U.S. GOVERNMENT PRINTING OFFICE

69–952 DTP WASHINGTON : 2001

FULFILLING THE PROMISE

HEARING

BEFORE THE

SUBCOMMITTEE ON THE CIVIL SERVICE

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

APRIL 3, 2000

Serial No. 106–183

Printed for the use of the Committee on Government Reform

(

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(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

LISA SMITH ARAFUNE, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON THE CIVIL SERVICE

JOE SCARBOROUGH, Florida, Chairman

ASA HUTCHINSON, Arkansas

CONSTANCE A. MORELLA, Maryland

JOHN L. MICA, Florida

DAN MILLER, Florida

ELIJAH E. CUMMINGS, Maryland

ELEANOR HOLMES NORTON, Washington,

DC

THOMAS H. ALLEN, Maine

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

GARRY EWING, Staff Director

SUSAN WAREN, Professional Staff Member

BETHANY JENKINS, Clerk

TANIA SHAND, Minority Professional Staff Member

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C O N T E N T S

Page

Hearing held on April 3, 2000 ................................................................................ 1

Statement of:

Day, Colonel George ‘‘Bud’’, USAF retired, Class Action Group; Colonel

George Rastall, USAF retired of the Retired Officers Association; and

Stephen W. Gammarino, senior vice president, Blue Cross/Blue Shield

Association ..................................................................................................... 19

Flynn, William ‘‘Ed’’, Director, Retirement and Insurance Programs, Office of Personnel Management; and Rear Admiral Thomas F. Carrato,

Director, Military Health System Operations, TRICARE Management

Activity ........................................................................................................... 48

Shows, Hon. Ronnie, a Representative in Congress from the State of

Mississippi ..................................................................................................... 7

Letters, statements, etc., submitted for the record by:

Carrato, Rear Admiral Thomas F., Director, Military Health System Operations, TRICARE Management Activity, prepared statement of .......... 61

Flynn, William ‘‘Ed’’, Director, Retirement and Insurance Programs, Office of Personnel Management, prepared statement of .............................. 51

Gammarino, Stephen W., senior vice president, Blue Cross/Blue Shield

Association, prepared statement of ............................................................. 36

Rastall, Colonel George, USAF retired of the Retired Officers Association,

prepared statement of ................................................................................... 25

Scarborough, Hon. Joe, a Representative in Congress from the State

of Florida:

Army brochures ......................................................................................... 45

Prepared statement of ............................................................................... 4

Shows, Hon. Ronnie, a Representative in Congress from the State of

Mississippi, prepared statement of .............................................................. 11

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FULFILLING THE PROMISE

MONDAY, APRIL 3, 2000

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE CIVIL SERVICE,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9 a.m., in the City

Council Chambers, City Hall, Government Street, Pensacola, FL,

Hon. Joe Scarborough (chairman of the subcommittee) presiding.

Present: Representatives Scarborough and Cummings.

Also present: Representative Shows.

Staff present: Garry Ewing, staff director; Jennifer Hemingway,

deputy staff director; Miguel Serrano, counsel; Susan Waren, professional staff members; Bethany Jenkins, clerk; Tania Shand, professional staff member; and Earley Green, minority assistant clerk.

Mr. SCARBOROUGH. I would like to call this hearing to order, the

Subcommittee on the Civil Service, for Government Reform.

I want to welcome all of you here again. This hearing of course

is a very positive, exciting followup to hearings that we held across

northwest Florida a few years back on TRICARE, and in those

TRICARE hearings we had an outstanding turnout and participation from Panama City over to Pensacola, and of course we got a

lot of testimony into the record, and we saw some very positive

changes in the TRICARE system as it pertained to northwest Florida that at least we were getting more response back from the carrier and the government than we had had in the past.

Unfortunately nationwide it did not go far enough, and unfortunately there is still a belief that the promise that was made to our

fighting men and women and their dependents has been broken.

So I am glad that we are now in a position where we are actually

being able to use that information and getting to the point where

I really think we can make some definite progress on Capitol Hill

this year, a legislative process that begins the long journey toward

keeping the promise that the Federal Government made again to

the men and women that fought and protected and defended this

country.

Today our committee is going to discuss extending enrollment in

the Federal Employees Health Benefits Program to certain military

health care beneficiaries. I hope today we are going to be able to

develop a consensus approach to bring high quality, reliable health

care coverage to men and women who have served this country

under arms.

Ensuring that our shores are defended and our freedom is protected are responsibilities that have to be shared by all Americans.

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Yet we must recognize that many factors contribute to the success

of our military force, including good, quality health care. A strong

military medical system is necessary to support not only present

active duty forces, but also to uphold the promise that was made

to many of our military retirees.

Earlier this month Defense Secretary Cohen stated before the

Senate Armed Services Committee, ‘‘We have made a pledge.

Whether it is legal or not, it is a moral obligation that we take care

of all of those who served, retired veterans and their families, and

we have not done so,’’ and I say it is about time that people in positions of authority start saying that.

In fact, I remember last year when I had the Joint Chiefs before

the Armed Services Committee I asked every last one whether they

thought that a promise was made and a promise was broken. And

every last one of them testified under oath that they themselves

believed they were promised good quality health care for life, and

promised free health care for life, and they all said they believed

that that promise had been broken. So I am glad people are starting to testify under oath in Congress that they believe a promise

was made and a promise was broken.

I could not agree with them more. While recruiting shortages in

all services are continuing, except for the Marine Corps, keeping

faith with the military retirees by upholding the promise is paramount. What potential recruits think once they learn the government has broken its word to a man like Colonel Bud Day, a Congressional Medal of Honor recipient and the Nation’s most highly

decorated officer since General McArthur, what they are thinking

is that if a promise can be made to a great American hero like that,

it can be broken to him. None of us will forget Colonel Day’s 67

months as a prisoner of war in North Vietnam and the heroic way

he handled himself there, or after he was released.

Since the implementation of the TRICARE program numerous

problems have been reported. Nonpayment of providers, lack of accessibility for patients, and unavailability of prescription drugs are

among the complaints. To address these concerns we set up a Congressional TRICARE advisory committee and held a series of hearings across this district from July 1996 to December 1997. And

through the information gained by public hearings and comprehensive independent research the committee came to the conclusion

that the current TRICARE program was in need of serious reform

or overhaul. Testimony from retirees, health care providers, and

government officials contributed to the committee’s final decision

that the TRICARE health care system fell far short in delivering

on its promise of free medical care for life.

And, you know, I use that term ‘‘free,’’ and other people use that

term ‘‘free.’’ Maybe we could ask Colonel Day and other people who

served whether they consider it to be free. I mean it has already

been paid for, and paid for with blood, sweat, tears, and effort, and

time away from their loved ones.

Hearings the subcommittee held in earlier Congresses also revealed deficiencies in the military health care system. While the

TRICARE committee made progress toward resolving specific problems with TRICARE, the broader issue of the broken promise to

military retirees still needs to be addressed.

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Many of us are aware of the words of Judge Vincent ruling in

Federal District Court in Florida that, ‘‘The plaintiffs certainly

have a strong equitable argument that the government should

abide by its promises. Regrettably, the law does not permit me to

order the United States to do so. Under the constitutional separation of powers, relief for the plaintiffs must come from Congress

and not from the judiciary.’’ I think it is past time that Congress

live up to its responsibility. We need to make this issue a top priority in Congress, and a top priority to keep our word.

I am proud to have joined Congressman Ronnie Shows and Charlie Norwood as a sponsor on H.R. 3573, the ‘‘Keep Our Promises

to America’s Military Retirees Act.’’ Congressman Shows is here

today. His visit before the subcommittee today is an example of the

commitment of many members to military retirees. We must keep

our ongoing commitment to promote health care needs of America’s

military retirees. Restoring the promise is crucial, and I hope that

this hearing will be a step in the right direction, and that the

Members of Congress will work with me to keep faith with those

who have sacrificed so long to keep America free.

And with that I would like to recognize the ranking member of

the subcommittee, the Honorable Elijah Cummings who traveled

all the way down from Baltimore last night, and even fought thunderstorms over Atlanta to be here today.

Congressman Cummings.

[The prepared statement of Hon. Joe Scarborough follows:]

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Mr. CUMMINGS. Thank you very much, Mr. Chairman, and, I

thank you for calling this hearing today, and as the ranking minority member I extend a warm welcome to our colleague, Representative Shows, and other panelists. Thank you for agreeing to appear

in person before our subcommittee and present testimony on military access to the Federal Employees Health Benefits Program.

I am pleased that Chairman Scarborough and I were able to

work in a bipartisan manner to introduce long-term care insurance

legislation for Federal and military employees and retirees. We

made a promise to move legislation on long-term care when we

were in Florida last year, and I am proud to say that that is a

promise which will be kept.

Today’s hearing is very, very important. Health care is a quality

of life issue for the young enlisted soldier in the field, military

spouses and children, and retirees who have spent their careers in

service.

I have often said that we have one life to live, that this is no

dress rehearsal, and this so happens to be that life. The Department of Defense promised to provide free health and dental care

to every member of the military. Those 65 years of age and older

who chose military service as a career and put their lives on the

line as Chairman Scarborough mentioned a few minutes ago defending our country are finding they are not eligible for their military’s health care system, TRICARE. Retirees over 65 can obtain

military health care only if space is available at military health

care facilities, and after TRICARE enrollees and other active duty

members and their dependents receive care.

Unfortunately illness does not wait for anyone. They face high

out-of-pocket costs and limited, if any, pharmacy benefits. Military

beneficiaries desperate for solution to the inadequacies of

TRICARE want to be included in the FEHBP program. The

FEHBP provides voluntary health insurance coverage for over 9

million Federal employees, retirees, and their dependents. Program

enrollees can choose between 10 and 30 plans available to them in

their geographic area, between 10 and 30 plans.

To differing degrees FEHBP plans cover inpatient and outpatient

care, prescription drugs, and mental health services, and many

cover dental care expenses. This plan is considered a model health

care system, and it would be unfortunate if we tried to help one

group of beneficiaries and hurt another.

The National Association of Retired Federal Employees

[NARFE], has expressed concern that absent sufficient safeguards

proposals to broaden participation in the FEHBP program could result in higher premiums, reduced coverage, and fewer plan options

for both Federal civilians and non-Federal civilians.

NARFE suggested that separate risk pools be created for Federal

civilian enrollees and military retirees. The Office of Personnel

Management recommends that any alternative program for military health care be modeled on the Federal health plan, but be an

entirely separate parallel program.

The bills introduced by Representative Shows and Norwood address the concerns raised by NARFE and OPM. H.R. 2966 and H.R.

3573 create a separate risk pool for military retirees who access

FEHBP plans. Without a doubt, military families and retirees deVerDate 11-MAY-2000 10:49 Feb 27, 2001 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\69952.TXT HGOVREF1 PsN: HGOVREF1
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serve a quality health care system. We are here today to discuss

how best to make that happen. I look forward to the testimony of

our witnesses, and hope that you will assist us in bringing quality

health care to military retirees.

And I thank you.

[Applause.]

Mr. SCARBOROUGH. Thank you.

Very briefly before we start this I wanted to recognize a leader

in our TRICARE panel who is here today, Admiral Tim Wright who

has served—Admiral, if you could just stand real quickly and let

everybody see you—Admiral Wright took the lead in our TRICARE

panel over the past few years, and again the findings of that committee have contributed greatly to this, and I think in the end will

have a big impact not only on what this subcommittee does, but

also what Congress does. I thank you and everybody else that was

able to help out.

With that, I would like to go ahead and move on to our first

panel, and again we are very honored to have Congressman Shows.

He is from the Fourth District of Mississippi, and he is on the Veterans Affairs Committee and the Transportation Committee. He of

course is the primary sponsor who introduced along with Congressman Norwood the bill that I believe goes further than any other

bill ever to help keep the promise that was made to our military

retirees.

Congressman Shows.

