Statement on the Medicare Demonstration of Military Managed Care

Today I am pleased to announce, on behalf of more than one million Medicare-eligible military retirees, a new demonstration that will expand health care options for our Nation's military retirees.

This initiative moves forward an idea—Medicare subvention, or Medicare reimbursement of Department of Defense health facilities—that the military retiree community has sought for many years. This administration first embraced the concept of Medicare subvention 3 years ago under health reform. More recently, the administration moved the concept forward in a legislative proposal for the Department of Veterans Affairs.

The demonstration I am announcing today, the "Medicare Demonstration of Military Managed Care," is a partnership between the Departments of Health and Human Services and Defense that can generate multiple benefits: expanded health care options and improved access to military treatment facilities for Medicare-eligible military retirees; a better way for the Department of Defense to care for retired beneficiaries and support medical readiness; and savings for the Medicare Trust Fund by providing health care to Medicare-eligible military retirees at a lower cost in the DoD health care system.

Under this demonstration project, Medicareeligible military retirees in five communities could enroll in Defense's new TRICARE Prime managed care system, and Medicare would reimburse DoD for these enrollees at a rate below what is traditionally paid to Medicare managed care plans. To protect the Medicare Trust Funds, Defense would receive Medicare payments only after meeting its current level of funding effort. The demonstration will test whether Medicare subvention is a cost-effective alternative for delivering accessible and quality care to dual-eligible beneficiaries.

We will submit legislation reflecting this agreement shortly. I am pleased that there is strong bipartisan support for this demonstration, and I look forward to working with Congress in quickly enacting enabling legislation this year.

We owe a great debt to those who have risked their lives defending our Nation. This agreement is an important step toward repaying that debt.