a study that has been directed in the defense bill this year, so would like to see what the outcome of that 

study is also, before jumping into this proposal. 

Mr. COFFMAN. Okay. 

Many of the veterans service organizations on the retirement 

issue have raised several relevant concerns regarding the proposed 

retirement restructure and presented to the Commission. That 
15 

said, maybe somebody can identify what—and I think a lot of you 

said it, but if we could summarize it by going just down in order, 

let’s start left—my left to right, as to what you agree with in terms 

of the Commission’s recommendations about reforming the retirement system. And name the most salient issue that you agree with 

the Commission’s report, if there is one. 

Yes? 

Mr. BOUSUM. Yes, sir. 

We agree with it. Actually, I would like to answer the one thing 

that we have a concern about, and that is the remoteness of readiness centers and armories, as far as the financial literacy piece, 

that the guardsman may not have the access he or she needs to 

make the decisions—the recommendations with input on the family. 

Mr. COFFMAN. Okay. 

Mr. GEHRKE. We agree with the recommendation in its entirety, 

recognizing that you can’t contribute to a service member’s TSP account without lowering that 50 percent to the 40 percent, as well 

as you can’t give guardsmen the option of receiving a lump sum retirement package immediately when they retire from service without making the changes. 

So we feel one begets the other, and I think what makes us feel 

comfortable with supporting the entire recommendation is, as the 

chairman alluded to, is that the overall value of that individual’s 

retirement is not hurt, as well as they are grandfathered, whoever 

is in the current system. So with those two things being said, we 

support the recommendation in its entirety. 

Mr. COFFMAN. Real quick I will let you go, right down the line 

real fast. 

Colonel HAYDEN. Then only thing that—you have heard a couple 

of my concerns, but if there was one thing that we do see in this, 

and something that we will—we also support, is that this does address the fairness issue, and it does provide something to those 

that leave short of 20 years some type of transportable benefit. 

Mr. NEIWEEM. And so I would say, you know 67 percent of our 

members support a 401(k) style. I think if out of these 15 recommendations if one is going to be prioritized, it should be compensation or retirement reform. 

And frankly, many of our members, by 11 or 12 years, are a little 

bit banged up from deployments, from fighting the wars or being 

out there at the front lines. And the pull of the 20 years, they are 

just not in that position to get that far, so having some sort of opportunity there. And, you know, the debate about whether reducing 

50 percent investing to 40 percent, you know, I don’t think that we 

believe that is going to end retention, as many folks that retire are 

still working age. 

Ms. RUEDISUELI. We do have some concerns, but focusing on 

what we agree with, we do agree that it addresses the fairness 

issue. We also feel that it encourages a very positive habit early in 

life—that is, saving for retirement. 

Mr. STOVALL. I would agree with the other witnesses that we 

need to address the roughly 80 percent of people who get out without a transportable retirement benefit. However, we would caution 
16 

that it is critical if we go that route that we invest in financial literacy for service members. 

Mr. COFFMAN. Mr. Chairman, thank you so much for the additional time. I think it speaks to the subordinate relationship between the Army and the Marine Corps, and I yield back. 

Dr. HECK. Thank you, Mr. Coffman. 

In that regard, Sergeant Major, you are recognized. 

[Laughter.] 

Mr. WALZ. Thank you, Chairman. And I do want to take a moment and thank the chairman and the ranking member for a very 

fair and thoughtful approach to an issue that is very—it is a big 

lift, and you have both done it in a manner that is very much appreciated. 

And that leads me to having you here. I think this is an incredibly important panel. I thank all of you. 

You are literally representing millions of folks and the families 

of our warriors, and we must get this right, first and foremost for 

national security, to maintain the All-Volunteer Force, and to keep 

faith with those warriors, both past, present, and future. And so 

the thoughtfulness—and I want to thank all of you—that you put 

into your testimony and as we are starting to get this feedback is 

absolutely critical. 

This could very well have profound impacts, which I think it will; 

but it also has the potential to show how democracy should work 

correctly. And so I am, I think cautiously optimistic, as all of you. 

I think change is always difficult for all of us, but I think we need 

to have these discussions. 

And I think a couple things, if I could point out, some of you 

mentioned on this. And I don’t—while they are not necessarily 

hard-core, these—the big three, if you will, of recommendations, I 

would argue that the long-term impact might be even greater. 

This issue of collaboration of DOD and VA—I have spoken about 

this ’til I am blue in the face for decades. It is still promoting inefficiencies. It is wasting taxpayer dollars. It is causing undue angst 

for us. 

And I think to not look at that in greater detail is a lost opportunity. And I say that with the sense of a little bit of a chip on the 

shoulder that when they are coming for reforms, perhaps you need 

to reform the bigger system first before you look at the E–5s. 

And that is the thing that I think we need to be very clear—and 

I have said it in here, and again, I applaud all of you on this—my 

concern is as much cultural as anything. When the representative 

of the family says, ‘‘We have got a little bit of concern,’’ that is a 

big red flag that people are talking about it amongst themselves. 

And so when you mentioned, ma’am, this idea of the transferability of G.I. Bill, I have said it in here before, taking that guarantee away once it was promised is an absolute nonstarter. Do not 

do this. Do not break faith. Go back and rethink that one through. 

Those are the types of things that have profound cultural impact. 

So that brings me to some of the things that you have mentioned, and my colleagues have asked wonderful questions. Mr. 

Coffman’s question was one where I was getting at on this. 

The thing I would ask all of you is, is it an accepted frame that 

we have to take from the 20-year folks to make the transferability 
17 

a part of this? Is that just an absolute given? We can’t do both? 

We can’t retain the mid-career folks and have the 20 years and do 

something on portability? 

And I ask this just to put it out there. I know the Commission 

has done incredibly thoughtful work and thought it through, but it 

seems to me now we have pitted 20-year career folks against others 

and that was never anyone’s thought. 