STATEMENT OF HON. RONNIE SHOWS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MISSISSIPPI

Mr. SHOWS. First of all, Congressman Scarborough, I would like

to tell you, Mr. Chairman, we appreciate so much being here and

testifying before your committee, and honored guests, and certainly, Congressman Cummings, it is a pleasure to be here and an

honor, and it is an honor to have an opportunity to introduce such

a great bill, in my opinion, not because Ronnie Shows is the author, but because it is the right thing to do.

And of course serving with Charlie Norwood is a pleasure and an

honor, and he is one of the co-authors with me on the bill, and I

cannot tell you how much it means to me to be able to—you are

always hearing about people having impacts on legislation, and it

is not so much me because it is the people behind us who made

it work. It is the military retirees who made this bill work right

now, and serving with members like you guys has been tremendous.

I would like to say first of all that without your leadership, Congressman Scarborough, and what you have done, because I have

found since I am a freshman up there, and this is my first full year

up there, and I have found the leadership in neither party, Democrat or Republican at this time are really jumping up and down

about this bill. I know you are catching some flak for being a cosponsor on this bill, both of you are just like I am, because neither

party is—really they say it is costing too much to present this bill,

but I cannot think of any other priority I would rather have than

our military retirees and our military, and I mean that.

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But in starting my testimony what I would like to do is, of course

I have gotten my written statement I would like to submit to you,

but I would just like to talk about the bill and what we are trying

to do, and the men and women we are trying to do this for. And

this is something they have earned, it is not something that was

given to them or they did not earn it. The men and women have

earned this career in the military.

Mr. Chairman, when this bill came about it about a year ago. I

was in Laurel, MS, I had been in office about 3 months and I got

a call from two gentlemen, Jim Whittington from Laurel, MS, and

Mr. Floyd Sears from Mississippi. And they asked me to come to

a meeting in Laurel, they had military retirees coming from all

over the country. And my dad is a veteran. He was captured at the

Battle of the Bulge in World War II, and a prisoner of the Nazis.

And my dad, we have taken him to the Veterans Hospital many

times for the care he needs in Jackson.

I guess when I got elected one of the first committees I asked to

serve on was the Veterans Committee, because I wanted to see if

I could help to make things a little bit better for our veterans. And

it is not that men and women are not dedicated at the Veterans

Hospitals, they are, but one of the problems is underfunding, the

cuts and things that have happened over the last several years.

But anyway, when I went to this meeting I never heard of the

broken promises, I did not know—I have always taken it for granted like a lot of citizens out here that military retirees, once you retire from the military you had health care and all this big fancy

retirement, Colonel Day, that you think anybody would have that

served their country, or worked for the Federal Government, or any

big company.

When I started hearing the testimony of the men and women

that served this country for 20 years and found out that first of all

if you did not go to the military hospital with the TRICARE/

CHAMPUS that it is hard to get health coverage. I have talked to

two or three doctors in Laurel, MS, and they do not take

TRICARE/CHAMPUS because they said it is too hard to get the

payment, and they say it is nothing against the TRICARE and

CHAMPUS people who run those organizations, it is just the fact

that is the way it is.

And then I was shocked to find out that you did not get in a veterans hospital after you retired unless there was bed space available, Congressman Cummings. I was not aware of that. And so I

really started seeing the problem that we have out there. The problem is that if you are a military retiree you are almost treated like

a second-class citizen, and I do not see how we can look our men

and women in the face with a clear conscience who served this

country and gave up the biggest of the earning part of their years

you might say, the biggest pay earnings part of their lives for this

country, and then we not live up to a commitment.

And also the people like Jim Whittington who served 20 years

and who was a recruiting officer, and him knowing that he told

young men and women if they would join the Army for 20 years

they would have free health care for the rest of their lives, and

they thought they were being told the truth, and so they helped recruit people in by telling this thinking that is the way it really was,

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and then you go—and I went to a hearing 1 day and Jim and them

had posters up into the nineties that said join the Army for 20

years, retire from the Army, and you will have free health care for

the rest of your life.

I am telling you, and I have nothing against car salesmen, but

you know sometimes a car salesman will just say a little bit more

to get you to buy that car. Well, that is almost what our government has done to try to get men and women. They will tell them

maybe not the whole truth to recruit them into our service, thinking all the time they had health care for the rest of their lives.

Well, I do not think our Federal Government ought to treat this

situation like this, I think it is wrong, I think it is misleading, and

how can we say that we are honoring our military retirees when

we do not keep our word.

And so after I got through with that meeting Jim Whittington

asked me, he said ‘‘Would you introduce a bill?’’ I said ‘‘Just as

quick as I can get back to Washington we will get our draftsmen

to see if we can get this bill together.’’

Well, anyway, our legislative person and director in my office is

a guy by the name of Phil Alperson, and I know a lot of these men

out here who are working with us on this bill, Colonel Day and

some of the others know Phil Alperson, and Phil went to work on

this bill, and about that time Congressman Norwood got with us

and we put our teams together, and they came up with this bill,

and the first bill was 2966.

Well, today on 2966 that was the original bill, we have nearly

300 sponsors on that bill. We found a technical error in the bill and

reintroduced a new bill, 3573, which is a bill that hopefully we will

eventually take up that has got like 250 co-sponsors on it today.

In the Senate it is Senate bill 2003, and the reason I am calling

out these numbers is that if you do not know them I want you to

call your Senators and ask them to please get on this bill because

as of today we only have 25 Senators I believe on the bill. And

what does the bill do?

The bill keeps the commitment. What the bill does do is if you

have enlisted prior to 1957 you get free health care for the rest of

your life, you and your spouse, like you were told you were going

to get. And then what it does after you hit 65 and up to 65 you

have the opportunity to take CHAMPUS, TRICARE, or the Federal

Employees Health Benefits Plan. And then after 65 instead of getting dumped like you are getting dumped now at the age of 65 and

they take all of your health care away from you you get to keep

it or with the option of the Federal Employees Health Benefits

Package.

So these are things that we feel like need to be done. I just cannot see how we can ask men and women who served in World War

II, Korea, Vietnam, and the Persian Gulf not to at least keep our

word to these men and women. They have devoted their lives for

this country.

And again I would like to give credit where credit is due. We

have had a lot of organizations that have come in and helped us

with this bill, the National Association for Uniformed Services, the

Retired Enlisted Association, the Class Act group of the military reVerDate 11-MAY-2000 10:49 Feb 27, 2001 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\DOCS\69952.TXT HGOVREF1 PsN: HGOVREF1
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tirees, and I have already mentioned Charlie Norwood which has

been a great co-sponsor and a supporter of this bill.

But above all I need to acknowledge the grassroots efforts, because this is what it is, and what is really astounding about this

bill is first of all you do not see lobbyists making $200,000 with the

pin striped suits and the leather cases walking up and down the

halls of Congress to help pass this bill. It is the men and women

in this auditorium this morning; it is the Jim Whittingtons and the

Floyd Sears from Mississippi on their computers along with Colonel

Day and some others here that are out writing and talking to their

fellow colleagues they have served in the services with. This is the

reason this bill is making its way. Is not what Ronnie has done,

or Joe, or Charlie, or anybody else. It is the men and women behind the bill that are making it go.

I think that if we can keep the presence of this bill alive I think

we might have a chance, but more than that we owe it to these

men and women to do this, and I hate to keep repeating myself,

but I am holding the scale up here. I have got a scale—on this side

I have got men and women who served this country for 20 years.

On this scale I have got Federal employees and elected officials like

myself. Hey, we serve 20 years, we get to keep ours, we pay a small

supplement, but we get to keep ours. But on this scale the men and

women who let us get to the point that we are at in our lives right

now, we drop them off the scale.

How in the world can we defend giving Federal employees and

elected officials like us health care retirement and we drop our men

and women off who served this country. I do not understand it. But

anyway, that is the justice I feel that is being done.

Again I want to thank you, Mr. Chairman, for conducting this

hearing, and this first opportunity for military retirees to bring

their case directly to the United States.

Thank you again, and I appreciate the opportunity of being here

this morning.

[Applause.]

[The prepared statement of Hon. Ronnie Shows follows:]

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Mr. SCARBOROUGH. Thank you so much.

I appreciate that testimony. It was great, it was to the point and,

you know, you talked about cost, and certainly that is what I hear.

I hear a lot of people complaining about the cost. I would say, and

I think you could make the argument very easily, that the cost of

breaking the promise is even greater.

Mr. SHOWS. That is right.

Mr. SCARBOROUGH. I mean there is a reason why all the other

services but the Marine Corps are having trouble filling their levels

for recruitment. I can tell you, and some people that have heard

me talk about this before probably have heard this story too much,

but it is to the point. My grandfather, when I was 16 or 17 years

old, served in the Navy; he started as an enlisted pilot. In fact, he

trained here at Whiting Field, but he flew in World War II, he flew

in the Korean War, gave 30 years to the Navy, risked his life, was

at Pearl Harbor on the Maryland which sunk. At the end of his life,

after serving for 30 years, he was very bitter toward the very government, the very country to whom he dedicated his entire life, and

was bitter and upset because he felt like he had had a promise broken to him. What impact did that have on me when I was 17 or

18 years old? Not following that path; if they could not keep the

promise to him how would I know they would keep the promise to

me.

The same thing with my two boys. I have got boys that are 12

and 9. I would love for them to follow in the footsteps of their

grandfather. Would I do it now? No.

If there is no commitment from the elected leaders on both ends

of Pennsylvania Avenue to keep their word to the men and women

who in the end, like you said, do more than anybody else to protect

and defend this country, what does that say? I think we have got

to get our heads screwed on right in Washington, and I am confident we will. I am confident that when my boys are 18 years old

when it is a time where they can go into the Navy, or the Air

Force, or the Army or Marines that we will have this situation

taken care of.

And again I want to thank you for being here and starting us

down that path.

Mr. SHOWS. Thank you.

Mr. SCARBOROUGH. Let us talk a little bit about your grassroots

effort, because you are right, I mean you can think of just about

every bill that comes before Congress, and you are lobbied from all

sides. I mean certainly I have got no problem with lobbyists, have

friends who are lobbyists, supporters who are lobbyists, but at the

same time it seems like you are getting hammered on—for instance

in Judiciary we just had a bill on asbestos. We got hammered on

by about 12 sides on that bill, and yet on a bill like this where Congress is being asked to keep its promise, and the President is being

asked to keep its promise, suddenly it does not seem like there are

many lobbyists at all.

Who is it that you are hearing from, and what are you doing as

far as the grassroots effort goes? And speaking before this congressional committee today I know that there are people that are going

to be reading your testimony all across the country, and I know

we’re going to all see to it—what can men and women that have

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served, what can they do to get involved in this effort and make

a difference so Congress will keep their promise?

Mr. SHOWS. Well, I will tell you what is so great about this bill,

Mr. Chairman, it kind of has a life of its own. I think something

like this has a bigger meaning, and the people who introduced it— and this may sound kind of corny, but I think it is a patriotic thing

to do. I think the reason this bill has gathered the momentum it

has is because the men and women. Actually this is the first time

they have an opportunity for this kind of bill to come along, and

we did not introduce it at time when we did not think could not

afford it, but because we can afford it.

Yeah, it may have a high price tag, but it is something that is

affordable, and what have the men and women have been told all

these years? ‘‘Oh, when we get the money we are going to take care

of it.’’ Well, they have got the money. We are just not setting our

priorities right.

Now, what do we do about the grassroots? I will tell you, I do

not think we have got to do much more. These guys and ladies

have gotten on their computers and the Internet. You know, I have

always wondered—and I am not very computer-oriented myself,

but evidently some of these men and women are because this is

what has happened to this bill: they have got their own Web site,

they are sending out their e-mail, they are contacting each other,

and basically this thing has just mushroomed into 1,000, 10,000

men and women on their computers, and the mail, and the radio

shows.

I have listened to Congressmen on C–Span, and before a Congressman gets off C–Span he gets calls from veterans saying ‘‘Are

you on House Bill 3573 or 2966?’’ It has kind of taken a life of its

own, and we have got the House floor. I believe just as sure as I

am sitting right here this morning, if this bill came on the floor it

would pass. I do not think there is a doubt about it; I think this

bill would pass.

