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Fixing the Force: The Outdated Military Compensation System

Issues » Foreign Policy and SecurityFixing the Force: The Outdated Military Compensation SystemSOURCE: AP/Jim MoneA sculpture portrays a wounded soldier being helped on the grounds of a Veterans Affairs hospital, June 9, 2014.By Katherine Blakeley | Thursday, May 7, 2015PRINT: <img alt="print icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/print24.png" width="24">SHARE: <img alt="Facebook icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/facebook24.png" width="24"><img alt="Twitter icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/twitter24.png" width="24"><img alt="Share on Google+" src="https://www.americanprogress.org/wp-content/themes/c3/images/googleplus24.png"/><img alt="Email icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/email24.png">See also:Infographic: Fixing the Force: The Path of a Military Career by Katherine Blakeley, Mo Smolskis, and Charles SchellpeperInfographic: Fixing the Force: Understanding Military Pay by Katherine Blakeley, Mo Smolskis, and Charles SchellpeperThe current military personnel system is outdated and too rigid to accommodate the flexible future force that the U.S. armed forces and national security will require. Designed in the post-World War II era with a hodgepodge of additions, the military pay, health care, and retirement systems remain largely the same as they were in 1947.PayBasic pay is a central element of the military compensation system, as well as the easiest element to understand, but it comprises only about half of total annual compensation for most service members.In addition to basic pay, service members can receive Hostile Fire/Imminent Danger Pay, as well as a variety of other special and incentive payments. For example, service members receive incentive pay for being a pilot or serving at sea. Service members also receive a Basic Allowance for Subsistence to subsidize their food costs. Those who live off-base get a Basic Allowance for Housing, which covers 100 percent of their housing costs, adjusted for the local cost of living.The pay scale starts low, but service members’ pay quickly increases as they gain more experience and are promoted out of the most junior ranks. For both enlisted service members and officers, regular military pay is about twice as much as that of civilians with comparable education and experience. However, officers are paid much more—up to twice as much as enlisted service members with similar years of service. While this pay difference made sense for a military with career officers and drafted enlisted soldiers, it does not reflect the reality of the skilled enlisted soldiers who make up today’s all-volunteer force.Health careThe U.S. Department of Defense, or DOD, provides health care coverage through TRICARE plans to all active-duty service members and their dependents with no premiums and minimal copays. This is a significant benefit: Employer-provided health care coverage in the private sector costs an average of $16,834 annually in premiums alone. But DOD’s annual reports on TRICARE and the military health system point to a number of serious issues.TRICARE Prime, DOD’s health maintenance organization, or HMO, plan, compares poorly with civilian plans in access to care and in cost per beneficiary. Because reimbursements are low—10 percent to 15 percent lower than Medicare—many medical providers do not accept TRICARE patients. And because the costs to individuals using TRICARE are just a fraction of the costs under private insurance plans, beneficiaries enrolled in TRICARE Prime utilize health care services about twice as much as beneficiaries in civilian HMO plans, which drives up DOD’s costs. In 2012, TRICARE cost about $54 billion—approximately 7 percent of the defense budget. However, active-duty service members and their dependents account for just 37 percent of TRICARE beneficiaries. The majority are military retirees and their families.Service members, families, and retirees receive about half of their care through military medical facilities. Despite similar standards of care, military facilities score lower than private-sector medical providers in surveys that rate patient experience and care, and a number of reports have highlighted systemic problems across facilities, including serious medical errors. Active-duty service members, who must receive care in military medical facilities, reported the lowest satisfaction with their health care—20 points below the civilian benchmark. It is time to take a close look at the TRICARE system and figure out how to provide American service members and their families with world-class health insurance at a reasonable cost and following the highest standards of care.RetirementThe military retirement system is inflexible, unequal, and expensive. Under the current plan, active-duty service members who serve for at least 20 years receive a substantial pension immediately, while service members who serve for less than 20 years receive no retirement benefits at all.This all-or-nothing “cliff-vesting” means that 83 percent of service members receive no retirement benefits at all. One-third of enlisted personnel leave the military after their first four-year tour. Those who serve in youth and vigor occupations, such as the infantry and other combat arms roles, rarely reach retirement and receive no retirement benefits for their years of service to their country. Just 9 percent of enlisted service members in the Army and 6 percent of enlisted Marines will serve 20 years and retire. Nearly half of all officers serve a full 20 years and receive retirement pay, while just 17 percent of enlisted soldiers do.The 20-year milestone and immediate receipt of retirement pay is a powerful incentive for separation from the service, even though personnel in many specialties—such as cyber, logistics, and intelligence—could continue to make valuable contributions for many additional years. This reality has a perverse effect on retaining the right mix of skills and capabilities in the armed forces. Nearly half of all service members who reach 20 years separate in that year. With an average retirement age of 41.4 years for enlisted service members and 45.2 years for officers, most retired service members pursue a second career after leaving the military in addition to receiving retired pay.Meanwhile, reservists receive retirement benefits when they reach 20 years of service with sufficient service points but must wait until age 60 to receive retirement pay. This divergence between reserve- and active-component retirement is increasingly outdated, especially considering the central role that the reserve forces have played over the past 15 years.The costs of the military retirement system must also be addressed. Payments for future retirement benefits cost 43 percent of the total amount that DOD pays in basic pay, even though only 17 percent of service members will reach retirement. Counting current and future retirees, the military retirement system costs more than $100 billion annually.ConclusionAfter years of punting the issue, Congress has adopted several reform recommendations in the House Armed Services Committee’s version of this year’s defense authorization bill, including a major change to the retirement system that would require DOD to contribute to a 401(k)-style plan for every service member. This is a great start, but much more remains to be done. The military pay, health care, and retirement systems need to be updated to meet the needs of the current force, while making sure that they will support the flexible future force that U.S. national security will require. The real question is whether Congress will maintain the political will to act.Katherine Blakeley is a Policy Analyst with the National Security and International Policy team at the Center for American Progress.