So do you think that is—that has to be the way it has to be 

done? 

Colonel HAYDEN. Personally, I don’t. The question is what is it 

that you need in order to sustain the force and meet the force profiles? And the current retirement system has done that. 

As an old assignments guy, I enjoyed having the retirement system the way it was. I could put people on remote assignments and 

these other types of things late in their career, and I knew I had 

them to take them to 20. 

There is a course of nature associated with it, but it does really 

tend to see who is going to be able to stick around. It gave you that 

flexibility, if you would, as the services. Some think of it as very 

rigid, the current—— 

Mr. WALZ. There is a strange mindset in the military, too, of a 

bunch of people who have to be incredibly flexible and have their 

lives ripped out from under them at any given moment really like 

stability, risk aversion, and assurances. And so I come back again 

to this issue. 

We are framing this entire issue that it has already been determined—and I absolutely agree that it is unfair for someone to do 

tours and not get there. That is an absolute given. 

But I also have deep concerns that we are changing it on that 

other end that has been a great way to maintain and hold folks 

who could do better in the private sector but choose to stay. 

So, anybody else comments on that? If that frame is set, if this 

cake is baked already, and our choice is now either to not do anything and keep this current system or to go with the proposal 

alone, I am not certain that is it. 

Mr. GEHRKE. So I guess it is not either/or in theory. You could 

contribute to a 401(k) for every service member, as the Commission 

recommended, and keep the 50 percent system, realizing that the 

costs are going to skyrocket, and that is great by us if you want 

to make that decision. If you don’t want to make that decision, we 

think the Commission’s recommendations is the next best alternative. 

With that being said, the Commission also used a proven model 

by RAND in order to calculate what the force structure needs were. 

So it wasn’t necessarily an arbitrary decision by the Commission. 

They used a scientific model, and I think that needs to be taken 

into consideration. 

However, again, if you guys want to contribute to the TSP accounts for every service member, and why not bump it up even 

higher and keep this same 50 percent, we—the VFW would strongly support—— 

Mr. WALZ. I want people to think, as I give back my time, to 

think of the frame that we have been putting on this. Our greatest 

asset is our fighting force, and if someone says that is the cost, we 
18 

need to assume and talk amongst ourselves, is that a cost we are 

willing to absorb or are they telling us that. 

So I yield back. 

Mr. MACARTHUR. Thank you, Mr. Chairman. 

And I also want to thank all of you for being here. I agree with 

my colleague, this is a very important hearing because you do represent millions of stakeholders, and certainly part of this deliberation is what is important in the—on the military side and what we 

can afford and all of that, but it is equally important on the side 

of the people that you represent, the other stakeholders. So I appreciate you being here. 

Uncertainty and fear of change are two big drivers of human behavior. And of all these recommendations, it seems to me that the 

TRICARE recommendations are the most fraught with uncertainty, 

fear of change—how it affects cost, how it affects access, choice, all 

of those things. 

So I want to stay there for just a couple of minutes. 

Mr. Stovall, you laid out some—sort of a framework for evaluating this, and you mentioned three things: preserve and protect 

the strength of an All-Volunteer Force, the interconnectivity of the 

recommendations, and the impact on other agencies. And I think 

those are important. 

I might add a couple, and that would be optimizing the service 

member experience, which may be different than just protecting 

the strength of the force. And I would also add sustainability, because whatever we do has to be done in the context of finite budgets, and so we have to create something sustainable. 

Recommendation six, the TRICARE that we have talked a lot 

about, calls for increased use of commercial insurance plans. It 

gives choice to Active Duty members, not so much choice for nonActive Duty. 

And there are things I like about it: its access to larger panels 

of doctors; increased choice; the ability to move and flex and adjust 

the plans without an act of Congress, literally, which TRICARE requires. 

And yet, a number of you have expressed a concern about it, and 

I would just ask you to—particularly Colonel Hayden and Ms. 

Ruedisueli, you have both spoken about concerns with it, and I 

would like you just to develop those a little bit more for the panel— 

or for the hearing. 

Ms. RUEDISUELI. You know, military families understand that 

military medical readiness is critical. I mean, we are sending our 

service members out there and we want to know that the military 

medical personnel are appropriately trained to respond to battlefield injuries, so that is one of our—we understand that that must 

come first. And if this plan were to compromise military medical 

readiness, it would be a show stopper. 

Mr. MACARTHUR. Well, let’s stay there for a moment, because 

you both mentioned that. And I understand that you don’t want to 

have military medical facilities sitting unused during normal times, 

but are they really doing the same kinds of things? Is the normal 

day-to-day care of a military family commensurate with battlefield 

care and the kind of readiness that you are talking about? 
19 

Ms. RUEDISUELI. You know, the report and I think common sense 

would suggest no; that, you know, care for ear infections and strep 

throat and delivering babies probably doesn’t contribute as much 

as it should to military medical readiness. 

I think our concern is that, you know, what happens if there is 

a mass exodus of beneficiaries from the direct care system once you 

throw open the doors and, you know, provide unlimited access to 

civilian care, as well as introducing copays within the MTFs, which 

has not been done before. That is our concern is, you know, will 

the MTFs be viable if the bulk of their core business walks away? 

We also have concerns kind of on the flip side of that from the 

military family perspective. What happens if the services decide 

that some of these MTFs that are located in remote areas like Fort 

Polk, Louisiana, or Fort Riley, Kansas—what if they are not necessary for military medical readiness anymore and those are shut 

down and our families are left? Well, you have got your commercial 

health insurance, but unfortunately, the civilian provider assets 

aren’t sufficient to treat our military families. 

Those are our two main concerns. 

Mr. MACARTHUR. And, Colonel Hayden. 

Colonel HAYDEN. And I will piggyback on that because part of it 

is that the MTFs provide the family readiness aspect along with it, 

not just the military member readiness piece and their medical 

care and treatment, but also for the families, especially in those remote areas. 