Now, in the Senate, like I said right now the last count I had

we had 25 U.S. Senators on it. Now, if we can get as much participation in the U.S. Senate as we have in the House, and get both

the leadership in the House and Senate, along with the Democrats

too, to help push this bill we will see it pass. What I recommend

is to keep doing what you are doing as far as the military retirees

out there, but just not among yourselves. Go to the schools, go to

the Rotary Clubs, go to the Lions Clubs, give your talks to these

clubs and organizations, tell them what kind of plight you have

had over the last several years or several decades trying to help get

health care. You are not first in line when you go to a veterans hospital just because you are retirees; if there is space available you

are in line. Tell them when you go to a private hospital that it is

hard to get them to accept your coverage because the hospitals do

not want to take it unless they are a veterans or military hospital.

These are the problems, you are having to drive all over the country to find somebody to give you health care, even when it is available.

So these are the things—I think by telling your story to the

press, to the Lions Clubs, to the schools, to any organization that

will hear you to get this momentum behind you, and then ask them

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to call Washington and ask them why are the leaders taking this

bill up. Why are they not taking it up? And this is the question

people are asking themselves.

And I am not against tax cuts, I know you are not against tax

cuts, but let me give you my personal philosophy about this. We

take our priorities first, and what are our priorities? The people

who made this country free, that is the priority. And you know

what, we take care of those folks. Guess what? When you go look

for a job what is the first thing you look for? Health care. We all

look for health care. When our kids go out looking for a job, they

look for security of health care.

Well, if we provide health care for our military retirees, somebody put on a light bulb, you know, a switch. Hey, I am going to

look for a job that is going to give me security of health care for

the rest of my life.

We call that the four Rs. I think Floyd Sears came up with this,

we were having a strategy meeting about this bill in Laurel with

some of these military retirees I was telling you about, and he said

‘‘Ronnie, it is the four Rs. First of all you can use this as a recruitment tool, the next one you can use it for retention or keeping the

troops that you do have, and then third military readiness.’’ We

know right now we do not have enough men and women in our

armed forces right now, and the fourth R, and the most important

R, it is the right thing to do. So if we get our priorities right, which

we should, and the men and women keep doing what they are

doing, I will say this: It has got a lot of attention, because I am

catching some flak from some of my own colleagues about this bill,

and I know you are too.

But for gosh sakes, let us look. We have got the biggest budget

surplus we have ever had in this country, the economy is running

stronger and longer than it ever has, and we are scratching our

heads trying to figure out why we cannot get men and women in

the military.

I talked with a man in Laurel, or Ellisville—I forget where it

was—he has got two boys in the Navy, both of them are married,

and both of them on food stamps and welfare. Now, what kind of

recruitment tool is that?

And I am concerned about our military, I am very concerned

about it. And this is one way we can make a difference.

Thank you.

Mr. SCARBOROUGH. Well, you are exactly right. I mean again we

get it at both ends. You have some military active duty men and

women that are on food stamps right now, and that is the message

that maybe their younger brother or sister gets, and then again

you have the situation with my grandfather that is repeated every

day across the country, and again the impact that that has on recruitment is just absolutely devastating. You can have all the neat

commercials you want in the middle of football games, and if you

have a grandfather, or an older brother, or an older sister say

‘‘Hey, do not believe that,’’ then it is not going to work.

And I agree with you also about priorities, spending priorities. It

is an expensive bill, but again it is worth the cost, and I certainly

hope that we all can work together to try to find offsets to pay for

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this bill, because I think it is a top priority, and I know that will

be necessary to get the needed votes in the Senate.

You said we are at 300 in the House, right, over 300?

Mr. SHOWS. On the original bill 2966 when we first introduced

it, right now we are up to about 280 or 290 co-sponsors.

Mr. SCARBOROUGH. OK.

Mr. SHOWS. The bill that we had the technical corrections in,

3573, which is the same bill, it just takes care of—what we did

when we introduced the bill, we meant to have the Federal Employees Health Benefits Plan prior to 65, but the first bill only included the ones after 65 that had the option for the Federal Employees Health Benefits Plan, so what we did, we came back with

3573 and put that in there for younger than 65, and we got like

250, almost everybody—within a week and a half we had like almost 190 co-sponsors on that bill too. A lot of them do not know

it is the same bill just with that technical correction in it, but we

have got right at 250 members on H.R. 3573. On the original bill

we are bumping 300.

Mr. SCARBOROUGH. OK. Great.

Mr. SHOWS. So we certainly want to get all the ones on H. R.

2966 on the H.R. 3573.

Mr. SCARBOROUGH. Then again obviously with only 25 in the

Senate we need to work there, too. But I will tell you what, I will

make you this commitment, after we have this hearing today—and

I have been telling the leadership we were going to be having a

hearing before my committee on this bill—I am going to go to them

and see what it is going to take to get it on the floor, and if there

are some things that are needed then I pledge to you that I will

work together with you, and we will work together to get something before them that they can put on the bill and that we can

pass.

Mr. SHOWS. Well, Mr. Chairman, I would like to say I really commend you for what you are doing. Again, I know that you are

catching some heavy duty flak on this bill, and just like Congressman Cummings and the rest of us from our own party leaderships,

each party we represent, and so I really appreciate you, and Mr.

Norwood, and the rest of the individuals, the Republicans and

Democrats. It is a bipartisan bill—this is not a party bill, it is a

bipartisan bill, and this is something that needs to be given that

top priority, and I appreciate your efforts. Thank you.

Mr. SCARBOROUGH. Thank you. And thank you for coming over

today.

Mr. SHOWS. Thank you.

Mr. SCARBOROUGH. Congressman Cummings.

Mr. CUMMINGS. I will be very brief. I want to thank you too for

coming to the hearing and giving your testimony which certainly

was very compelling.

Now, would this bill come before the Armed Services Committee,

too?

Mr. SHOWS. I will tell you, you are talking to a new guy on the

block, so I really do not know.

Mr. CUMMINGS. But it has never had a hearing?

Mr. SHOWS. This bill has not had a hearing. With all the co-authors we have on this bill, it has not had a hearing, so this is what

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we are trying to do. I believe if the bill gets a hearing like Chairman Scarborough is saying it will definitely get some attention,

and the bill is getting a lot of attention from the leadership, you

know, but it has not been taken up yet, and it is going to have to

be pushed, and pushed, and pushed until we get somebody to listen

to us.

Mr. CUMMINGS. I really think that this is something we have to

do. As I was listening to you I could not help but just think about

2 years ago when I was over in Bosnia to see our troops over there

and to see what they were doing, and it was just a few of them,

but they were protecting the peace, and the fact is that I think

what happens too often is we take so much for granted in this

country that we are always going to be the way we are, this wonderful free country, but as Chairman Scarborough it takes people

to be standing up for us. It is not enough to lift up the flag, you

have got to have people behind it, and so the fact is that so many

people have given up so much so that we can have that freedom,

and so I really do thank you for your testimony, and I pledge to

work with Chairman Scarborough to do everything that we can to

do our part to get this legislation on the floor.

Thank you.

Mr. SHOWS. Thank you.

Mr. SCARBOROUGH. Thank you, Congressman Cummings. Congressman Shows, if you have time we would really be honored to

have you up on the dias and to ask questions of the next panel.

Mr. SHOWS. OK.

Mr. SCARBOROUGH. So thank you again for your testimony. We

appreciate it.

And while he is coming up here I want to thank you and—why

don’t we ask the second panel to come up now. It is Colonel Bud

Day, Colonel George Rastall, and Stephen Gammarino.

But I do want to thank you, Congressman Cummings. Congressman Cummings mentioned briefly long-term care, which I believe

is going to be one of the key health care benefits in the future,

which we were able to pass out of our subcommittee and full committee that also is going to help military retirees take care of themselves and their loved ones, so we are fortunate for that.

I want to welcome our second panel now, and of course I think

everybody in the audience knows Colonel George E. ‘‘Bud’’ Day, retired. Obviously he is a veteran of more than 30 years service in

the armed forces of the United States. He was born in Iowa, joined

the Marine Corps in 1942 and served 30 months in the South Pacific as a noncommissioned officer, he received an appointment as

a second lieutenant in the National Guard in 1950. Colonel Day

was called to active duty in the Air Force in 1951, and entered jet

pilot training, and served two tours in the Far East as a fighter

bomber pilot during the Korean War.

In April 1967 Colonel Day was assigned to the 31st TAC Fighter

Wing in Vietnam, and as I think everybody here knows he was

shot down and was imprisoned in Vietnam, and I know I said earlier that you were released—you were released by yourself, one of

the few that escaped. In fact, I believe you were the only one to

escape in the South. But we are certainly honored to have you here

today.

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As most of you know, he has also been a fighter for military

health care and for keeping the promise, and has filed a lawsuit

on behalf of many, many men and women who did not get what

they were promised, and while things did not work exactly the way

I think all of us wanted in the District Court here we may have

some good news on appeal.

So, Colonel Day, I welcome you here.

I would also like to welcome Colonel George Rastall. He is the

second vice president of the Pensacola TROA chapter. Colonel

Rastall served a 34-year career in active and reserve forces. He was

also a Federal civilian employee, and is currently enrolled in

FEHBP, and he has also done great things fighting to make sure

the promise is kept.

And finally we have Stephen W. Gammarino before us again. He

is senior vice president with Blue Cross/Blue Shield Association,

and we certainly look forward to your testimony.

Colonel Day, if you would.

STATEMENTS OF COLONEL GEORGE ‘‘BUD’’ DAY, USAF RETIRED, CLASS ACTION GROUP; COLONEL GEORGE RASTALL,

USAF RETIRED OF THE RETIRED OFFICERS ASSOCIATION;

AND STEPHEN W. GAMMARINO, SENIOR VICE PRESIDENT,

BLUE CROSS/BLUE SHIELD ASSOCIATION

Colonel DAY. Thank you, Congressman Scarborough.

Congressman Cummings, we have not met. Thanks for being

here. And Representative Shows, it is nice to see you again.

Mr. SHOWS. Nice to see you again.

Colonel DAY. Congressman Shows was just at a meeting up in

Huntsville where we had about 1,000 World War II and Korean

veterans who had a meeting about this very subject, and we are

highly indebted to Congressman Shows for having taken the initiative at the grassroots level to meet with his constituents and listen

to them, and listen to their complaints about having been thrown

out of military hospitals because they were age 65 and having lost

a carrier, and been put out into the Medicare system of being

forced to pay a premium that they should not have to pay, and

then being subject to all of the deductibles and all the problems

there are out in the Medicare field.

As you know, Medicare has the ability if you have property and

run up a staggering bill Medicare will wind up taking your estate

out, and that money that you have saved and accumulated hoping

that you would pass on to your children and grandchildren to put

them through college and so forth goes to satisfy your Medicare

liens.

Also there is not any prescription drug carrier out there for this

group, and that is basically what most old guys, as McCain says

old geezers, like me need the most. So that is the situation that we

have been forced into purely because we reached the age of 65, and

second because the government decided they are going to do medical care for us on the cheap.

It has not been a matter of there have not been funds available,

it has been a question of what does the government want to do

with that money.

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No indictment of our current panel obviously, but we just had a

bill go through, the national budget which just went through larded

up with $6.1 billion worth of what is described as pork. I do not

think that our medical care coverage can come under the label of

pork.

And so before I go any further I would like to introduce Colonel

Bob Rinely who is the plaintiff in our lawsuit, if Bob would stand

up. Bob flew three combat sorties over the Beach in D-Day, World

War II in France, and he is one of two plaintiffs in the class-act

lawsuit, and just to summarize that real briefly, in 1995 when the

government made the election that they were going to put us out

of military hospitals I listened to that, and having heard the promise as an enlisted Marine, having paid 20 cents a month out of my

pay as an enlisted Marine, as did all enlisted Marines and Navy

up to mid-World War II and previously, all of us were made the

promise that if we served our 20 years, we were going to have free

lifetime medical care, and not only was the promise made, but it

was made in writing, and it was made with proper authority.