Fixing the Force: The Outdated Military Compensation System

Issues » Foreign Policy and Security Fixing the Force: The Outdated Military Compensation SystemSOURCE: AP/Jim Mone A sculpture portrays a ...

Infographic: Fixing the Force: Understanding Military Pay

Infographic: Fixing the Force: Understanding Military Pay | Center for American Progress Facebook 57,891 Twitter 40,100Youtube 3,892 RSSCAP en Español <img alt="Center for American Progress masthead" class="banner fit" src="https://www.americanprogress.org/wp-content/shared/images/CAP_BigBanner.svg"> --><img alt="Center for American Progress masthead" class="banner fit svg" data-img-fallback="https://www.americanprogress.org/wp-content/themes/c3/images/c3-slim-banner-880.png" src="https://www.americanprogress.org/wp-content/shared/images/CAP_BigBanner.svg"> <img alt="Small CAP Banner" class="mobile-only minibanner" src="https://www.americanprogress.org/wp-content/shared/images/CAPMobileBanner.svg"> --><img alt="Small CAP Banner" class="mobile-only minibanner svg" data-img-fallback="https://www.americanprogress.org/wp-content/themes/c3/images/mobile-banner-960.jpg" src="https://www.americanprogress.org/wp-content/shared/images/CAPMobileBanner.svg">TRENDING:2015 Progressive PartyMinimum WageImmigration ReformNondiscrimination ProtectionsIncome Inequality Search for: --> <img alt="Search Icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/mag.png"> IssuesChinaCivil LibertiesEarly ChildhoodEconomyEducationEnergy and EnvironmentFederal BudgetForeign Policy and SecurityGuns and CrimeHealth CareHigher EducationHousingImmigrationLabor and WorkLGBTMediaMilitaryOpen GovernmentPovertyProgressive MovementPublic OpinionRace and EthnicityRegulation and MarketsReligion and ValuesTax ReformTechnology and ScienceTerrorismWomenProjects Our ProjectsThe Center for American Progress helps advance progressive ideas through a range of projects in key issue areas.Doctors for AmericaEnoughFair Shot CampaignGeneration ProgressLeadership InstituteLegal ProgressProgress 2050Progressive Studies ProgramReel ProgressWashington Center for Equitable GrowthWomen's InitiativeExpertsFind Experts by Name... or Find Experts by Issue: ChinaCivil LibertiesEarly ChildhoodEconomyEducationEnergy and EnvironmentFederal BudgetForeign Policy and SecurityGuns and CrimeHealth CareHigher EducationHousingImmigrationLabor and WorkLGBTMediaMilitaryOpen GovernmentPovertyProgressive MovementPublic OpinionRace and EthnicityRegulation and MarketsReligion and ValuesTax ReformTechnology and ScienceTerrorismWomenEventsReports About UsAbout Center for American Progress <img alt="CAP Logo" class="fithalf picright" src="https://www.americanprogress.org/wp-content/shared/images/cap250.png"> <img alt="CAP Logo" class="fithalf picright" src="https://www.americanprogress.org/wp-content/shared/images/CAP_logo.svg"> --><img alt="CAP Logo" class="fithalf picright svg" data-img-fallback="https://www.americanprogress.org/wp-content/shared/images/cap250.png" src="https://www.americanprogress.org/wp-content/shared/images/CAP_logo.svg"> Board of Directors · Staff & Fellows · Jobs · Internships PressDonateIssues » Foreign Policy and SecurityInfographic: Fixing the Force: Understanding Military PayBy Katherine Blakeley, Mo Smolskis, Charles Schellpeper | Thursday, May 7, 2015PRINT: <img alt="print icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/print24.png" width="24">SHARE: <img alt="Facebook icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/facebook24.png" width="24"><img alt="Twitter icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/twitter24.png" width="24"><img alt="Share on Google+" src="https://www.americanprogress.org/wp-content/themes/c3/images/googleplus24.png"/><img alt="Email icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/email24.png">See also:Infographic: Fixing the Force: The Path of a Military Career by Katherine Blakeley, Mo Smolskis, and Charles SchellpeperFixing the Force: The Outdated Military Compensation System by Katherine BlakeleyThe current military personnel system is outdated; it is also too rigid to accommodate the flexible force that the U.S. armed forces and national security will require in the future. The military pay, health care, and retirement systems were designed in the post-World War II era, and although they have seen a hodgepodge of additions since then, they have remained largely unchanged since 1947.Basic pay makes up only about half of military compensation. The infographic below provides snapshots of total compensation for military officers and enlisted service members by rank.<img alt="compensation_bytype" class="alignnone size-full wp-image-112710" height="1193" src="https://cdn.americanprogress.org/wp-content/uploads/2015/05/compensation_bytype.jpg" width="880" />Katherine Blakeley is a Policy Analyst on the National Security and International Policy team at the Center for American Progress. Mo Smolskis and Charles Schellpeper are interns with the National Security and International Policy team.

Infographic: Fixing the Force: Understanding Military Pay

Infographic: Fixing the Force: Understanding Military Pay | Center for American Progress Facebook 57,891 Twitter 40,100Youtube 3,892 RSSCAP...