And the thing that TRICARE does also right now is it provides 

predictability for that care, where a family would go from one location to the next with the multiple PCS [permanent change of station] moves and things that take place over a career. So that has 

some predictability along with it, where under this you are going 

to be shopping for what would be that insurance product in that 

new area, and some—and that is kind of where we look at the 

ECHO [Extended Care Health Option] proposal that is in there 

along with it. Is that proposal going to be there? Is that same 

ECHO program or the autism program that you were with at Base 

X going to be at Base Y? 

And so that is the other readiness piece that you have to look 

at. From our perspective, the current system actually tends to capture that retiree population and even some of that—the medical 

treatment that is done for families, and it uses that towards medical readiness. And that captured population is available, then, 

under the current TRICARE—under—— 

Mr. MACARTHUR. Thank you. 

Thank you, Mr. Chairman. I yield back. 

Dr. HECK. Ms. Stefanik. 

Ms. STEFANIK. Thank you, Mr. Chairman. 

And thank you, to all of our witnesses today for the work that 

you do representing the millions of stakeholders, whether they be 

service men and women, veterans, military retirees, or military 

families. 

My question actually adds onto Congressman MacArthur’s notes 

about health care quality and your comments, Ms. Ruedisueli— 

that is—I have a tough name too. That is okay. 
20 

I represent Fort Drum, which is in New York’s 21st District in 

northern New York in Jefferson County, and our health care is provided off post to our service men and women. We have a very 

unique partnership with Samaritan Hospital, and it is unlike any 

other Army installation across the country. 

The same goes for our education system. Our military families 

aren’t educated on post; they go to school in the public school system, along with other members of the broader community. 

My question is, how do the recommendations regarding the Federal Employee Health Benefit program—how would that have an 

effect specifically on soldiers who are serving at Fort Drum in the 

10th Mountain Division because of the unique relationship we have 

with hospitals? 

Ms. RUEDISUELI. I never thought I would feel so fortunate to 

have spent a few years at Fort Drum, but I am very familiar with 

what you are talking about. You know, I don’t see that it would 

have that much of an impact. I mean, right now, as you mentioned, 

there is a very strong relationship. Most families receive the bulk 

of their care out in the civilian network. 

I think where the changes would occur is families would still 

have to, under the new plan, be educated to pick the right commercial health plan so that they have got the appropriate coverage that 

fits their family’s needs. I think that would be more complicated 

than it is now, where because the bulk of the medical care is automatically provided off post, families are simply—they are considered TRICARE Prime, they realize there will be no out-of-pocket 

expenses. As long as they follow the referral and authorization 

rules it is very straightforward. 

Under the commercial plans there would be more education 

needed, but I think people could achieve pretty much the same results by picking the right plans. 

Ms. STEFANIK. And then my follow-up is on the education system. So the report discusses a military dependent student identifier. How would that be utilized for an installation like Fort Drum, 

where students go to school off post in a non-military school? 

Ms. RUEDISUELI. One of the benefits of the military student identifier is that it allows aggregate reporting of military student performance. So it would allow us to track how military students are 

doing on standard measures of academic performance, whether it 

be graduation rates, absenteeism, college acceptance. 

Those would all be valuable information to have as we decided 

where to direct resources to installations that do educate their students on post, but it would also be helpful to understand how the 

local communities are doing with our military students, as well. 

Ms. STEFANIK. Great. Thank you for the answers. 

I think that Fort Drum’s model is quite unique, and it is actually 

a model for other military installations across the country in terms 

of the high quality of health care provided and the—how intertwined our community is with Fort Drum. And thank you for your 

time at Fort Drum. 

I yield back. 

Dr. HECK. Mr. Russell, recognized for 5 minutes. 

Mr. RUSSELL. Thank you, Mr. Chairman, and thank you for your 

indulgence in letting me join you today. 
21 

And thanks, for the panelists, for all that you represent. 

I guess a couple of important questions come to my mind. 

One, when the draft was eliminated, part of the retention to get 

people to 20 was to provide good incentives. And I have not heard 

any discussion addressing the retirements as being retainer pay. 

They are not property. 

We, when we retire from the service, are on half rations for half 

duty and are subject to recall until the day we die. During the Gulf 

War I recall a 67-year-old pharmacist who had served in World 

War II being recalled back to duty, quite to his surprise. 

And so I have not heard anyone in any of these proposals address the retainer pay issue and what that means. Would someone 

care to address that? 

Colonel HAYDEN. You are absolutely right. There is still that retainer aspect associated with the current retirement system, that 

you can still be recalled and brought back. 

And we actually used that during my time on the Joint Staff on 

the Air Staff. We used it for the most recent conflicts after 9/11. 

We are bringing people back on and out of retirement status and 

back on Active Duty in order to meet some of the critical skills that 

the Air Force needed at the time. 

So it is an element that is important to remember. What we are 

doing with this proposal, there is that portion that is being devalued. It is providing, if you would, what would be a 401(k) that 

is more of that transportable career device. 

But our concern is is that—still that draw, that whole aspect of 

drawing people out to 20. I would be more than happy to give a 

transportable career device to everybody who leaves, and that is 

one of the things that we—— 

Mr. RUSSELL. Well, and I think we have to address the issue, because it gets into not only retention of the force, but it gets into 

retention of skills in times of national emergency. And I have not 

heard anyone in any of the reports or looking at any of these things 

that addresses the issue, and I think it is vital. 

A second one that I have not heard addressed is because retirements are retainer pay, they hold certain legal differences over a 

401(k). Now, the Uniformed Spouse Protection Act, in the early— 

late 1980s, I guess, it tried to address some of that to compare it 

more towards property, but it left certain provisions still unique to 

what retainer was. 

And that may not sound like something understandable, but 

what it means is this, is that if you serve 3 years—and I know a 

constituent who lives in Edmond, Oklahoma. He was the—one of 

the sergeant—the chief master sergeants of the Air Force. 

