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our live capitol hill coverage continues tomorrow with the confirmation hearing for the next defense secretary, ashton carter. live coverage of the senator armed services committee will get underway tomorrow on c-span3 starting at 9:30 a.m. eastern. this sunday on q and a,

david brooks columnist for the "the new york times" on writing an article for the times and the awards he gives out at the end of the year. the sidney awards. >> sidney awards are given for the best magazine essays of the yeesh, and they can be in journals or something like the new yorker or the atlantic. and the idea is they always come out about that christmas week. and the idea is that's a good week to step back and not read little instant stuff, tweets, not even read newspaper articles. but to step back and read something deeper and longer. and it's to celebrate those longer pieces. i do believe magazines changed history. the new republican until its recent destruction was the most influence political magazine of the 21st century. it created a voice for modern liberalism. conservatism barely existed before the national forum review. >> sunday night at 8:00 eastern

and pacific on c-span's q and a. with live coverage of the u.s. house on c-span and the senate on c-span two, here on c-span3 we compliment that coverage by showing you the most relevant congressional hearings and public fairs events. on weekends it's the home to american history tv with programs that tell our nation's story, including the civil war's 150th anniversary, visiting battlefields and key events, american art facts touring museums to discover what art facts reveal about america's past, history book shelf with the best moan american history writers, the presidency lectures in history with top college professors and our new series, real america featuring our government and educational films from the 1930s through the '70s. c-span 3 created by the cable tv industry and fund by your local

cable tv provider. like us on facebook, follow us on twitter. up next a panel of military compensation and retirement modernization commanders. the commission is making proposals to change military pensions, health care and retirement compensation. from capitol hill this is about two hours, 25 minutes. good morning.

the committee meets this morning to receive testimony from the commissioners of the military compensation and retirement modernization commission. i want to thing each commissioner for your diligence and hard work over many month to develop the recommendations you will present to us today. our witnesses today are the commission chairman, honorable alfonso mull done jr., the honorable larry press her, the honorable stephen boyer the honorable dove zack kiem mr. michael higgins, general peter chiarelli and i understand that senator bob kerrey is snowed in in new york. and the honorable christopher carney. this year a signature issue for this committee will be thoughtful consideration of the commission's recommendations to modernize military compensation

and retirement benefits. as we do i encourage the members of this committee and my colleagues in the house and the senate to keep an open mind. we're also eager to hear from any military or other os that has constructive ideas to improve the current system. no one has a monopoly on good ideas and we all come to this debate as patriots who love our nation's armed forces and want to improve the quality of life for all who serve and their families. we honor the service and sacrifices of service members and their families active duty guard and reserve, and we pledge to keep their well-being foremost in our thoughts and we deliberate the commission's recommendations. but upholding our sacred obligation to them does not mean resisting change at every turn. we must not shrink from the opportunity before us to create a modern system of compensation and retirement benefits that would provide greater value and choice for those its serves.

congress established the commission in the national defense authorization act for the fiscal year 2013 to conduct a review of the military compensation and retirement systems and to make recommendations for modernization. we asked the committee to develop recommendations that would, one ensure the long term viability of the all-volunteer force during all levels of conflict and economic conditions, two, improve the quality of life for service members and their families to ensure successful recruitment retention and kreeshs for those members, and three modernize and achieve physical sustainability for the compensation and retirement systems in the 21st century. the military's current compensation and retirement systems are decades old. and in their current form may be less than suitable for modern day military members. today we have a nearly 70-year-old military retirement

system and tricare, the military's health program was implemented in the mid 1990s. before the retirement system and tricare were appropriate for their time, both the retirement system and tricare were appropriate for their time but clearly times have changed. we're here today to learn how the commission's recommendations could make compensation and benefits better for the military members and families of our current forces and forces of the future. more overin a world of multiple threats and is careens danger we count op young americans to enlist or commit to serve in an all volunteer force that protects us and our families. as this committee evaluates the commission's recommendation to modernize military compensation and benefits we must carefully consider how any changes in compensation and benefits will motivate young people of today to serve in the 21 rs century.