The Blue Jackets Manual as far back as 1918 says that you will

get free medical care for life if you do your service. And not only

did they make the promise, but we saw that promise being carried

out at major hospitals. At the ones that I was in back in those days

during the war—Balboa Park, Long Beach, and Oak Knoll—there

were World War I veterans and retired members and their families

in those hospitals while we active duty people were in them during

the war. As a practical matter, when I retired in 1977, and when

Mr. Rinely retired in the 1960’s they provided that care to us right

up until 1995 when the government made the election that the

money that they had been spending on us for medical care was

going somewhere else.

So there is not any question that there is both a moral and a

legal basis for this. I have provided the Federal court with a stack

of documents roughly this [indicating] thick that articulated in

writing the various promises and recruiting statements. The Government’s defense on March 7th when I was in the Federal Circuit

Court of Appeals in Washington was that, yes, the promise had

been made, but they did not have to keep it because there was no

legislation out there that specifically tied our retired medical care

to a spending bill. Of course if that were in fact true, if that was

the only defense out, there would be no need for a piece of legislation which is called the Little Tucker Act.

There is a Federal act that says that you can have a quasi-contract, or an implied-in-fact contract with the Government if certain

conditions are fulfilled. Our situation has absolutely fulfilled those

conditions.

And I might add that the Federal Circuit Court listened with

great interest. One of the members was a retired West Point Lieutenant Colonel, another member was a retired Navy Commander,

he was a former recruiter in his other life, and the third party was

a senior Federal lady judge who listened with great interest.

And I might add that the very first case on our docket was one

in which a confidential informant had been promised a bunch of

money if he would stick out with this gang, get them all hung up,

get them busted, and if that happened they would give him someVerDate 11-MAY-2000 10:49 Feb 27, 2001 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCS\69952.TXT HGOVREF1 PsN: HGOVREF1
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thing like around $100,000. Well, he did his part, the government

welshed. When the bill went up to Janet Reno to pay this guy she

said no, she was not paying him. So the judges on the panel said

it sounded a little bit to them as if confidential informants for the

Government and retired World War II and Korean vets got the

same treatment. And I thought that spoke eloquently of our situation.

We are indebted to you all for this hearing. We feel that getting

H.R. 2966 underway and getting the companion bill in the Senate

underway certainly will solve this problem from both aspects.

I am quite hopeful that the Federal court is going to rule on our

behalf. We have given them the documentation to do that.

If they do that, then the court can order a number of things to

happen. One thing they can give us is some damages for these people who have been spending $45 a month to get the care they

should have gotten for free.

The second thing is that it can order some other relief. I do not

know what that relief will be exactly, and that will take care of the

past. But what will happen is that H.R. 2966 and the companion

Senate bill will make sure that this becomes a matter of law, and

we do not have to be haggling about it for the veterans of the next

war.

Once again, I cannot say how indebted I am to you all for holding

the hearings, and I would like to say to every one of you who are

here that I am equally indebted to you, because if you all were not

out here behind us and not working with us we would not be where

we are today.

I met Congressman Shows a year ago November up in Laurel,

MS. Around 200 of us were up there explaining to him what our

problems were, and there were a bunch of people exactly like you

up there who are in exactly the same boat we are in, and they communicated with him, and he acted.

[Applause.]

Mr. SCARBOROUGH. Thank you, Colonel Day. We appreciate it,

and of course Colonel Day mentioned McCain. I do not know how

many of you knew it, but Colonel Day and Senator McCain are

good friends, and in fact shared the same cell in Vietnam, both

POWs.

In fact, you could see Colonel Day barnstorming for John McCain

throughout South Carolina about a month or two ago, and you

looked real good on TV every night. We enjoyed it.

Colonel Rastall.

Colonel RASTALL. Before I start I would like to say if I seem biased on one side or the other, I started out enlisted and then got

a direct commission, so I have feelings for both ends of it.

Mr. Chairman and distinguished members of the Civil Service

Subcommittee, good morning. On behalf of the Retired Officers Association known as TROA, I am pleased and honored to address the

importance of the government-provided health coverage for our

395,000 active retired reserve, and about 70,000 auxiliary who are

survivors of our former members, as well as all service members

regardless of their status or rank.

I was out of the country for 9 years working in other places than

this country previous to this time. As recently as October I reenVerDate 11-MAY-2000 10:49 Feb 27, 2001 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 C:\DOCS\69952.TXT HGOVREF1 PsN: HGOVREF1
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tered the U.S. domain, and I thought I have been a member of this

organization for years, now I am going to get active, and this morning, the talks everybody has given me have a lot of enthusiasm, so

I do not know if I can work it off and get it down to reality here,

but I really have a good renewed faith in the democratic process

by being here this morning.

First I want to thank you, Mr. Chairman and other distinguished

members of the Civil Service Subcommittee for allowing me to

present TROA’s view on the Federal Employees Health Benefits

Program we call FEHBP, and its importance to military members

and their families.

Mr. Chairman, the hearings today are extremely important to

the 44,600 TROA members living in Florida, of which 6,400 live in

your district. There are 173,200 retirees in Florida, and 36,600 of

these are in your district. Many of these potential enrollees are

most interested in an option to enroll in FEHBP under a program

sponsored by DOD.

Long-term care insurance for Federal employees was pledged by

you to be able to have the recent legislation that you introduced

and reported out by the subcommittee, and we are very impressed

about that. That is known as House bill 4040, I believe. Well, with

your introduction of this and the favorable reporting of that you

certainly fulfilled the pledge that you made in your other hearings,

and that we deeply appreciate. We are most grateful to you for that

initiative, and look forward to its enactment later this year. So

thank you for being a friend and a strong supporter of the military

community.

TROA believes the Nation has a real health care crisis. Why? Because military health care services have been significantly curtailed in many locations throughout the world, including the Naval

Hospital in Pensacola. As you know, I am a resident of Pensacola,

and have been for a long time.

This is because of the well known staffing drawdowns, reduced

operating budgets, or base closures. And the military treatment facilities, MTFs we call them, have been closed at Orlando and

Homestead. Access to care is further reduced when inpatient services are closed, such as Patrick Air Force Base in 1998, and the

planned closure at Tindall Air Force Base this year.

Medicare-eligible retirees who are left to seek care on a spaceavailable basis at the MTFs are finding it increasingly more difficult because of budget constraints and curtailed services. Services

are uncertain and, at best, a catch-as-catch-can health care program.

The cruel reality is that so many older military retirees are left

with Medicare as their sole source of health care, a benefit that

most non-military Americans had upon their retirement without

having endured the rigors and sacrifices of military service.

In 1966 when the Civilian Health and Medical Program of the

Uniformed Services called CHAMPUS, and now known as

TRICARE, was being formulated by the House and Senate Armed

Services Committee it was intended that retired uniformed services

beneficiaries have fair health care benefits when they turned 65

and became eligible for Medicare.

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In the 1966 congressional equation Medicare plus space-available

care equals a fair benefit just does not hold up any more, as well

recognized by everybody in this room. It is not balanced, and it is

not equitable. We know only Congress can restore health care equity to older retired service members. In doing so, it should also ensure at least parity with the relatively inexpensive health care

available to retired Federal civilians. Although that may not be

agreed upon by all here, I realize you are after full coverage. Of

course that would be ideal.

What will the FEHBP option do for retirees? I am a good example of what it does. I retired from the active and reserve careers

and U.S. Government employee programs. I enjoy the relatively

carefree benefits of Medicare and FEHBP. My wife is only eligible

for TRICARE Standard, but thankfully we are able to use FEHBP

rather than having to rely on TRICARE benefits.

I emphasize that—and this has been alluded to already by the

Honorable Representative—most of us with families of modest

means have always had to make career and life decisions based in

no small way on health benefits. I believe we made our decisions

on a promise we believed would be virtually untouchable.

During my 9 years out of the country—I came back sometimes— but during my 9 years out of the country, almost every individual

I talked to, one of their major reasons for being over there is because they could not get coverage or jobs that would cover health

benefits, but they could get it as a contractor with a contractor

overseas. I think that speaks for the thing that I am mentioning

here.

Now I will turn to the TROA support for recent legislation. As

you know, H.R. 2966 and House bill 3573 have been recently introduced, and now I am up to date on that as of this morning. TROA

supports these because they provide a significant step toward honoring the lifetime health benefit. The strength of the commitment

was lucidly describe by Judge Roger Vincent when he ruled in the

Federal District Court in Florida, which you have already alluded

to, that, ‘‘The plaintiffs certainly have a strong equitable argument

that the government should abide by its promises. Regrettably, the

law does not permit me to order the United States to do so under

the constitutional separation of powers. Relief for the plaintiffs

must come from the Congress, and not from the judiciary.’’ For

TROA and I and all retirees it is strongly urged that this subcommittee continue to work with the House leadership to find the

necessary offsets to enact the most recent bill.

In closing, Mr. Chairman, I want to reaffirm that the uniformed

service members want fair treatment along with the other Federal

employees. Many want the opportunity to participate in the government FEHBP program.

Finally, on behalf of the military retirees in Florida and around

the world I want to thank you for allowing me the opportunity to

present the views of Retired Officers Association on this very important matter, and I remind you we are not just for us, we are

for everybody.

I would be pleased to respond to any questions you or other committee members may have, or provide a written response for the

record.

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Thank you.

Mr. SCARBOROUGH. Thank you. Next we welcome back to our

committee again Steve Gammarino. Steve is the vice president for

the FEHBP for Blue Cross/Blue Shield, and right now I believe

Blue Cross/Blue Shield serves about 50 percent of those that are

enrolled in the FEHBP, so you have got quite a big job to deal with

day in and day out. We thank you for taking time out of your busy

schedule once again to come before this committee and give us testimony. Mr. Gammarino.

[The prepared statement of Colonel Rastall follows:]

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Mr. GAMMARINO. Mr. Chairman, members of the committee, and

other distinguished guests, good morning. Thank you for the opportunity to appear before you today to discuss the benefits of extending enrollment in the Federal Employees Health Benefits Program

to certain military beneficiaries.

With your permission, Mr. Chairman, I would like to submit my

written testimony for the record.

Mr. SCARBOROUGH. Without objection.

Mr. GAMMARINO. In keeping with your letter of invitation I will

focus my remarks on a general discussion of the FEHBP and the

Blue Cross/Blue Shield Association’s service benefit plan, and what

effect from the carrier’s perspective this would have on our program.

As you know, the FEHBP is the largest employee-sponsored

health insurance system in the country. This year they will insure

over 9 million Federal employees, retirees, and dependents. The

program is often cited as a model of efficiency and effectiveness

that the private and public sector should attempt to replicate.

The Blue Cross/Blue Shield plans jointly underwrite and deliver

what is called the governmentwide service benefit plan in the program. This plan has been offered in the FEHBP since 1960, and

it is the largest plan in the program. We currently cover approximately 4 million Federal employees, family members, and retirees.

And we have about 48 percent, Congressman Scarborough. We are

2 points shy of that 50 percent mark, but we are trying.

Blue Cross/Blue Shield is keenly aware of the important role the

program plays in the lives of millions of Federal employees, retirees, and their families. As the largest carrier in the program, we

believe we bear a special responsibility to provide stability and integrity to the program, and look forward to working with the subcommittee as you examine various legislative proposals.

As you know, the National Defense Authorization Act of 1999 established a 3-year demonstration project permitting Medicare-eligible retirees and their dependents to enroll in the FEHBP. From the

beginning, Blue Cross/Blue Shield has been committed to working

with OPM and the Department of Defense on a demonstration

project to determine whether the FEHBP participation is a viable

option for the retired military community.

At the most recent count we enroll almost 800 contracts, which

is about, we understand, 46 percent of the total demonstration enrollment. As this demonstration project continues Blue Cross/Blue

Shield is committed to working with the appropriate agencies and

other military support groups to provide necessary information and

educate eligible beneficiaries about the program.

Over the past few years numerous proposals have been introduced that seek to extend the FEHBP to various groups. The proposals have led us to develop four basic principles we would like

you to consider when evaluating suggestions for extending the

FEHBP beyond its current enrollment base.

First, there should be a logical connection between the Federal

Government as an employer and the population proposed to receive

the FEHBP coverage.

Second, the existing private sector role of the FEHBP carriers

must be preserved to maintain a strong and competitive program.