He married within 2 years. By the third year, as a young buck 

sergeant, his wife left him. Two years later he married a bride that 

he had for the next 30 years. 

However, when he retired with 35 years service from the Air 

Force, wife number one came knocking at the door for 50 percent 

of his retirement. That is a problem. 

And so, you know, we are digging into things that it sounds 

good—we talk about portability, we talk about 401(k), and all of 

that is appreciated. But there are some serious retention issues 
22 

here that we have to address before I am ready to dive onto any 

of this. 

As a military retiree, I get it, having raised five kids in uniform—I should say my spouse, as I was gone on multiple deployments. And I do share your concerns on the military docs and the 

readiness. I know our chairman appreciates much of that, as well, 

in his capacity. 

Those are important factors for readiness, and I would hope that 

as we look at these things that we could address that. 

And the last question I have for whoever would like to answer 

it, you know, pays are set by law. Having pushed infantry soldiers 

for much of my adult life, you know, if you give Joe the choice between $35 or $75 to buy the best retirement plan for the end of 

his career, I can tell you what he is going to do. He is going to opt 

for the cheapest plan if he is forced to take a plan at all. 

And so how will you address—do you envision any penalties that 

will come about if you leave before 20 years service? Is there benefit if you stay longer? Because if you make this transportable before 10 years, I fear that our already dwindling force will get very 

much smaller. 

And I yield to whoever would like to answer that. 

Mr. GEHRKE. So I think, as the Commission pointed out, that it 

would be an automatically opt-in for the 401(k), so they would be 

contributing automatically, immediately from day one. And I think 

with the financial literacy, being a dumb Marine myself, enlisted 

type who served with a light armored reconnaissance, same unit as 

Congressman Coffman, I can still do my numbers and I can understand the compounding interest of that 401(k) and the long-term 

benefit that it would have for me. 

But that financial literacy part is crucial, because they have to 

understand that that is part of the benefit. 

And then I think the retention pay is also a crucial part, which 

Congress or the Department should be able to lower whenever they 

want, and that should be able to keep people in and pull them to 

those 10 years. 

Mr. RUSSELL. Thank you. 

Mr. Chairman, I yield back my time. 

Dr. HECK. Mr. Knight. 

All right, well they haven’t rung the bell yet so we will continue. 

One of the Commissioners during their presentation when talking about the health care proposal basically said that TRICARE 

was broken and that it couldn’t be fixed. Kind of scorched earth, 

come on in and start from the ground and build something up. 

Real quick, this is a simple yes or no: Do you believe that 

TRICARE is that broken that it cannot be fixed and it needs to be 

replaced with something else? 

Mr. Bousum. 

Mr. BOUSUM. The majority of members of my association would 

say no, it is not broken. 

Dr. HECK. Okay. 

Mr. Gehrke. 

Mr. GEHRKE. TRICARE is in a death spiral. 

Dr. HECK. Okay. Yes or no? Come on, Marine. 

[Laughter.] 
23 

Mr. GEHRKE. The VFW does not have a resolution on that proposal—— 

Dr. HECK. Okay. 

Colonel Hayden. 

Colonel HAYDEN. No, TRICARE is not broken. 

Dr. HECK. Okay. 

Mr. Neiweem. 

Mr. NEIWEEM. We would say no. 

Ms. RUEDISUELI. We would say yes. 

Mr. STOVALL. No. 

Dr. HECK. Okay. Thank you. 

Mrs. Davis. 

Mrs. DAVIS. Let me go back to the issues that we are talking 

about in terms of the retirement for a second, with skill sets that 

people have and the opportunities to continue them. One of the 

issues that is combined with that but maybe we don’t state it as 

clearly has to do with leadership. And I know that when we have 

spoken particularly with the Marines, that tends to be perhaps 

more of an issue that was raised. 

I wonder if in your opinion that is something that we would essentially lose, perhaps—I don’t even want to use the word ‘‘lose’’ as 

much as not be able to capitalize on as much in the services after— 

if the 12 years somehow signaled that people were ready to leave. 

I think it is that midlevel leadership that actually is a hallmark 

of our military. 

Where do you place that, or do you think it is not as big an issue 

as perhaps some would suggest? 

Mr. BOUSUM. Well, I will take a stab. I think that even in the 

current environment that there are people who get between 12 and 

16 years who actually no longer want to be serving, but that they 

know that they need to get to 20 to get the retirement. And so I 

would actually ask open-endedly, does the Department actually 

want those individuals? 

Mr. GEHRKE. So I was in the Reserves, and at 6 years after I had 

done—already done a deployment to Iraq I was able to get out. I 

did not get out. 

I postponed my discharge for another 2 years so I could go to Afghanistan. I had nothing in mind except the welfare of the Marine 

next to me when I was choosing to go to Afghanistan and reenlist 

in that contract. Twenty years did not enter my mind. 

In hindsight, I realize that I financially would have been better 

off if I would have continued in my civilian occupation in the long 

term because my civilian occupation at that time was matching my 

401(k). 

Colonel HAYDEN. It is an interesting question, and one of the 

things, as a former chief of military personnel policy, what we 

would look at is how do you retain the force. And the thing is you 

also have to take a look at it just—you can’t look at it just as the 

retirement benefit; you have to also then start looking at all the 

personnel policy aspects associated with how you retain a force. 

What is the profiles that you need? 

It has always been a little bit better to have maybe too many 

people at that midlevel NCO and officer corps to draw from, and 

you use the promotion system many times to, if you would, try to 
24 

determine who are the leaders that you are going to go ahead and 

continue on to try to make that career. So you have to look at how 

you play both of them—the promotion system as well as the retirement system, in order to draw the people that you really need out 

there to that 20-year point. 