in a constrained physical environment, we must consider how best to achieve the proper balance between providing attractive compensation and benefits for our troops and paying for military modernization and readiness effective equipment and advanced training that will enable our military to respond in moments of crisis and keep our citizens safe. we can meet both of these objectives and we must. clearly we will not have enough time today for a complete and thorough review of every recommendation the commission has made. that's why i've asked senator graham, chairman of our personnel subcommittee to hold a series of meetings in the near future to explore all of the commission's recommendations in great depth. i thank snasht gram and senator gillibrand on their leadership. fanl loinlly we look forward to the testimony today. their recommendations come to us

unanimously after nearly two years of hard work research and debate. i encourage the commissioners to speak freely without reservations. some of them i know, i'm sure will do that. thank you again commissioners for your extraordinary efforts. senator reid. oh. senator kerrey arrived. thank you senator kerrey for arriving. >> thank you, mr. chairman. let me join you in welcoming the witnesses and commending them for a job well done. thank you very much. and i think it's extremely important to the meeting today and i thank the chairman for holding the meeting. this hearing comes as the department yesterday formally submitted its budget for fiscal year 2016. while we await the full details there are a few immediate notable aspects. first, the requested top line of some $35 billion above the

budget control act spending caps of defense. the spending cap for fy 16 represents no growth on real terms. the department has requested $35 billion more. shows how deep the funding shortfalls run, particularly with respect to forestructure and the training and the modernization accounts. second, the department has again requested measure to slow the growth of personnel. the department submitted these proposals last year, congress supported some and elected to defer the others until after this commission reported its recommendations. many members on both sides of the aisle have been reluctant to support compensation and benefit forms requested by the department in the past several yeeshs while this commission deliberated and suggested that we should wait until the report is submitted. this is the context which today we hear from this very distinguished panel. these issues are paramount of importance to the military.

we charge the military with fighting and winning the nation's wars. implicit is recruiting and retaining the very best in military service and ensuring that they're trained for their mission, prepared for the arduous duty we ask them. usually discussion is focused entirely on their pay. but these other elements are equally important if we want our service member to accomplish the mission and come home alive. it is important to say from the outset that the goal of the commission is not to save money. it is to strengthen the all volunteer force. it is to modernize a retirement system that is 70 years old. and importantly, it is to ensure that service members and their families enjoy a quality of life and a quality of service that will enable the services to recruit and retain the very best men and women for military service needed to meet national defense objectives. under the current budget

situation i fear we are quickly prices ours outs of having a military sufficiently sized and adequately trained to meet the myriad of tasks and threats we face all over the world. as we heard last week from the service chiefs, the budget caps do not allow the services to meet their national defense objectives. now if these recommendations you're making are enacted and they do provide savings, such savings should be used to address shortfalls and to reinvest. finally, i would like to highlight one area. only 17% of all service members will leave with any retirement benefit under the current system. with officers more than twice as likely to leave with the benefits and enlisted peshs them, even while enlistinged personnel have always sustained the vast majority of kaushlgties. we are told under these recommendations as many as 75% of all service members will leave the services with some

retirement benefit, even if they do not serve the full 20 years on active duty as most service members do not. thank you, mr. chairman and thank you to tour panelists for this important work. >> again i would like to thank all of the members of the panel all of whom have other responsibilities and work that needs to be done and they took their valuable time and effort to bring this, i think is an excellent comprehensive report which i hope we'll, i know will serve as guidance for us as we move forward request much needed reforms. i thank all of you again. mr. chairman, we're ready to listen to your statement. thank you for, again for your chairmanship. >> thank you, mr. chairman. chairman mccain, ranking member, reid, distinguished members of the committee my fellow commissioners and i are honored to be here today. we thank you for the opportunity to testify. we also thank you for your support of the commission during the last 18 months and for your

leadership in protecting our service members compensation and benefits. i would like to request that oush final report be extraordinary the record >> without objection. >> the all volunteer force is without peer. they're unwavering commitment has never been clearer than during the last 13 years of war. as commissioners, we recognize our obligation to craft a valued compensation system that is both relevant to contemporary service members and able to operate in a modern and efficient manner. we are unanimous in your belief that the recommendations we offer in our report strengthen the foundation of the al volunteer force ensure our national security and truly honor those who served and their families who support them now and into the future. our report is, of course fornld by our own lifelong experience

with military service and public service. however our recommendations are most form bid insights of service members, veterans retirees and families. we visited 55 mill bases worldwide. more than 150,000 current and retired service members provided thoughtful responses to the commission's survey and we developed working relationships with more than 30 military and veterans service organizations. additionally the commission received input from more than 20 federal agencies working groups numerous research institutions, private firms and not for profit organizations. the result of this process included 18 months of comprehensive, independent research review and analysis are 15 unanimous recommendations that will improve choice, access, quality and value within

