Ghosts in the Machine

Jan. 1, 2003

For US military retirees, the ar-rival of President Bush in the White House two years ago was a welcome event. Bush had spoken often of the need to honor the nation’s veterans. He pledged to protect retiree benefits. And he vowed to put an end to government’s “broken promises.”

That last point got special emphasis from the new President. “We must keep our commitment to those who wore the uniform in the past,” Bush noted on Jan. 19, 2001. “We will make sure promises made to our veterans will be promises kept.”

The prime “broken promise,” of course, concerned retiree medical care. A Bush campaign statement said the US “promised lifetime health care to career military personnel” but “we have reneged.” It was a “contractual promise” Bush intended to fulfill.

To the exasperation of older retirees, however, even the Bush Administration has found the matter difficult to resolve quickly and in its entirety. This is evident in the course of an important retiree lawsuit seeking financial redress.

The issue is complicated, but the basic facts of this particular matter are not in dispute.

Retirees have long asserted they were promised free, lifetime care in military facilities after 20 years in uniform. This plan worked reasonably well until the 1990s, when two new factors emerged. First, thousands of retirees lost access to military clinics and hospitals due to base closures. Then, in 1995, the Clinton Administration announced a new military health care system, called Tricare. It excluded retirees 65 and older, who were told they had to use Medicare.

This twofold squeeze forced older retirees–mostly World War II and Korean War veterans–out of the DOD system and into a less-hospitable health care world. Many had to purchase supplemental policies, some costing hundreds of dollars a month.

In 1996, some retirees struck back, filing a federal lawsuit claiming breach of contract and seeking damages. Retired USAF Col. George “Bud” Day–Medal of Honor recipient, Vietnam POW, and lawyer–brought suit on behalf of two Air Force retirees. Some 22,000 others, age 65 and older, supported the suit and formed a possible legal class, called the “Class Act Group.”

A trial court dismissed the suit, but Day appealed, and a three-judge panel of the Circuit Court of Appeals in Washington agreed to hear him.

The previous Administration at first denied that recruiters made health care promises, but in the face of massive evidence to the contrary, backed off the claim.

In court, federal lawyers conceded that recruiters had, indeed, made promises. However, they said, they had no statutory right to do so and thus the promises weren’t valid. It was a legalistic approach, amply summed up in a March 2000 exchange between Judge Pauline Newman and E. Roy Hawkens, the lead government lawyer:

Newman: “You’re not telling us that these promises were not made; you’re just saying they don’t have to be kept?”

Hawkens: “That’s correct, your honor.”

The retirees won that round in court. To the surprise of some, however, the case has continued, and there was a rehearing before the full appellate court. That was bad news for the retirees. The court, in a 9-4 ruling on Nov. 18, acknowledged the retirees had “moral claims” but said recruiter promises were not backed by a statute and thus were not binding on the government.

The case now heads for the Supreme Court and more uncertainty.

Without question, the actions of the government stem from worries about cost. Some have estimated that US liability could be significant, if it lost the case.

Whatever the cost, no one now disputes that World War II and Korean War veterans were promised free lifetime care. Recruiters offered it, service leaders supported it, service members counted on it, and Congress funded it through the regular health care appropriations. This, in the view of the Day group, was nothing if not a “contract.”

The latest legal development comes on top of other struggles in recent years that have led to important gains for the majority of retirees. However, other retirees–especially elderly veterans, who are passing away at the rate of more than 1,000 a day–have become ghostly figures snarled in the complex machinery of government.

“What I find most troubling,” wrote dissenting appeals court Judge S. Jay Plager, “is the insistence by the government, represented before us by the Department of Justice, to define the government’s justice as a ‘win’ on any basis possible.”

No one doubts that retiree health care has seen remarkable improvements in recent years. Congress and the Executive have worked together closely and effectively to improve retiree medical benefits. For one thing, Congress approved the Tricare for Life second-payer system for 65-and-over retirees. However, the new program is not free; 65-and-over retirees must enroll in Medicare and pay Part B premiums. More importantly, many older retirees already have sustained substantial out-of-pocket expenses.

While the court’s majority could not find a legal basis to sustain the retiree case, it did express a “hope” that “Congress will make good on the promises recruiters made in good faith to plaintiffs and others of the World War II and Korean War era.” The Bush Administration could make a good start toward resolving the problem by working closely with the Congress and opening negotiations for a fair and reasonable settlement that the older retirees could accept.