The problem is that in difficult budget times that we are in right 

now, sometimes we don’t use the tools to our advantage or actually 

we do drawdowns like we are right now with what we consider 

with dignity. And what I would like to, you know—the one thing 

that the Army is, if you would, right now, instead of using the tools 

that you have provided them—temporary early retirement authority, voluntary separation pay—where you could incentivize people 

to step aside, we have continued to kind of use what is more the 

budget-driven aspects and use the cuts of RIFs [reductions in force] 

and SERBs [Selective Early Retirement Boards] and other things 

like this to get people to move to the side, or we just denied reenlistments. 

And those are the kind of what I consider draconian tools, where 

we really had strong tools available to recognize people’s service, 

allow them to leave even with a 15-year retirement, but we haven’t 

been able to do that. 

Mr. GEHRKE. If I can say something real quick, piggybacking on 

what Colonel Hayden said, right now we are pushing people out at 

the 8- and 12-year point. We want them to get out. We are pushing 

good Marines. We are pushing good captains and good staff sergeants out of service after 8, 10, and 12 years, and we are pushing 

them out with nothing. 

So I would consider that when we are talking about force structure and retaining that force structure. Right now we are acting— 

the Department of Defense is saying it is too big for our current 

mission; we need to push these guys out. And they are pushing 

them out with nothing. 

Colonel HAYDEN. And if I could just piggyback on that, I would 

say that once you get to the 6-year point there is such a thing as 

called involuntary separation pay, so if people are being forced at 

that point in time, there is a years-of-service element. For instance, 

if you are at 10 years of service you get 1 year of your base pay 

as an involuntary separation pay. 

Now, I would think that if you are involuntarily letting people 

go one of the things we could look at is allow them to take that 

involuntary separation pay and invest that into a—into the TSP or 

a 401(k), change the IRS [Internal Revenue Service] rules to allow 

that to happen, and then recognize that as some type of transportable career device along with it. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

Let me just raise one point that has not been addressed in all 

of this when we talk about reforming the system that, well, first 

of all, I—let me just say to the retirement system that, I mean, it 

is antiquated, and I get the point about incentivizing people to stay 

for 20 years. But this is my father’s retirement system. 

My father retired from the United States Army in 1964, where 

prior to I think when I came in in 1972, the system had dramatically changed when they went to an all—when they were 
25 

transitioning to an all-volunteer system, where they dramatically 

increased the pay from what it was. 

And so the system really was designed initially as a—basically 

you got low pay, but significant benefits, you know, utilizing the PX 

[Post Exchange] and the commissary, those discounts, but relatively low pay prior to being an All-Volunteer Force. And the compensation at the back end—the compensation was at the back end 

in terms of 20 years being at 50 percent. 

We are living longer now. The pay is much more competitive 

with that of the private sector. 

One thing that amazes me now, with retention where it is—retention is very high right now—is that we still have a promotion 

system that is tied to basically a lower retention system—I mean, 

a lower retention rate, whereby people are, in fact, being forced 

out, that if you come up for promotion, you are passed over a couple times, you are out. 

And it is different when we started that, where the quality 

wasn’t what the quality is today. The quality today of the men and 

women who serve this country is the highest that it has ever been 

historically in this country. And we are forcing people—good people 

that want to stay in—we are forcing them out with a promotion 

system that doesn’t reflect the fact that we have high retention. 

No organization outside the military would ever have—would 

ever do what we are doing now, in terms of if they had a very high 

retention system they would slow down the promotion rate, and by 

slowing down the promotion rate we are giving people more time 

to increase their technical proficiency within their military occupational specialties. And we are, in fact, we are reducing the pipeline 

in terms of training costs to replace them. 

So I think one of the things that we need to look at—and I know 

it is painful and it doesn’t sound good, but is slowing down the promotion system so we stop pushing people out at the rate that we 

are. 

I don’t know, does—would anybody like to comment on that? 

Colonel HAYDEN. We couldn’t agree more. It would be nice to be 

able to retain even some of the great folks that we are forcing out 

of the system right now. 

It is not always just with the promotion system. We are also 

doing it with what we would call in the Air Force ‘‘career job reservations.’’ These are when you come up on career points on the enlisted side of the house, denying reenlistments or forcing them to 

retrain in the other types of aspect. 

But what we have got right now with the—with sequestration, 

the difficulties that that has put the service chiefs in, especially in 

the Army and the Marine Corps to start bringing down the forces 

associated with it, we are using end strength as an offset to—to 

bring down personnel costs. And we have been doing other things 

like capping pay and changing the commissary benefit or the housing allowance, and things like this, that is now going to cause even 

more what I think is more of a retention problem. 

I personally believe that what you see right now is the true retention of the force is being masked. It is because we are in the 

drawdown. When you take a look at the DEP [Delayed Enlistment/ 

Entry Program] bank for the Army last year, I think it was in tes-
26 

timony that instead of entering the year with about a 50 percent 

of their DEP bank, they entered the year at about 33 percent of 

their DEP that was ready to ship in the next year. 

And so with those kind of indicators, the true retention is being 

masked as we draw down the force. I think once we get through 

this and now that the economy is coming back, and I am hearing 

that the recruiting numbers are starting to go up for the Army and 

the Marine Corps, that we may have a little bit more of a difficult 

time meeting the recruiting as well as the retention numbers once 

we are past this drawdown. 

Mr. COFFMAN. Well, I would argue—I would agree with you that 

it does mask—the reduction in force that is currently ongoing to reduce end strength does, in fact, mask the retention problem. But 

I think it is still—I think we are so slow to update policies in the 

military, whether it is the retirement system, and we are debating 

that today, an antiquated system of—that was there in I think the 

Second World War, to the rate of promotion that we have that 

doesn’t reflect retention. 

With that, Mr. Chairman, I yield back. 

Mr. MACARTHUR. I am going to stay on health care, although I 

am interested in all 15 of these and they all could have hearings 

all of their own, frankly. 

I have noticed in all of the hearings that we tend to look at 

TRICARE in a very binary way. It is either good or bad. It is either 

broken in a death spiral or it is the, you know, the greatest thing 

and our service members love it. 