35

Third, the infrastructure to handle the expanded enrollment

should exist, and not have to be created.

And fourth, the principles of insurance underwriting should be

preserved. Because the FEHBP is a program of insurance it is essential that each carrier underwrite its own risk.

As we look at the question of existing enrollment in the FEHBP

to the military beneficiaries, it appears that these four principles;

would in fact be met.

Additionally, Blue Cross/Blue Shield can assure the subcommittee that we are capable of providing the same high quality of service to military beneficiaries that we now provide for the civilian enrollees. We would defer to the Congress and to the executive

branch, specifically OPM and the Department of Defense on the related policy choices and decisions.

One issue that has been repeatedly discussed is the issue of

whether to have separate risk pools for the military beneficiaries.

From an insurance or risk-management perspective, risk pools in

this case we do not feel are required.

Under equal conditions of participation we have no reason to believe that on average the 65-year-old Medicare-eligible military retiree would utilize health care services any differently than a similarly situated civilian counterpart.

I hope that my remarks to you will be helpful in our deliberations. Again, thank you for the opportunity to appear before you

today, and let me assure you that the Blue Cross/Blue Shield Association stands ready to work with this subcommittee as you consider the very important issues before you.

I will be pleased to answer any questions you may have at this

time.

[The prepared statement of Mr. Gammarino follows:]

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Mr. SCARBOROUGH. Thank you.

Colonel Day, let me ask you a very, very basic obvious question.

I probably would not get away with it in court, but we are not in

court, are we? so I can ask you a leading question.

Were you promised military health care for life, and by whom?

Colonel DAY. Yes, I was. I was promised that by the Marine

Corps, and again by the Air Force. It was common knowledge, it

was a common understanding that along with the retirement benefit at 20 years that you would have the accompanying free medical

care. That was part of the recruiting pitch; medical care really

made it attractive. I might add in 1942 and even up through the

very early fifties that was the best deal around. There was not any

equivalent government retirement out there like that. General Motors did not give a deal like that; the military was very, very

unique in that; that promise was something that elevated the military retirement to a step above a civilian retirement. But on the

contrary other side of that you had those wars that you had to go

to, like World War II, Korea, and so on. So, you know, that excellent benefit was offset somewhat.

And I might add that of my own knowledge I know a number of

people who died in Vietnam trying to make sure that their family

was going to collect on this promise.

I was a lifer, as were many of my dear friends, and many of

these people wound up dying, and they were not able to collect on

the promise, but they gave their life thinking that the promise was

going to be carried out.

And I might add that Judge Vincent’s interpretation of what the

law is on the subject is certainly not binding. He had to take a

whack at that, and from his own perspective decide whether or not

it was Congress’ problem or the court’s. It is my view that this is

also the court’s problem. The court has got to sit down and take

a look at this series of promises that were made, and to decide

whether or not they are going to deliver on that. And certainly they

have the authority under the Little Tucker Act to come back and

say there is no question that there was a promise and we are going

to enforce it.

Mr. SCARBOROUGH. You talked about friends of yours who you

served with in Vietnam that did not come home.

Colonel DAY. Yes.

Mr. SCARBOROUGH. Let us talk just very briefly about our experiences in Vietnam. How long were you a prisoner of war?

Colonel DAY. I was a POW for 67 months. I got shot down August 26, 1967; I escaped shortly after that; got recaptured, and

then I was released on March 14, 1973.

Mr. SCARBOROUGH. Again we have heard Senator McCain’s talks

about just what it was like, how horrible that situation was, and

how difficult is it for you after losing friends, and after going

through the experiences that you have gone through, how difficult

is it for you to see your government, the country that you were

fighting for, that you were willing to put it all on the line for, just

back away from a promise and not deliver to you the same benefits

that are delivered to your counterparts in the Civil Service?

Colonel DAY. It is quite incomprehensible, and basically ignoble.

It is just not understandable that the military would be selected

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out as the only group of retired Federal employees who are not

going to have some good, sound medical care program like Blue

Cross/Blue Shield which is, you know, basically the premier program out there.

The idea that the military group is discriminated against is just

not one that I am able to understand, and I think it just gets back

to the idea that someone made an arbitrary decision that they were

going to do military medical care on the cheap, and said, ‘‘Well,

drop these people off into Medicare.’’ And, as has been alluded to,

obviously everyone who pays any tax is entitled to go to Medicare.

Those people also did not have the deprivation of missing their

families—in my case their Christmas of 1942, 1943, 1944, and 1954

away from home—I was 30 months out in the Pacific, I was away

from my family two tours during the Korean War. Those were

short tours, about 7 or 8 months each, and then of course I was

gone 6 years in Vietnam, so it is not very understandable that the

bureaucracy would have taken off in the direction that they did in

this discriminatory application of health care benefits to Federal

employees.

Mr. SCARBOROUGH. Thank you, Colonel. My time is up, but we

are honored that you are here today, and honored that you continue fighting to make sure that America does the right thing.

Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

I too thank you, and thank all of you, and the people in the audience for what you have done to make our country what it is, and

to keep it what it is, and I really mean that. When I think about

my own history and the fact that my mother and father were

sharecroppers, and for me to be a member of the Congress of the

United States of America, that did not happen just by accident, and

I know that it is the people in this room that made all of that possible, and I do appreciate it.

Colonel Rastall, I want to talk just a moment about the demonstration project. What steps could the Department of Defense

and the Office of Personnel Management have taken to improve the

enrollment in the FEHBP program? I was just wondering about

that.

Colonel RASTALL. I will make this short because the text of my

presentation will get in your hands, but TROA believes that the

low participation rate is attributable to a variety of reasons, most

significantly I believe some beneficiaries fear venturing into the uncharted waters with the worry that they would have to change

plans again when the test authority expires in 2002, and that is

their perception of it, and the lack of understanding about FEHBP,

including potential cost savings they would have over their existing

Medicare supplemental insurance.

As far as improvements are concerned, we strongly recommend

that the current test participants be allowed to continue their participation in FEHBP even after the conclusion of the demonstration

program. DOD continued to increase efforts to communicate and

explain fully the benefits available under the FEHBP test, including the option to convert to a Medigap policy without preexisting

illness restrictions should the test be terminated, and the subVerDate 11-MAY-2000 10:49 Feb 27, 2001 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 C:\DOCS\69952.TXT HGOVREF1 PsN: HGOVREF1
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committee support expansion of the FEHBP 65 program worldwide

as quickly as feasible, and make it a permanent program.

Expansion of the test in the fall of 2000 guaranteed enrollment

beyond December 31st, 2001, and an aggressive educational program will lead to a fair demonstration. A properly executed test

will truly reveal the propensity of uniformed services beneficiaries

to enroll in the program, the resultant government cost, and the

success or failure of FEHBP as an option that honors the lifetime

health care commitment.

Could I talk just a little bit on cost?

Mr. SCARBOROUGH. Sure.

Colonel RASTALL. You know these things that I am going to talk

about. These are some of the concerns that we have, or we read not

only in TROA, but outside TROA. With the forecast of a growing

budget surplus, as we have already alluded to the fact that it is

difficult to understand why funding could not be had—and we understand a lot of the problems involved in this process, do not misunderstand me—DOD civilian leadership apparently has chosen in

the past to ignore how directly this continuing abrogation affects

military readiness. I want to say lately this seemingly is turning

around a little bit.

Also, more and more the retirees who are the service’s best recruiters are reluctant to recommend a service career to their children and those of friends and neighbors. This is not only an issue

of equity and employer obligation, it is a readiness issue as well,

as we have already stated.

One final point. You probably know that the deliberations of the

Balanced Budget Act of 1997 resulted in Congress funding funds

to restore $1.7 billion per year for funding health care services for

illegal immigrants. I do not know what the outyear costs of that

would be, or what they would add up to. We know what the outyear costs would cost for some of the proposals here. We do not begrudge them of their needs, certainly not, but retirees find it difficult to understand why Congress could not consider at least as

high a priority for restoring promised benefits to those who fought

the hot wars, the cold war, and like today’s servicemen were and

are so often deployed to keep the peace.

Traditionally Congress has always had the will to do the right

thing. We are confident that congressional leadership can find the

funding to keep the promise made long ago to career veterans.

Thank you.

Mr. CUMMINGS. With regard to education under the demonstration projects do you think we could have done a better job of educating people as to the demonstrations themselves? And what was

the purpose for the demonstration projects?

Colonel RASTALL. What was the purpose?

Mr. CUMMINGS. Yes, sir.

Colonel RASTALL. As far as I know, and maybe I would like to

make a separate report on the details of this, but I am sure part

of the purpose was for the Congress to see what the reaction would

be and have a test run here to see what would happen.

Mr. CUMMINGS. Right.

Colonel RASTALL. I mean that is the primary purpose of it—to

see how many people would be interested.

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Mr. CUMMINGS. You are right, you are on the mark, but I guess

the question is the education. The reason why I mention the education piece is that you listed a number of reasons why as many

people as we thought—or we thought more people would enroll,

and they did not.

Colonel RASTALL. Right.

Mr. CUMMINGS. And I think you have given some very good reasons, and I was just trying to figure out whether you felt that education, educating people as to the demonstration projects, was a

problem. You might want to speak on that, too, Mr. Gammarino.

I am just curious, because it just seems like the demonstration is

the thing that helps you to take the demonstration and you say

‘‘OK, this works, and it works well,’’ and the hope is that you then

can take it nationwide and do it everywhere, and so I was just

wondering about that.

Colonel RASTALL. If we expanded this educational program in the

sites, in other places, it would help a lot to get more participation.

Mr. CUMMINGS. Mr. Gammarino.

Colonel DAY. May I?

Mr. CUMMINGS. Sure.

Colonel DAY. I think it is largely a matter of trust. I do not think

that most of the GIs—Mr. Rinely here kind of heads up a loose

group of around 10,000 people who we loosely call a class act group

who are the sponsors of this lawsuit against the government. They

have lost trust in the government. They do not think that any more

demonstrations are going to work, they think all of these are stopgaps. There are roughly 3 million World War II, Korean, pre-June

1956 veterans out there, they are dying at the rate of around 1,000

a day. The perception is that the government is dragging its feet

so these people will die off and go away. That is the perception. I

think that many of these people as soon as they start talking about

getting moved over to this test group of some kind, or that test

group, and this is going to terminate in 2003 or whatever it is, they

just say to themselves, ‘‘Why should I believe that?’’

Mr. CUMMINGS. Why be bothered.

Colonel DAY. Yes. And who knows that is going to work, and who

knows they are going to keep paying.

Mr. CUMMINGS. Thank you. That is very helpful.

Mr. GAMMARINO. First I do not think it was realistic, given the

base of enrollees that we started with, that you were going to get

the potential everybody thought was out there. You wanted a group

of 66,000, you started with a pool of 66, so it was unrealistic to assume you are going to get that level of participation.

Why? My other panel members have already told you some of the

reasons. Additionally I can tell you just from trying to market a

health insurance program it takes more than 1 year to educate a

population in terms of what you have to offer. The pilot program,

I do not think a lot of people are going to jump into a 3-year pilot.

What is out there for them in the long run?

In terms of going forward, I understand there is a GAO study

going to be done in terms of focus groups. I hope and assume they

will talk to both people that enrolled and that do not, but I think

in order to get the type of enrollment that you need for a demonstration project you are going to have to increase the pool. You

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are not going to get 66,000 people over the next couple of years in

the existing pool.

You do need continuous ongoing communications, and you have

to use a variety of mechanisms and vehicles to get there. From my

vantage point in terms of educating members to our plans, we use

a number of vehicles. We use direct mails; we have toll-free call

lines that people can call us and find out about our program; we

have outbound calls to educate people on what we are all about.

So there are a number of vehicles, and you cannot just stick with

one, and you are going to have to use a number of support groups.

The health plan such as Blue Cross/Blue Shield would be happy

to participate with the agencies, happy to participate with the retiree groups, but I think you are going to need a coordinated effort

to educate these people on what the FEHBP is all about.