Infographic: Fixing the Force: The Path of a Military Career

Infographic: Fixing the Force: The Path of a Military Career | Center for American Progress Facebook 57,891 Twitter 40,100Youtube 3,892 RSSCAP en Español <img alt="Center for American Progress masthead" class="banner fit" src="https://www.americanprogress.org/wp-content/shared/images/CAP_BigBanner.svg"> --><img alt="Center for American Progress masthead" class="banner fit svg" data-img-fallback="https://www.americanprogress.org/wp-content/themes/c3/images/c3-slim-banner-880.png" src="https://www.americanprogress.org/wp-content/shared/images/CAP_BigBanner.svg"> <img alt="Small CAP Banner" class="mobile-only minibanner" src="https://www.americanprogress.org/wp-content/shared/images/CAPMobileBanner.svg"> --><img alt="Small CAP Banner" class="mobile-only minibanner svg" data-img-fallback="https://www.americanprogress.org/wp-content/themes/c3/images/mobile-banner-960.jpg" src="https://www.americanprogress.org/wp-content/shared/images/CAPMobileBanner.svg">TRENDING:2015 Progressive PartyMinimum WageImmigration ReformNondiscrimination ProtectionsIncome Inequality Search for: --> <img alt="Search Icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/mag.png"> IssuesChinaCivil LibertiesEarly ChildhoodEconomyEducationEnergy and EnvironmentFederal BudgetForeign Policy and SecurityGuns and CrimeHealth CareHigher EducationHousingImmigrationLabor and WorkLGBTMediaMilitaryOpen GovernmentPovertyProgressive MovementPublic OpinionRace and EthnicityRegulation and MarketsReligion and ValuesTax ReformTechnology and ScienceTerrorismWomenProjects Our ProjectsThe Center for American Progress helps advance progressive ideas through a range of projects in key issue areas.Doctors for AmericaEnoughFair Shot CampaignGeneration ProgressLeadership InstituteLegal ProgressProgress 2050Progressive Studies ProgramReel ProgressWashington Center for Equitable GrowthWomen's InitiativeExpertsFind Experts by Name... or Find Experts by Issue: ChinaCivil LibertiesEarly ChildhoodEconomyEducationEnergy and EnvironmentFederal BudgetForeign Policy and SecurityGuns and CrimeHealth CareHigher EducationHousingImmigrationLabor and WorkLGBTMediaMilitaryOpen GovernmentPovertyProgressive MovementPublic OpinionRace and EthnicityRegulation and MarketsReligion and ValuesTax ReformTechnology and ScienceTerrorismWomenEventsReports About UsAbout Center for American Progress <img alt="CAP Logo" class="fithalf picright" src="https://www.americanprogress.org/wp-content/shared/images/cap250.png"> <img alt="CAP Logo" class="fithalf picright" src="https://www.americanprogress.org/wp-content/shared/images/CAP_logo.svg"> --><img alt="CAP Logo" class="fithalf picright svg" data-img-fallback="https://www.americanprogress.org/wp-content/shared/images/cap250.png" src="https://www.americanprogress.org/wp-content/shared/images/CAP_logo.svg"> Board of Directors · Staff & Fellows · Jobs · Internships PressDonateIssues » Foreign Policy and SecurityInfographic: Fixing the Force: The Path of a Military CareerBy Katherine Blakeley, Mo Smolskis, Charles Schellpeper | Thursday, May 7, 2015PRINT: <img alt="print icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/print24.png" width="24">SHARE: <img alt="Facebook icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/facebook24.png" width="24"><img alt="Twitter icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/twitter24.png" width="24"><img