And even going down the panel, when you were given the opportunity to give a one-word answer, the yeses and the noes were 

equally emphatic. And that fact is, we will never know, as decisions 

are made, how it is going to flow and what the unintended consequences are and how it will be—we are simply not going to know. 

I come out of the business world and I would never, ever do 

something in my company that affected thousands of people without piloting it, testing it. We are talking about something here that 

affects millions of people. 

And I know this is a better question for probably the heads of 

our military services, but from your perspective, is there any way 

that you can conceive of piloting some of these changes to 

TRICARE so that we can actually assess—not study, not consider 

how it might go, but actually do it and assess how it goes? Be curious for any of you to respond to that. 

Colonel HAYDEN. First of all, I think that there is an opportunity 

with the FEHBP [Federal Employee Health Benefit Plan]-like system proposed by the Commission and with—where I look and see 

that the Guard and Reserve has had a very difficult time of access, 

is potentially looking at a pilot for this FEHBP-like system for the 

Guard and Reserve and try to look to expand that area associated 

with it. 

The other thing that we would recommend as an association is 

to at least use these multi-service areas that are out there the Defense Health Agency [DHA] has and look to at least pilot there, 

where you have a single budget authority, that one of the commands, if you would, one of the services is the executive agent and 
27 

would then have oversight of that budget for that multi-service 

area. 

DHA says that they wish to go to that, but we believe it has been 

a little bit more of a snail’s pace and we should look to try to do 

that and use those at least as a pilot to see if you can gain efficiencies within those multi-service areas. 

Mr. BOUSUM. Representative MacArthur, just as Colonel Hayden 

had said, I—while it is not a question I have asked of my members 

to weigh in on when I—when we talked about these 15 recommendations, I think that the Guard would actually—the Active 

members would welcome being kind of the guinea pig for something like that. 

Mr. MACARTHUR. Any others? 

Ms. RUEDISUELI. We have talked about it internally. I think 

there would be a lot of challenges with doing a pilot. 

The plans that are suggested by the Commission are not exactly 

like FEHBP. They would have to be customized for our risk pool, 

for the benefits that are specific and necessary for military families. So it is not like you could just offer them FEHBP and expect 

to have, you know, a legitimate pilot. I think there would be a lot 

of challenges. 

But we do appreciate the idea of testing this out before doing a 

full rollout plan. 

Mr. GEHRKE. I think that the challenges of a pilot is the civilian 

health care industry or economy is not a national economy. It can 

be in a localized economy, whereas TRICARE is pretty much national more or less. It is a national plan. 

And what I am alluding to is your FEHB plan in California is 

going to be different than what a plan looks like in Oklahoma. And 

the costs are going to be associated different. 

So you may not get a fair analysis of what the future of that 

health care is going to be unless you do it countrywide in different 

locations to gauge what the true costs are. 

Mr. MACARTHUR. All right. Thank you. 

I yield back. 

Ms. STEFANIK. Thank you, Mr. Chairman. 

I want to touch on a recommendation that I don’t think has been 

raised yet, and that is improving access to childcare on installations. And as I am reading and going through the report it says 

that the Commission found that the demand for military childcare 

often exceeds availability, resulting in more than 11,000 children 

on waiting lists as of September 2014. 

Can you talk about why access to high-quality childcare is an important aspect of readiness and whether or not you agree with the 

Commission’s recommendation that Congress reestablish the authority to use operating funds for construction projects for expanding and modifying child develop program facilities on installations? 

Ms. RUEDISUELI. You know, I think there is the very obvious link 

to readiness when you are talking about dual-military families, 

when you are talking about single-parent military families, where 

their ability to do their jobs is directly linked to the availability of 

childcare. I think if you take a little step away from that, though, 

there are other links to readiness. 
28 

You know, spouse employment in general is very linked to the 

availability of childcare. It undermines readiness if you have people 

leaving the force because their spouse cannot maintain employment, and that is a driver for leaving. 

Furthermore, there is the link to readiness during deployments. 

Childcare during deployment is critical for families, for the stay-athome—the at-home parent to have some respite from childcare to 

be able to do basic things like go to doctor’s appointments. 

So I think there are many ways that the availability of childcare 

links to readiness. 

We agree with the Commission’s report. There doesn’t seem to be 

a lot of accurate data out there, but anecdotally we hear virtually 

everywhere that there are wait lists for childcare. 

We appreciate the fact that they are talking about expanding 

child development centers, but we would point out that 70 percent 

of military families live off the installation and the child development center might not be the best solution for them or the only solution for them. And so we would encourage decisionmakers to look 

beyond just expanding CDCs [child development centers] into programs like the childcare fee assistance programs and other innovative solutions that might help to address this issue. 

Ms. STEFANIK. Thank you. 

Any other comments on that subject area? 

Colonel HAYDEN. Actually, we are in full support of what NMFA 

had to say. 

Ms. STEFANIK. Thank you very much. 

I yield back. 

Mr. KNIGHT. Now I am up. 

You know, I would like to talk just about a couple areas. I know 

that when we went down the row about the TRICARE there was 

a little bit of difference there, and that seems to be the biggest 

sticking point with me on this subject, and I will talk about the 

other part here in a minute. 

But if we can talk about TRICARE and basically talk about the 

people who think it is broken—if it is not broken, do we think that 

this will work, that this will continue to move forward for the next 

15 or 20 years without us doing anything to it? And if you do think 

it is broken, where do you see it going? 

Ms. RUEDISUELI. Well, we are one of the organizations that 

thinks that it is broken, and, you know, our concerns basically are 

that, yes, you can continue to deliver the benefit as it looks today, 

but it will be eroded. You know, over the years there have been increasing pressures to increase fees and out-of-pocket costs for families. Our concern is that even in the things that people can’t see, 

like provider networks, that those would be eroded because we are 

cutting reimbursement rates. 