And last, but not least, what will happen over a period of time

is word of mouth. If the current enrollees that are in the program

are satisfied, they will tell their neighbors, and the trust alluded

to earlier hopefully would buildup and they would find a reason to

take a look at a program such as ours.

Thank you.

Mr. CUMMINGS. Thank you, Mr. Chairman.

Mr. SCARBOROUGH. Thank you, Congressman Cummings.

Congressman Shows.

Mr. SHOWS. I would just like to have one question for Colonel

Day. When you were recruited and the coming years after that, did

they not have posters that were sent out, and recruiting materials

saying that—did you ever see written material that said—I know

I saw a poster in I think it was like 1991 or 1992 that join the

Army for a career and have health care for the rest of your life.

Have you run across those, did you see them in your career or

when you were recruited?

Colonel DAY. Yes, sir, I have. In fact, I have in my brief to the

Federal Circuit Court an Army recruiting pitch that is directed to

lawyers dated November 10, 1997 that promises lawyers, you do 20

years and you will have a lifetime of free medical care.

Out in the units back in my active duty days you had people who

were appointed as in-house recruiters, and as people came up, particularly highly skilled enlisted people, as they came up to terminate their enlistment you had people who were out there counseling them, talking to them, giving them a pitch about re-enlisting,

and pointing out to them what these medical benefits are worth,

and what your retirement pay is worth, and why ship over, and

why do all these things. So these pitches have been consistent. We

have some documents in my brief here that shows these recruiting

pitches again being made in 1991 and 1992, so this I will say

roughly 25 years after the military said in the Space A that, ‘‘We

are not going to give that to you.’’

Mr. SHOWS. That is right.

Colonel DAY. And so there is no question that these recruiting

pitches have been made, and there is no question that they have

been relied on. So that has just been—and I have in here I guess

roughly another dozen affidavits from recruiters who as late as in

the 1980’s were still making that promise.

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One of the problems that I have also in my brief is that Judge

Vincent never let me get into the discovery of the recruiters’ material. I never got to depose any of the general officers that run the

recruiting command, which is a separate command, commanded by

an Army I believe either two-star or three-star, I was not able to

get discovery or production on that went back before 1956. So that

was one of our basic problems, and one of the reasons why he was

able to find as he did, because he did not have the documents to

read.

Mr. SHOWS. We had a prisoner of war in Vietnam from Hattiesburg. Did you ever know Colonel Hall? He was 71⁄2 years——

Colonel DAY. Yes, sir. I know him very well.

Mr. SHOWS. He is a good friend.

Colonel DAY. Yes, sir.

Mr. SHOWS. I appreciate that testimony. I just do not understand

how we are having such a hard problem with this among our leadership in that when we have the material out there, and I cannot

understand the judge not letting you use the recruiting material in

your case. That just does not seem right.

Colonel RASTALL. Well, I will also leave this with you. This is one

of the Army posters from way back, the early nineties: ‘‘Superb

health care. Health care is provided to you and your family members while you are in the Army, and for the rest of your life if you

serve a minimum of 20 years of active Federal service to earn your

retirement.’’

Mr. SHOWS. You know what I cannot figure out, how the lawyers

got by without getting it if the lawyers were promised it.

Mr. SCARBOROUGH. That is a good question. Without objection we

would like to have copies of that brochure, and Colonel Day, and

copies of all the information that you have pertaining to recruiting

brochures that promised health care for life. Without objection.

[The information referred to follows:]

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Mr. SCARBOROUGH. Congressman Shows, any other questions?

Mr. SHOWS. No.

Mr. SCARBOROUGH. OK. Thank you.

Well, I would like to do about 10 more rounds, but unfortunately

we have to get up to Washington and vote today, so if you gentlemen do not mind I will be submitting written questions, and if any

other panel members have any written questions they would like

to submit to you we will keep the record open for several weeks to

get a response to those questions.

But thank you again for coming and testifying, and we appreciate your service to the country, and also appreciate what you are

doing now. Thank you.

Colonel DAY. Thank you.

[Applause.]

Mr. SCARBOROUGH. All right. We now call our third panel up to

testify, third and final panel today, and speaking on the third

panel once again we will have William ‘‘Ed’’ Flynn III, he is Director of Retirement and Insurance Programs for the Office of Personnel Management. He is a frequent witness before this subcommittee, and we certainly appreciate his technical knowledge of the

FEHBP. Thank you, Mr. Flynn, for being with us again.

Our other witness for the third panel is Rear Admiral Thomas

Carrato. He currently serves as Director of Military Health System

Operations at TRICARE. He has appeared before this subcommittee to discuss the ongoing military FEHBP demonstration project,

and we certainly appreciate his appearance here today also.

Mr. Flynn.

STATEMENTS OF WILLIAM ‘‘ED’’ FLYNN, DIRECTOR, RETIREMENT AND INSURANCE PROGRAMS, OFFICE OF PERSONNEL

MANAGEMENT; AND REAR ADMIRAL THOMAS F. CARRATO,

DIRECTOR, MILITARY HEALTH SYSTEM OPERATIONS,

TRICARE MANAGEMENT ACTIVITY

Mr. FLYNN. Thank you, Mr. Chairman, and good morning also to

Mr. Cummings and Mr. Shows.

I appreciate very much your invitation for me to come and testify

today, and to provide some information about how the Federal Employees Health Benefits Program operates, and our views on several bills that are pending in Congress that would enable certain

members of the military family to enroll in the Federal Employees

Health Benefits Program.

As you know, and as has been stated here this morning, the Federal Employees Health Benefits Program is the Nation’s largest

employer-sponsored health insurance program. With $18 billion in

annual revenues it covers approximately 9 million people, including

2.3 million active Federal employees, 1.9 million retirees and their

eligible family members and dependents.

Each year we prepare a wealth of comparative and other information in paper and electronic formats to enable these individuals

to make informed choices among the almost 300 health plans that

participate in the program. The program provides active and retired Federal employees and their families access to the same

health plan coverage with the same government contribution. In

general, participants receive a government contribution equal to 72

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percent of the program’s weighted average premium, limited to 75

percent of the premium for any particular plan that they choose.

Individuals who enroll in the program then pay the difference out

of their own pocket.

By virtually any measure, the Federal Employees Health Benefits Program is a resounding success. It has weathered evolution in

the health care industry remarkably well, though it has not been

without its challenges, some of which as you know we confront

today. The program earns high marks from observers as a marketoriented program which provides vital health care protection at a

reasonable price to its members. Because of this, many see it as a

model for extending health care protection to others. We have always attempted to be helpful in this regard. If our experience can

be used to solve health care issues for others, we are eager to assist.

The program is unique. It is an employer-sponsored program, it

is an integral part of the compensation package the government relies on to successfully compete with other employers in attracting

and retaining qualified employees to perform the vital work of government. As an employer, the government must be able to manage

its health insurance costs in order to remain competitive, and to

offer value to the government’s work force.

For these reasons, if we were to undertake a direct role in expanding health care access for members of the military we would

want to ensure that the program’s strategic value as a component

of that compensation package is maintained.

In order to do that, we think several principles are important.

First, the new population should be considered a separate risk pool

for purposes of establishing premiums, at least until there is

enough experience to evaluate whether or not they are any differences in the utilization of health care.

Second, the sponsoring organization for the new population must

be prepared to conduct enrollment administrative-related financial

activities in much the same way that Federal employing agencies

do today.

Third, proposals for adding any group should include authority

for OPM to manage the inclusion of new participants to ensure

adequate access to health plans and the services that they offer.

On the whole, the pending legislative initiatives to allow certain

military groups to enroll in the Federal Employees Health Benefits

Program conform to these principles. We have reviewed the pending bills to understand their implications for the Federal Employees Health Benefits Program, and we are working with the Department of Defense to determine the best way to meet the needs of

that population.

In that regard let me offer just a few comments on the current

Department of Defense Federal Employees Health Benefits Demonstration Project. As you know, we have just concluded the initial

open enrollment period. While cooperating closely with the Department of Defense on every aspect of implementation, all of us are

disappointed that only about 2,500 of the 66,000 eligible individuals chose to participate. We are already planning greater outreach

efforts and informational efforts for the next enrollment period in

November.

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There has already been some testimony this morning about the

various reviews we have underway and things that we can do differently and better next November. I think I will just make reference to that and answer any questions that you may have.

As I said, Mr. Chairman, I appreciate very much the opportunity

to be here this morning, and would be happy to answer any questions you may have.

Mr. SCARBOROUGH. Thank you, Ed.

Admiral Carrato.

[The prepared statement of Mr. Flynn follows:]

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Rear Admiral CARRATO. Mr. Chairman, Mr. Cummings, Mr

Shows, good morning.

I would also like to say I am honored to be in this auditorium

with Colonel Day and the other great American patriots who are

here and represented today.

I appreciate the opportunity to discuss the department’s progress

in implementing TRICARE, and to review the legislation pending

in the Congress on access to FEHBP for military beneficiaries. A

particular focus for both the Congress and the administration is defining how the Nation will keep its health care commitments to

military retirees and their families over the age of 65.

TRICARE is the Defense Department’s means for execution of

the military health care mission, to ensure readiness through a fit

and healthy force that is ready to fight whenever called upon, and

to provide health care for the military family.

TRICARE offers a triple-option health benefit that provides beneficiaries a choice. TRICARE offers a comprehensive health benefit

for our beneficiaries for preventive health services. For better coordination with our civilian systems, and to lower out-of-pocket

costs for families we have designed and fully implemented a strong,

more uniform benefit.

Because health care is a key quality of life issue for our service

members and their families, making TRICARE work for our beneficiaries is a very high priority for the department. Many steps

have been taken to make the program less expensive and easier for

our beneficiaries to use. Recent independent reports on TRICARE

performance find improved access to care, high quality of care, and

stable costs for the government and beneficiaries.

While we have taken many actions to improve TRICARE, our

work is not done. Over the past year senior department and service

leadership have visited each TRICARE region to identify areas in

which we can further improve customer service and access.

We have developed an aggressive action plan to further improve

areas such as access to care and claims processing. We are working

closely with the joint chiefs of staff and the Defense Medical Oversight Committee, which is made up of military and civilian leadership, to ensure these improvements will make TRICARE more accessible and customer-friendly, simpler, and more uniform throughout the country.

Another focus of the department is enhancing the military health

benefit. The President’s budget for fiscal year 2001 adds funding

for two important expansions of the TRICARE benefit that will

lower out-of-pocket medical costs for service members and their

families.

A number of bills introduced in this session of Congress include

extension of FEHBP coverage.

The department views extension of the FEHBP demonstration

and other demonstrations as an opportunity to collect additional information and experience on the feasibility of these alternatives.

The department is working with OPM to select two additional sites

for the FEHBP demonstration for this fall’s open season due to low

participation in the initial open season for the demonstration.

The department opposes the provisions extending FEHBP coverage to military retirees on a permanent basis, owing to their high

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cost and adverse effects on military readiness. These provisions are

estimated to cost $5 billion to $9 billion annually. The most serious

consequences of these provisions would arise if the high costs had

to be absorbed by the Defense Health Program. Space-available

care in the military treatment facilities would ultimately be reduced by the cost of this new entitlement. Consequently, beneficiaries in the lowest priority for access to care in military hospitals would see their access severely curtailed, if not eliminated.

This group would include those beneficiaries not enrolled in

TRICARE Prime.

The department is committed to doing all it can to provide health

care for our retired beneficiaries who have served our country with

great honor and dignity. As the subcommittee members are aware,

current statutory authority provides only for space-available care

in military treatment facilities for military retirees who have

reached age 65.

The growing number of military retirees aged 65 and older, infrastructure downsizing, and increased TRICARE Prime enrollment

have resulted in less space-available care for military retirees.

Secretary Cohen and the chairman have expressed their strong

commitment to expand health care access to our Medicare-eligible

retirees, their spouses and survivors. The department is conducting

several demonstration programs to test the best means to expand

health care to our Medicare-eligible retirees.

As the department conducts these tests of FEHBP, TRICARE

senior, and other approaches for meeting the needs of our senior

beneficiaries we always keep in mind the substantial sacrifices that

these people made in service to their country. We also remember

their comrades-in-arms who gave the last full measure of devotion.