alt="Share on Google+" src="https://www.americanprogress.org/wp-content/themes/c3/images/googleplus24.png"/><img alt="Email icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/email24.png">See also:Infographic: Fixing the Force: Understanding Military Pay by Katherine Blakeley, Mo Smolskis, and Charles SchellpeperFixing the Force: The Outdated Military Compensation System by Katherine BlakeleyThe current military personnel system is outdated; it is also too rigid to accommodate the flexible force that the U.S. armed forces and national security will require in the future. The military pay, health care, and retirement systems were designed in the post-World War II era, and although they have seen a hodgepodge of additions since then, they have remained largely unchanged since 1947.Every service member experiences a number of key career and personal milestones from their enlistment through their retirement. The infographic below follows one path of a military career.<img alt="compensation_bylifespan" class="alignnone size-full wp-image-112693" height="1402" src="https://cdn.americanprogress.org/wp-content/uploads/2015/05/compensation_bylifespan.jpg" width="880" />Katherine Blakeley is a Policy Analyst on the National Security and International Policy team at the Center for American Progress. Mo Smolskis and Charles Schellpeper are interns with the National Security and International Policy team.

Infographic: Fixing the Force: The Path of a Military Career

Infographic: Fixing the Force: The Path of a Military Career | Center for American Progress Facebook 57,891 Twitter 40,100Youtube 3,892 RSS...

Modernizing Military Compensation

Issues » GeneralIdea of the Day: Modernizing Military CompensationMay 7, 2015PRINT: SHARE: <img alt="Facebook icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/facebook24.png" width="24"><img alt="Twitter icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/twitter24.png" width="24"><img alt="Share on Google+" src="https://www.americanprogress.org/wp-content/themes/c3/images/googleplus24.png"/><img alt="Email icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/email24.png"><img alt="idea_bulb" class="picright size-full wp-image-103790" height="241" src="https://cdn.americanprogress.org/wp-content/uploads/2015/01/idea_bulb.jpg" width="200" />The current military personnel system is outdated and too rigid to accommodate the flexible future force that the U.S. armed forces and national security will require. Designed in the post-World War II era with a hodgepodge of additions, the military pay, health care, and retirement systems remain largely the same as they were in 1947.After years of punting the issue, Congress has adopted several reform recommendations in the House Armed Services Committee’s version of this year’s defense authorization bill, including a major change to the retirement system that would require DOD to contribute to a 401(k)-style plan for every service member. This is a great start, but much more remains to be done. The military pay, health care, and retirement systems need to be updated to meet the needs of the current force, while making sure that they will support the flexible future force that U.S. national security will require. The real question is whether Congress will maintain the political will to act.For more on this idea, please see:Fixing the Force: The Outdated Military Compensation System by Katherine Blakeley