So our concern is that you can’t really compare the TRICARE of 

today to TRICARE Choice, what is proposed, because the TRICARE 

of today is not going to exist 5 years down the road; it will have 

been chipped away by these various budgetary pressures. 

Mr. GEHRKE. I think the VA health care system may be a good 

analogy. If you look at where VA was 5, 7, 10 years ago, you were 

seeing then access issues—same type of access issues that you are 
29 

seeing now: long appointment wait times, not being able to get in 

to see the doctor when you needed to or when you wanted to. 

If TRICARE keeps on its path you are going to see the same 

thing that happened, you know, in Phoenix, last year, the difference being is that there is no real accountability in the same 

way that there is accountability for the VA health care system. 

When doctors aren’t seeing their patients and denying patients, 

there are going to be no lists at all. They are just going to be denied and the military health care beneficiary is going to have to 

keep on looking somewhere else. 

I think a good example is I called up the top 20 hospitals in the 

country. Eleven of them accepted—did not accept TRICARE at all. 

Three of them only accepted TRICARE Standard; and I think one 

of them only accepted Prime, Standard, and all the different 

TRICAREs. 

I imagined that if TRICARE goes down the same path in 5, 10 

years you are going to be at zero. Will the proposed plan be better? 

I guess I can’t say. 

Mr. KNIGHT. Okay. Well, you know, I am going to agree with 

most of those comments. 

I think that, you know, not just TRICARE but in the medical industry we see that across the board, where a lot of things are not 

accepted anymore and they are just not being provided or they are 

not being accepted by a lot of the industry. And I am afraid that 

that is where TRICARE is going. 

I will go on to my second. We talk about this kind of 2-year vesting period, where you are 2 years and a day through your enlistment or un-enlistment, and then you are kind of through a vesting 

period. 

You know, that was one of my first questions is, I don’t know of 

anything that you get vested after 2 years except for California 

teachers get tenure. Outside of that, vesting is typically a 5-year 

or 10-year period because that is kind of the retainment and that 

is a commitment that we have accepted, and that is where your— 

you get that level of commitment. 

Is that a problem for any of your organizations, or is that something that is accepted, that we love the 2 years? Or do you think 

that that is going to be an issue? 

Mr. BOUSUM. Actually, it is funny you mentioned that. Your 

staffer actually vested after 2 years. Staff members on the House 

side actually have that because of the election cycle. 

Mr. KNIGHT. I am a long way away from California so I can talk 

about them instead of talking about these. 

Mr. BOUSUM. Understood. 

I don’t think that our associate would have a problem. 

Colonel HAYDEN. It is an interesting twist because truthfully, 

when you take a look at the MCRMC’s [Military Compensation and 

Retirement Modernization Commission’s] proposal, there are a lot 

of variables. And so one of the variables is just the vesting piece. 

One of the things we would say is that if you get the—you know, 

we have just gone through and provided the post-9/11 G.I. Bill— 

a wonderful, wonderful benefit that we have—that now service 

members get just at the 3-year point. So you could easily see that 

the vesting could actually shift to somewhere after the first term 
30 

of enlistment, after the initial Active Duty service commitment, 

which typically is around the 4-year point—4- or 5-year point—and 

then start to look at potentially doing more of a match, if you 

would, beyond that. 

Mr. KNIGHT. Sure. 

Colonel HAYDEN. Because at that point now you have gone 

through, you have done what you have signed up for; we have provided the post-9/11 G.I. Bill as a service, if you would, for that first 

term. And then beyond that, if you are staying with the company, 

now it is up to the company to start to investing back in you, and 

that is another one way of taking a look at it. 

Mr. GEHRKE. I asked the Commission the exact same thing, actually, and the premise of my question was, you know, if I leave any 

company that offers a 401(k) match after a year I would keep that 

401(k). Why shouldn’t service members? 

Their response, which I think is in line with my experience, is 

that usually the washed-out point of service members, when you 

find out that they cannot transition into military service, is that 2 

years. So people who you know are not going to fulfill their obligation usually wash out by 2 years, and that is why they chose that. 

Mr. KNIGHT. Thank you, Mr. Chair. I yield back. 

Mr. RUSSELL. Thank you, Mr. Chairman. 

Go to an issue maybe a little more lighthearted, one we can all 

relate to. The Army and the Air Force have been sharing commissaries for a long time. The Navy and the Marines, despite their 

love for one another, have also done the same. 

Why would it not be possible to combine the two without efficiencies? As a career soldier, you know, I don’t advocate necessarily 

that posts and bases need to be anything but self-contained. We 

have done that since the days of, you know, Vauban forts and 

stockade outposts. You know, we have to be self-contained, both 

electricity, with provisions, all of that. So I would never really advocate their privatization. 

But why could we not combine two services with two services 

and make it more effective? Be interested in your views. 

Mr. NEIWEEM. Sir, if I could just say—— 

Mr. RUSSELL. Oft times you get overlapping circles and you go 

where the overlaps are. And, you know, the gulf is not as wide. 

I would be curious, yes, Mr. Gehrke? 

Mr. GEHRKE. I understand that the Marines were opposed to 

merging these systems. Being the few and the proud, I can respect 

that. 

However, I think they may have changed their tone or it changed 

my mind when I found out that the commissary system in its current form has more SCS [stock control system] staff than the entire 

Marine Corps has SCS staff. So when you look at those numbers 

you think there is room to merge and to create some synergies 

there. 

Mr. RUSSELL. Yes. I would agree. 

Ms. RUEDISUELI. You know, we are not opposed to the idea of 

consolidation, and we acknowledge there probably would be efficiencies there. I think our concern is that with the reduction in the 

appropriations for the commissary, you are expecting these efficiencies to then be able to pay for all the operating costs, and I 
31 

think that is where the risk comes in. If that doesn’t pan out that 

way, you are probably talking about the death of a benefit that is 

very important to a lot of military families. 