Thank you.

[The prepared statement of Rear Admiral Carrato follows:]

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Mr. SCARBOROUGH. Thank you, Admiral, and I appreciate again

both of you being here today.

Admiral, I wanted to ask you, first of all it sounded as if in your

testimony that you stated the Department of Defense’s position on

Congressman Shows’ bill would be that it was opposed because of

the high cost; is that accurate?

Rear Admiral CARRATO. Yes, sir. There are two issues that we

are concerned about and the views we provided on Mr. Shows’ bill.

The first issue is the impact upon medical readiness. The second

issue does deal with the cost issue, and certainly the potential impact that would have from a financial perspective on the defense

health plan.

Mr. SCARBOROUGH. Do you agree with the statement that Secretary Cohen said on Friday, actually this past Friday, where he

said how do we tell the people who are coming in that we want

them to make a commitment when we make a commitment that we

cannot even keep.

Some of the retirees are saying to potential recruits, ‘‘Do not join

because they will not take care of you and your family.’’ That can

have a major impact on recruitment. I mean do you agree with Secretary of Defense Cohen that these broken promises are starting to

catch up with the military in this country?

Rear Admiral CARRATO. Yes, sir. I know the Secretary and the

chairman are both very concerned about quality of life issues, and

certainly health care is one of the most important quality of life

issues.

Mr. SCARBOROUGH. Well, is there not a disconnect there, though?

If the DOD does not step forward—and again I think we need to

go back to last year’s hearing, and I am not one, you can ask my

children, I am not one to say I told you so, but I will tell you, you

know, last year we had a little back and forth to where you were

testifying that the way the program was set up we were going to

have something like 80 percent enrollment. I told you I would be

shocked if we even got to 10 percent enrollment, and now we see

that enrollment stands at about 4 percent. I was closer on that

‘‘The Price is Right’’ question than you. I am not questioning your

integrity, or your word, or your commitment to these military retirees, but I do have concerns with the DOD’s commitment because

they know full well that when we were predicting failure last year

now they have delayed another year, and what does another year

mean? It means—how many World War II—you may know this answer—how many veterans of World War II are dying weekly; 1,000

a week?

VOICE. More.

Mr. SCARBOROUGH. At least 1,000 a week.

VOICE. 1,000 a day.

Mr. SCARBOROUGH. 1,000 a day, so the question is how many

World War II veterans—you know, we have all these great movies

about them, whether it is Tom Hanks, or whether it is ‘‘The Thin

Red Line,’’ or whatever they are all called, and everybody goes out

teary-eyed wondering about what made these young men give the

ultimate sacrifice, whether it was at Normandy, or whether it was

at Pearl Harbor, or whatever, and yet every day we delay, another

1,000 die.

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And I will tell you what, I am not going to be polite if we come

back here next year and we have the same situation, and that is

why I am pressing you on this, that is why there was an urgency

last year when I said this thing was set up for failure, and that

somebody in the DOD was sending you out and putting you in a

very difficult position, because have bought a lot of time. Let us

face it, if 1,000 die a day, well, great, the Federal Government has

saved a lot of money on the deaths of veterans, World War II veterans where they are not going to have to worry about their health

care, and I am sure if they stall another 5 years or so pretty soon

they are going to just wait out these men and women, and wait

until they die, and then, hey, there is not going to be a great crisis.

I mean I think it is despicable what has happened, I think it is

despicable that they are doing the slow roll on these men and

women that gave their all. And I am not preaching there, but it

is hard for somebody like me to comprehend the existence of an Adolph Hitler, or to comprehend being attacked, American forces

being attacked on American soil, and it is remarkable to me that

the DOD is not going to step forward.

This question is about as long as a Chris Matthews question, I

guess, so the question is this: How can you guarantee me, or how

can—not you, but how can the DOD guarantee me that if you’re

not going to support Congressman Shows’ bill to take care of this

situation that we are not going to be back here a year later with

another 365,000 dead World War II veterans and with the same

situation where we say, ‘‘Well, let us conduct another study for another 2 or 3 years to see if this works or not?’’ What can you all

do?

Rear Admiral CARRATO. I think there were several questions. I

will try and touch on the big one first.

You are correct, the Secretary and the chairman have both recognized that a moral obligation has been made to these great American patriots, the individuals who fought and won World War II

and Korea. As the Secretary and the chairman have been working

with the Congress to address all of the quality of life issues, and

last year with the tremendous support of Congress, the Secretary

and the chairman were able to address pay and retirement housing; this year they are focusing on health care. And in that regard

to meet and address the moral commitment the Secretary established the Defense Medical Oversight Committee which is comprised of the UnderSecretary for Personnel and Readiness, the

Vice-Chiefs of the services and their UnderSecretaries, and they

want to look at the TRICARE benefit, and what we can provide to

the over–65 retirees, and how we found it.

I can also say that one bill, Senate bill 2087 which talks about

extending the national mail order pharmacy program, the department has gone on record as saying that represents a very good first

step, and you need to start with a very good first step, but the bottom line answer is that the department does recognize a moral

commitment, they have established a very senior body comprised

of senior military and civilian leaders to address this very important policy issue for the department and for the country.

Mr. SCARBOROUGH. Is it primarily a money issue? Is the opposition—you say it is $5 to $9 billion annually—would the DOD be

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willing to support Shows/Norwood, a bill that we all support, if we

were able to figure out a way to fund it without going into the DOD

budget?

Rear Admiral CARRATO. Well, I think funding certainly is an

issue, and we need to be fiscally prudent in anything that we do.

Mr. SCARBOROUGH. Is it a main issue?

Rear Admiral CARRATO. The other issue is readiness.

Mr. SCARBOROUGH. Readiness in what way?

Rear Admiral CARRATO. Readiness—the reason for being, for

having military health system is to provide support to our troops

when they go in harm’s way, but we also need to make sure that

we have a fit and healthy force, so we have a significant peacetime

role to make sure that our force is healthy.

We need to make sure that we have that infrastructure, that we

have those highly trained physicians, nurses, technicians who are

able when called to support a contingency, and what we learn is

that what we do in peacetime, whether it is medical logistics, whatever support there is for the wartime mission, we need to make

sure that what we do in peacetime we can translate into wartime,

so readiness is a very, very important consideration, in addition to

funding issues as we consider these bills.

Mr. SCARBOROUGH. Would you agree with myself and Secretary

Cohen and other people that have spoken today that readiness is

one of our concerns, too, that when we do not keep the promise we

cannot get the best people to come in and service? You agree that

is a readiness crisis, too?

Rear Admiral CARRATO. I agree with a lot of the statements that

were made, but I think you made the statement you can have

whatever Hollywood producer/director producing recruiting commercials, but when your grandfather, your father tells you that is

probably not a good deal, that is really what impacts on recruitment, and it certainly can have some effect on retention as well,

and that is why the Secretary and the chairman are committed to

working with the Congress to address this issue.

Mr. SCARBOROUGH. I really hope we can keep an open dialog and

with the urgency of understanding how many American heroes die

every day, and die going to the grave knowing like my grandfather

that the country they fought for could not even keep their promise

to them, and I appreciate you being here testifying today. I know

you do not deliver a message that anybody here wants to hear, but

at the same time you are doing your job, and I look forward to

working with you over the next year to make sure that when we

hold a hearing again next year, and we will regardless of who is

in charge, that we will have positive news to tell these men and

women.

Congressman Cummings.

Mr. CUMMINGS. I was just sitting back just listening, and I could

not help but think about Colonel Day’s statement when he said

that he believed, and a lot of people believe, a lot of our retirees

believe that our country is just sort of waiting for them to die—boy,

that is deep—just waiting for them to die. [Applause.]

And I am not here to beat up on anybody, but I think it does say

something for us where we do not have the balance, and Congressman Shows in his statement he was talking about the balance, he

72

was talking about civilians, and he was talking about military, but

there is also a balance I think that we have to have between the

readiness that you talk about, and also talking about the people

who made it possible for us to even have a system for people to be

ready. In some kind of way we have got to strike that balance, because right now it seems like we are out of balance, and a lot of

times in these kind of hearings, not necessarily about the military,

we talk about costs if you do not do certain things. You know, we

talk about children, we talk about all kinds of costs, and here I

guess we don’t talk about the cost of not providing adequate and

timely health care because we are talking about older people, so we

do not say, ‘‘Well, if we do not treat the person who is 67 years old,

and do not give them what they need in 3 or 4 years it is going

to cost us more to treat them because the health care will cost

more, because we are saying they are going to die.’’ I mean that is what it really boils down to. I do not care how

you look at it, and so it is not a very good commentary about the

most powerful country in the world.

And that leads me to ask you, Rear Admiral, about the task

force. You mentioned a task force—— Rear Admiral CARRATO. The Defense Medical Oversight Committee?

Mr. CUMMINGS. Yes, the one that is trying to come up with solutions.

Rear Admiral CARRATO. Yes, sir.

Mr. CUMMINGS. Do we have any kind of representation from the

retired community on that?

Rear Admiral CARRATO. No, sir.

Mr. CUMMINGS. And it would just seem to me, and I do not know

how that is structured or whatever, but it would just seem to me

that I would love to have a guy like a Colonel Day or somebody

sitting there saying ‘‘Hey, hey, what about us?’’ And I was just

wondering, is there a mechanism for that kind of thing?

In other words, if you are trying to come up with something, if

you have got some kind of mechanism in place to try to address

these various medical problems with readiness, and retirees, and

everybody, and you do not have a voice of the retired community,

even though they may be senior officers on it, I just wonder if that

is something practical that could be done.

Rear Admiral CARRATO. Let me answer your question in a couple

of ways. First of all, in terms of being able to take advantage of

individuals like Colonel Day, the member organizations of the Military Coalition and Alliance, organizations like TROA and others,

we meet routinely—and when I say we, the office of the Assistant

Secretary for Health Affairs—we have a recurring dialog. In fact,

when enrollment was coming in as low as it was on the FEHBP

demo, we quickly assembled that meeting on an ad hoc basis to get

input.

We also stay in contact with them about improvements they

would like to see made to the TRICARE program. They are also

called—in this year’s testimony before our oversight hearings the

authorization committees both had panels where representation

was provided by the Military Coalition and Alliance, so their voice

is being heard.

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I think they are also being heard certainly by the Secretary and

by the chairman, and that is one of the reasons that this Defense

Medical Oversight Committee was formed. In fact, one quote we

heard was that medicine is too important for just the medics to

handle it, and that is why this senior-level panel that now recognizes that health care is truly a recruitment and retention issue

has assembled this senior body.

Now, while the membership does not allow for people currently

like the membership organizations, certainly as the committee receives briefings from various parties that might be an opportunity

to—and again I do not want to represent that I control that agenda, but I would think that might be one possibility to hear those

concerns.

But I think the bottom line is, I think the concerns are well

known to us. That is why I think as Colonel Day indicated, the Secretary, the chairman, that we do have this moral obligation, and

we do need to find a way to address the issue.

Mr. CUMMINGS. I just have two more questions, Mr. Chairman.

Mr. SCARBOROUGH. All right.

Mr. CUMMINGS. Tell us what was the purpose of the demonstration projects, and what, if anything, have we learned from them?

Rear Admiral CARRATO. We have several demonstration programs for the over–65s that are currently ongoing. We also have

a permanent program which addresses some of the concerns that

were raised about base realignment and closure. We have a prescription drug benefit for the over–65s who were or are adversely

impacted by base realignment and closures, so that addresses a

very big void in Medicare coverage, and that is prescription drug

coverage. That is a permanent program that the Congress directed

us to implement, and we are serving about 400,000 Medicare-eligibles through the Brack Pharmacy Program.

We also have a TRICARE Senior Prime which is a Medicare subvention demonstration program, and that is six sites where we took

six military hospitals, and we went through the Medicare Plus

Choice qualification process, so we actually have qualified six military hospitals as Medicare HMOs, and Congressman Shows knows

that the only Medicare HMO in the State of Mississippi is the one

run by Kessler Medical Center. And that was to test the subvention program. Could we operate like a Medicare HMO, receiving

funding from HCFA, and we have about 30,000 folks enrolled in

that program.

