Military Officer - October 2006 - (Page 34) washingtonscene Is Inflation Losing Energy? ■ As this column went COLA Watch CPI edges ahead of last year’s pace. to press in late August, energy prices were dropping again. We may see a year-end CPI flip-flop from last year’s Katrinadriven energy cost spike. I n mid-August, the Bureau of Labor Statistics announced the July 2006 monthly consumer price index (CPI), which is used to calculate the annual costof-living adjustment (COLA) for military retired pay, VA disability compensation, survivor annuities, and Social Security. The CPI continued its upward trend, increasing another 0.3 percent in July — for a cumulative increase of 3.4 percent so far this fiscal year. Once again, a large share of the increase was caused by a jump in skyrocketing energy prices. Last year, the CPI had risen 3.2 percent through July and ended the year at 4.1 percent. With inflation currently running slightly ahead of last year’s pace, it seems likely that the CPI will end this year in the same ballpark. We at least can hope that inflation in the last two months of FY 2006 will not match last year’s, when Hurricane Katrina sent energy prices soaring. The final COLA percentage will be announced in mid-October. DoD Health Cost Challenge Pentagon leaders seek ideas to cut costs. M 34 MILITARY OFFICER OCTOBER 2006 OAA President Vice Adm. Norb Ryan Jr., USN-Ret., and other leaders of The Military Coalition (TMC) met Aug. 8 with Dr. William Winkenwerder, assistant secretary of defense for Health Affairs, for an update on the Pentagon’s strategic planning efforts. “A successful health care system adapts to the changing needs of its beneficiaries,” said Winkenwerder. Upcoming base realignment and closure (BRAC) actions will be aimed at making more efficient use of military medical facilities, and part of that will be realigning and downsizing at some locations. Winkenwerder also says the BRAC budget is “a little short” but expressed optimism about the upcoming changes. MOAA and TMC will be pushing for full funding so any shortfall doesn’t come at the expense of beneficiary care delivery. Winkenwerder repeated his concerns about health costs growing at a pace he considers unsustainable, and he indicated that now is the time to be looking at solutions. He challenged TMC associations to develop ideas and options to cut costs and maintain a great health benefit. Ryan agrees that funding issues are a challenge and has stressed the need for better collaboration between Pentagon leaders and TMC. MOAA stepped up to the plate on that score earlier this year by offering the Pentagon and Congress a list of 16 ways to reduce health costs in ways that don’t pose negative consequences for beneficiaries. MOAA accepts the challenge to identify additional options, in the belief that DoD needs to maximize its own efficiency before seeking to impose large cost increases on beneficiaries. For the most part, congressional leaders have agreed with that view. A major challenge, in MOAA’s perception, is that Defense health programs are not designed or managed in a way that promotes efficiency. The Army, Navy, and Air Force each manage their own separate military health budgets (in a wartime environment that leads commanders to rob those accounts to fund readiness needs). On the other hand, the TRICARE Management Agency oversees three regional
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