Mr. RUSSELL. Yes. And I would agree, it is very important, which 

is why I was smart enough to retire near an Air Force base, being 

an Army retiree. 

But on that line, has there been any study to show that maybe 

there is not a benefit to their combination, that there is efficiency 

already and their combination would not create it because—you 

know, I am just curious. 

Colonel HAYDEN. There have been studies at least to look and 

combine, if you would, the exchange systems. And it is—there has 

been pushback on several of those studies, and we are still where 

we are even though that the Army and the Air Force were able to 

merge, if you would, their exchange systems. 

But you have to take a look at the exchange systems on what 

they actually do. The Navy, for instance, has their lodging associated with the way they do the Navy exchange. 

And so it is a business model that is, if you would, that is built 

on profit, and that is the way the exchange systems are now. And 

then the commissary is actually an appropriated more of a—— 

Mr. RUSSELL. So you think that the circle could go wider and get 

the MWR on the Army and—— 

Colonel HAYDEN. Well, I think—— 

Mr. RUSSELL [continuing]. The Air Force side, or—— 

Colonel HAYDEN. I think the important thing is that when you 

look at a consolidation of this, you have to see the business models 

that are out there with the different services and why the consolidation may not be in the best interest of all unless you are trying 

to bring in what would be the lodging model and all these other 

types of aspects along with it. 

But I am, along with Karen, the question really comes back is 

now you are end up taking away, if you would, the subsidy that 

was associated with the operation of the commissary, and you are 

introducing this business model. And is that business model really 

going to save, in the end of the day, are the—you are still going 

to see the 30 percent savings when you are at the commissary, and 

are you going to get the MWR funds that you need in order to—— 

Mr. RUSSELL. Put money back in, rather than take—— 

Colonel HAYDEN. So I think you end up robbing Peter to pay 

Paul on this. 

Mr. RUSSELL. And thank you. 

Thank you, Mr. Chairman. 

Dr. HECK. So one thing we haven’t talked about probably on purpose is SBP [Survivor Benefit Plan]. And really, you know, so the 

Commission makes a recommendation on how to potentially move 

forward and address the SBP–DIC [Dependency and Indemnity 

Compensation] offset—again, prospectively, fully recognizes it is 

not going to do anything for anybody who is currently impacted by 

the offset. 

As you may recall, the recommendation is that for those individuals who want to get full SBP if they also receive DIC is that they 

would pay an increased premium annuity—roughly 11 percent, as 
32 

opposed to the lower premium annuity at I think 6 percent, and 

not have the offset. 

Thoughts? I mean, I—to me it seems—I don’t know. I have already filled out my election notice when I hit 20 years so it is not 

going to affect me, but, you know—and again, realizing that we are 

not talking about the more strategic issue of whether or not there 

should be an offset to begin with, but any ideas of whether or not 

that is something that is worthwhile, something opposed? I mean, 

is that one of the, you know, easy yes, check the box, that should 

be an easy one to do? 

Colonel HAYDEN. Well, MOAA actually opposes the proposal. 

What we see is, like you had mentioned, sir, is that it doesn’t do 

anything for the 60,000 survivors that are out there right now that 

are affected by the SBP–DIC offset. 

But the other thing is is because of the way that the premium 

is set up, what you are doing is really—the people who would take 

advantage of the higher-paying premium are those that are the 

most disadvantaged. The ones who would look at the SBP–DIC— 

the higher-paying premium for SBP—are the ones who are actually 

what I would think are the 100 percent disabled right now. They 

themselves are going to think that, ‘‘Oh, yes. When I die I am going 

to die of a service-connected disability.’’ 

And if you are 100 percent and you go through that—there is 

that period of window that if you get I think it is the 10-year point, 

you are automatically—whatever you die of, you are going to die 

of a service connection. 

The idea is that you are going to prey on the ones who have the 

most severe disabilities. They are the ones who are going to find 

it to their financial advantage to try to provide for their survivors 

that way, and they are the ones who probably are unable, then, to 

work—or the majority of them maybe have difficulties working 

then when they get out of the services. 

So for our perspective, it is nice to give an option like that, but 

it is only to the advantage of those that actually think they are 

going to die of service connection. 

Mr. GEHRKE. The VFW would agree with everything Mike said. 

We really need to do something about the current beneficiaries who 

are eligible. 

But the current SBP–DIC is certainly untenable. I think the 

SSIA [Special Survivor Indemnity Allowance] ends within the next 

year or two, so you do need to find some alternative to that. And 

we think the current plan—or the proposed plan is the best thing 

that has been proposed other than completely eliminating the offset. 

So we think the service members do need a—some sort of better 

option than what they are provided now. 

Dr. HECK. Okay. 

Anyone else? 

Mr. Stovall. 

Mr. STOVALL. Mr. Chairman, this is something that the American Legion opposes. One, like as mentioned before, it doesn’t address the current injustice facing the tens of thousands of beneficiaries. 
33 

And then lifting the offset for those who follow on only to charge 

a higher premium is a nonstarter for us. We feel that this recommendation doesn’t solve the problem. 

Dr. HECK. All right. 

This is the first time we have ever exhausted the panel—the 

members of questions. 

I want to thank you all for taking the time to be here, for giving 

us your insights. Obviously it has been mentioned by several of the 

members, just the sheer breadth of your membership and the folks 

that you represent—you know, in disclosure, I belong to three of 

your organizations seated at the table—really means a lot to us. 

And I want to assure all of you that are here today and those 

who may be seeing the hearing or listening that we will be very 

deliberative in this process as we review the recommendations of 

the Commission before we make recommendations to move forward 

to the full committee. 

So again, thank you for your time today. 

There being no further business, the hearing is adjourned. 

[Whereupon, at 3:38 p.m., the subcommittee was adjourned.] 

A P P E N D I X 

MARCH 25, 2015 

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Æ