We have two programs that we are just enrolling in now. One is

another pharmacy demonstration program at two sites, and we also

have something we call the TRICARE Senior Supplement demonstration program, and that is where we are putting in place

TRICARE as a wraparound supplement to Medicare.

The other program, and the one I am going to be coming before

your committee again next week to talk about, is the FEHBP demonstration program, and that was a test to see if we offered

FEHBP to our over–65 population would they enroll.

I think all these tests are very valid. We are learning some valuable information. We do not have the complete scientific evaluation

yet to learn all the lessons, but we are getting some valuable information, and I think it will be helpful as we move forward in

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crafting a long-term solution, a long-term policy solution to the

over–65 health care issue.

Mr. CUMMINGS. Just last, but not least, because of what you just

said, you know, it goes back to when I asked Colonel Day and others about this whole question of the demonstrations, and you heard

their opinion of the demonstrations; right?

Rear Admiral CARRATO. Yes, sir.

Mr. CUMMINGS. Can you understand why they would say what

they said that the demonstrations are basically like a sort of stalling tactic I guess, and it is waiting for people still to die? I mean

that is a hell of a statement to come—and I know, I mean I see

everybody shaking their heads because they agree with it, but for

us to take that back, I agree with the chairman some kind of way

we have got to get this message through that the very people that

all of these demonstration programs are supposed to be trying to

help and all of that kind of thing, they do not have much of an

opinion about them at all; they just think that it is a bunch of crap.

So I mean that is—[applause]—and I just think that we have got

to some kind of way we have got to do something different. I mean

it is nice to be going in this circle, but it seems like that is about

all it is, and I would rather—I used to always tell people if you are

for me you are for me, if you are against me you are against me,

but at least let me know so I can—I do not want people to say that

you are doing something for me that you are not doing, and I can

deal with that, but if you say you are doing something and I can

clearly see that it is not doing what you claim it is doing, then I

have a major problem.

And so with that I just want to thank all of you again, everybody

who has testified, and being here in Pensacola I must say that you

are very fortunate to have Mr. Scarborough representing you, and

I am a Democrat, but we were able to get through our committee

the long-term care package, which is very, very important, and I

hope that the people in the audience understand that it is meeting

like this, this is what America is all about right here, people getting together, us listening to what you all have to say, and taking

that back so that hopefully we can make the kind of changes that

will make a difference in your lives, and I just want to tell you it

means a lot for me to come down here from Baltimore to see at 9

o’clock on a Monday morning this number of people out interested

in what their government is all about, and it also shows that you

have faith in us that we will do the right thing, and that we will

hear you. And I thank you.

[Applause.]

Mr. SCARBOROUGH. Thank you, Congressman Cummings. I certainly appreciate you coming down, too, and you are right, we have

accomplished quite a bit on long-term care, and I know we are all

standing shoulder to shoulder to make sure that the same thing

happens here, and I thank you for coming down.

Also I think it is interesting your talking about this committee,

it was an interesting question whether they have any military retirees on that committee, and of course the answer is no, and I always find it interesting that you can always tell when somebody

is about to leave the White House, because whether they are working for Republicans or Democrats you can tell they are starting to

75

shop their book deals, and their frankness, the closer they get to

retirement they get more and more blunt.

I have found the same thing here where men and women that

are serving in the military, the closer they are to their retirement

date the more blunt they are about the promise that has been broken, so I think that is why it is absolutely critical that we have

people that are freed of the politics of the Pentagon just like the

politics of the White House, or just like the politics of Congress,

and are able to speak their mind and be blunt, and hopefully that

is something we can work on speaking to the Secretary of Defense

about having some military retirees on this panel.

Congressman Shows.

Mr. SHOWS. Thank you, Mr. Chairman.

Admiral, I would not want your job sometimes coming to these

events like this, but I do have some concern about what you said,

and I have got several questions here, but I am going to get to one

that just kind of—tell me why this would harm military readiness.

You know, I would just like to know, and if we—and let me put

it under this scenario: My point all along is I am not asking DOD

to take money out of their budget to put into this program; I think

we ought to put additional moneys in to make sure the program

is funded. We do not want an unfunded mandate, do we?

Rear Admiral CARRATO. No.

Mr. SHOWS. And so I have always heard that it has been the

money, and now I am hearing it could affect military readiness.

Well, nobody wants to affect military readiness, but if you would

tell me why.

Rear Admiral CARRATO. OK. With readiness, we operate as you

know a system of hospitals and clinics staffed by people in uniform

and civil service folks whose mission and reason for being is to support our fighting forces when deployed.

We also have a peacetime mission which is important for a couple of reasons. One is we need to make sure that when our forces

are deployed that they are fit and healthy to fight. Also physicians,

nurses, clerks, technicians we need to support our fighting force,

they need to be able to be in the business of patient care. They

need to be in the ICUs. We operate graduate medical education

training programs, we do that in our fixed facilities.

If we were to offer FEHBP enrollment to people, what would be

the impact upon our fixed assets? We need to optimize, we need to

make sure that the physicians, the nurses, the technicians and

corpsmen who are supporting our fighting force in the field have

adequate training, and again prepare for war. We need to perform

that mission in peacetime so it carries over. So that summarizes

the big concern over medical benefits.

Mr. SHOWS. Well, the Federal Employees Health Benefits Plan,

and again I am a new guy, OK, so I do not know all the ins and

outs of the program and what is going on to some extent, but if you

had the Federal Employees Health Benefits Plan could you not

take that to the private hospitals and services there? Am I missing

something there?

Rear Admiral CARRATO. I guess another way to look at it, and

our Assistant Secretary oftentimes says TRICARE is the only HMO

that goes to war, and maybe we are not communicating here, so if

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I have misunderstood your question, but we rely heavily on our

uniformed providers in our military facilities. In fact, a large number of our TRICARE Prime enrollees are enrolled to a uniformed

provider in the military facility, so we need to practice that care.

If we suddenly started losing patients, if patients started going

to FEHBP, and I am not sure—— Mr. SHOWS. So you are telling me that you are afraid they will

leave the TRICARE and go to the FEHBP?

Rear Admiral CARRATO. No, I think there is a variety of reasons.

One is the cost reason, would we have to further decrease our infrastructure to pay the FEHBP benefits.

Mr. SHOWS. My vision or perspective about this thing, first of all

I am not for taking money out of the DOD to do it. I think we

ought to be taking some money and putting it in there for it, so

I do not see how that—[applause]—and again I am not as technical

about this as I should be, and with the experience, but I am not

saying take anything from DOD; I am saying adding to it.

Now, if the problem is that you are afraid we are going to start

taking some of these patients away and enroll them in other care,

and that is going to cause your doctors or your medical staff not

to get the practice that they need, I think it is a very, very bad

reason, and again I am not saying this to get a response out of the

crowd, you know, it just gets to me that you are afraid we are just

not going to have enough guys to practice on, and I just—I do not

understand that. You know, I could see where we could if we are

running short of patients let some of our doctors go and help them

in the private sector hospitals, loan them out or something, but I

just do not see that being a good reason not to be for this bill.

Let me ask you this: Under the pilot program, and Mr. Flynn

may be able to answer this, some of the talk that we have out there

is that if you join the pilot program, whether it is true or false, you

are going to lose the coverage that you have not knowing if this

program is going to be renewed. Is that correct? Admiral, do you

need to answer that? I do not know.

Rear Admiral CARRATO. As we have looked at reasons why individuals have chosen not to enroll, one of the reasons that people

have indicated is that it is a demonstration program, and do I want

to give up what I have already got in the way of health care coverage for a demo that may end some 3 years down the road.

There is information, and again it gets a little bit complex, but

if you were covered as defined by law a Medigap program you can

get that program back without regard to preexisting condition.

However, there are some other arrangements that people entered

into prior to the establishment of some of the Medigap programs,

and those situations really need to be examined on a case-by-case

basis, so that led to a little bit of confusion, one that could not be

clarified with a marketing brochure or a simple phone call, it really

needed sort of a face-to-face.

Mr. SHOWS. So you think that could be overcome, misunderstanding about that?

Rear Admiral CARRATO. I think so.

Mr. SHOWS. And maybe you would have a better test project.

Rear Admiral CARRATO. Right. In fact, the point that Mr.

Gammarino made in terms of marketing, and I think as I have witVerDate 11-MAY-2000 10:49 Feb 27, 2001 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 C:\DOCS\69952.TXT HGOVREF1 PsN: HGOVREF1
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nessed marketing of health care programs to the military community, and it is probably true in other communities, but it is really

the word of mouth, it is people who are in the program saying

‘‘Hey, this is a pretty good deal, you really ought to sign up for it,’’ and I think that is where we make some big gains and we might

see some additional enrollment.

Mr. SHOWS. One more question. There are not different levels for

retirees of rank? I mean if you are a military retiree, it does not

matter if you are an admiral, or a rear admiral, you still have the

same kind of health care coverage as any of these retirees have

here?

Rear Admiral CARRATO. Yes, sir.

Mr. SHOWS. So there is no difference.

Rear Admiral CARRATO. That is correct.

Mr. SHOWS. OK. I did not know that, I just wanted to make sure

I was right.

Well, I appreciate your comment, but still it is hard for me to

think about there are not enough people to practice on if we pass

this bill, and I just—— Rear Admiral CARRATO. Sir, let me say, and I say that the care

we provide in military treatment facilities is second to none in

terms of quality, we provide good care I think as we have seen in

TRICARE Prime, and in some of the discussions here today. I think

people want to come to military facilities, so I am not so concerned.

There are some other issues dealing with funding, and I would

be happy to provide a more detailed response to your question for

the record if I could, sir.

Mr. SHOWS. If you would, and let me say this: All the visits my

dad had to veterans hospitals—and he is not a military retiree, but

the staff there worked extremely hard to make sure he had the

service, and was treated with a lot of respect, and I am not saying

that about our health care facilities. All I am saying is that they

are not having the moneys to operate on that they should because

of the cuts. We need more outpatient facilities, and hopefully

maybe that is coming around, but I do appreciate you coming here,

and do appreciate your responding to me, and I would appreciate

the additional information.

Thank you.

Rear Admiral CARRATO. Thank you, sir.

Mr. SHOWS. Thank you, Mr. Chairman.

Mr. SCARBOROUGH. Thank you. And we are going to keep the

record open for several weeks, because I know we certainly do not

have the time to ask all the questions we want to ask of you all

and the other two panels, so we will be submitting some questions

in writing, and keep the record open for 2 to 3 weeks so you can

respond.

Let me just ask in closing, though, Mr. Flynn, I just wanted to

make sure I understood your testimony correctly that OPM believes that H.R. 3573 Mr. Shows’ bill, meets OPM’s criteria for extending FEHBP coverage; is that accurate?

Mr. FLYNN. As I indicated in my testimony, Mr. Chairman, the

principles as a provider of service, or a provider of this program

that were important to us seem to be met in that bill and in the

others that we have looked at, generally speaking.

78

Obviously there is a lot that happens from bill to implementation, but in the broad sense, yes, sir.

Mr. SCARBOROUGH. Good. Well, it sounds like we have OPM willing to come on board if we get this passed, and now all we have

to do is work the Pentagon.

So with that, thank you for coming, and Admiral, again I appreciate you coming and delivering news that everybody may not like

to hear, but that is part of the process, part of the democratic process. Like I said, this committee will be working with you and the

rest of the DOD to figure out how we can bridge the gap and make

sure that the promise is kept.

And I think it is at least positive that we have the Secretary of

Defense, and yourself, and the members of the Joint Chiefs all saying that the promise has been broken.

Let me tell you, when we were doing our TRICARE hearings 2

or 3 years ago, we could not get the DOD to admit to that, and so

I think we have come a long way in a few years, but we do not

have a few more years to close the deal, we have to do it now.

So I thank you, and I thank all the audience members for coming

out and participating in this process, and we will be around afterwards if you all have any questions.

We are adjourned.

[Applause.]

[Whereupon, at 11:15 a.m., the subcommittee was adjourned.]

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