Modernizing Military Compensation

Issues » General Idea of the Day: Modernizing Military CompensationMay 7, 2015 PRINT: SHARE: The current military personnel system is outda...

RELEASE: The Time Is Now to Fix the Way We Pay and Care for Active and Retired Military Service Members and Veterans

Press Room »May 2015RELEASE: The Time Is Now to Fix the Way We Pay and Care for Active and Retired Military Service Members and VeteransMay 7, 2015PRINT: SHARE: <img alt="Facebook icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/facebook24.png" width="24"><img alt="Twitter icon" height="24" src="https://www.americanprogress.org/wp-content/themes/c3/images/twitter24.png" width="24"><img alt="Share on Google+" src="https://www.americanprogress.org/wp-content/themes/c3/images/googleplus24.png"/><img alt="Email icon" src="https://www.americanprogress.org/wp-content/themes/c3/images/email24.png">Contact: Tom Caiazza Phone: 202.481.7141 Email: tcaiazza@americanprogress.orgWashington, D.C. — The current military compensation system is an outdated, rigid, and costly behemoth that is woefully inadequate to meet the current needs of armed forces personnel or those of the future force, according to a Center for American Progress analysis released today. The compensation system—the main pillars of which are basic pay, health care, and retirement benefits—was designed in the post-World War II era and remains largely the same as it was nearly 70 years ago. Lawmakers have begun to look at improvements, but a great deal is still required for the system to meet the needs of a 21st century military.The column and infographics released today, in conjunction with a panel discussion featuring military personnel experts, calls for reforms to the military compensation system to make it one that better suits the needs of today’s all-volunteer military.“When you look at the numbers, the military compensation system does not serve our fighting men and women well at all,” said Katherine Blakeley, author of the column. “Base pay levels greatly advantage officers over enlisted members; the retirement system only works only for the small percentage of the force that reaches 20 years of service, with no benefits at all for the rest of our servicemen and women; and the health care system is consistently rated significantly worse than comparable civilian programs. The House Armed Services Committee is beginning to look at improvements, but a serious rethinking of the way we pay and care for members of our fighting force from the day they enlist through their retirement is long overdue.”According to the column, officers make nearly twice as much in base pay as enlisted service members do. This made sense when the military consisted of volunteer officers and conscripted enlisted members. However, with the all-volunteer military that exists today, such a stark discrepancy is unnecessary and often contributes to well-qualified and well-trained enlisted members separating from the military after only a few years.The retirement system is even more lopsided, with service members who reach 20 years of service immediately receiving full benefits and those who fail to reach the 20-year milestone receiving no retirement benefits at all. This means that while the retirement system costs the government more than $100 billion per year, roughly 83 percent of service members exit the service without retirement benefits of any kind.The U.S. Department of Defense’s health care system, known as TRICARE, covers military members and their families through their tenure and retirement. However, the quality of the health care plans and services are both rated well below comparable civilian health plans and facilities. Several recent issues have arisen to expose systemic problems across facilities, including serious medical errors.Click here to read the column.Related Resources:Infographic: Fixing the Force: The Path of a Military Career by Katherine Blakeley, Mo Smolskis, and Charles SchellpeperInfographic: Fixing the Force: Understanding Military Pay by Katherine Blakeley, Mo Smolskis, and Charles SchellpeperFor more information on this topic or to speak with an expert, contact Tom Caiazza at tcaiazza@americanprogress.org or 202.481.7141.

RELEASE: The Time Is Now to Fix the Way We Pay and Care for Active and Retired Military Service Members and Veterans

Press Room »May 2015 RELEASE: The Time Is Now to Fix the Way We Pay and Care for Active and Retired Military Service Members and VeteransMa...