the compensation system. our work represents the most comprehensive review of military compensation and benefits since the inception of the all volunteer force. consistent with our congressional mandate, we reviewed each program to determine if and how modernization might ensure the long term viability of the all volunteer force, enable the quality of life for service members and their families and achieve a greater physical sustainability for compensation and retirement systems. our recommendations do this and more, improving choice, access, quality and value within the compensation system. our retirement recommendations propose a blended plan that extends retirement benefits from 17% to 75% of the force as ranking member reid has already stated. it leverages the retention power of traditional military retirement to maintain the

current force profiles, protects the asset of service members who retire at 20 years of service and reduces annual federal outlays by $4.7 billion. our health benefits recommendations improve access, choice and value of health care for active duty family members reserve component members and retirees while reducing outlays by $3.2 billion. our recommendations on commissariry maintain patron's grocery discount while also reducing the cost of delivering that benefit by more than $500 million annually. with these savings to the taxpayer -- while these savings to the taxpayer are significant, the commission did not engage in cost cutting drill. in fact, our recommendations to improve joint readiness, service members financial literacy, support for exceptional families and transition assistance

require additional funding to ensure program efficacy. in summary, our recommendations represent a holistic package of reforms that modernize the structure of composition programs rather than adjust the level of benefits delivered to the service members. they sustain the all volunteer force by maintaining or increasing the overall value of the compensation for service members and their families and provide additional options for service personnel managers to design and manage a balanced force. this creates an efficient compensation and benefits system that after full implementation saves the taxpayers more than $12 billion annually. while sustaining the overall value of compensation and benefit for those who serve and have served and the families who support them. my fellow commissioners and i thank you again for the opportunity to testify today and we are honored to present our

unanimous recommendations. mr. chairman, we stand ready to answer your questions. >> thank you, very much, mr. chairman. if it's okay i'll just have a couple of brief questions, because iz was was briefed by you already. if any of the members of the committee wish to respond to any questions by me or other members, just signify and you'll be recognized. just two brief questions, mr. chairman. how do you know that your recommendations will provide this same force structure to the services on the issue of the proposed compensation system? in other words, right now there's an incentive to remain for 20 years. in this present plan, there will be retirement compensation literally throughout. so how does that -- do we have

incentive for people to remain in for a career or disincentive? >> we do indeed mr. chairman. in our recommendations we did a blended, blended plan here. we already have a defined benefit. and we added a defined contribution to this. and to make sure that we can do the retention or provide for the retention that the services told us that they wanted us to. i'm going to have commissioner higgins to talk to the specifics of that recommendation mr. chairman. >> thank you. >> commissioner higgins. >> thank you very much mr. chairman. and chairman mccain. sir, the system we've devised includes the incentives the flexibility and the choice that people want in force -- when we

look forward at how the system will operate overtime, our belief is, and supported by our analysis. and in this case it was iran model which was the dynamic retention model used. we believe that this will -- our proposal will exactly model the current force profiles. it will have the tools within it including a continuation pay thrift savings plan, with matching, which is currently not offered today. it will include the tools that will draw people through the 20-year career much like the defined benefit does today. and to some large extent because defined benefit is retained under our proposal about 80% of that defined benefit. so these new tools to meet the demands of choice flexibility,

along with the defined benefit that is retained, we believe will operate very effectively. and the modelling that we've done will support that. >> thank you. on the issue of health care, how does this incentivize beneficiaries to seek the most cost effective means of getting health care? >> mr. chairman, thank you for the question. that was very important to us as we took a look at the programs that are providing the benefits to our service members. as we traveled across the country and we talked to families service members serve component members retirees. after listening very very carefully to the conversations and discussions that we had in terms of what people said they wanted, they preferred as values, choice access and value of health care were the themes

that just kept coming times and times again. and i'm going to ask commissioner boyer to speak specifically to that question. >> thank you chairman and members of the committee. cost effective means, well i look at it from two ways. one is to the government, another is to the family. when we looked at this how can we achieve both. presently under tricare we don't because there really isn't sufficient unitization management tools. it's a very limited network because of the very low reimbursement rates and how the tricare contractors actually recruit providers into the networks and pay below below medicare rates. so with regard to the families we said, you know can we do better? not only for the government with regard to the cost but also with regard to the families and improve the quality of care

give them the choice that they want and get better access? and we found that if we, if we, if we move to a system whereby we have what we called tricare choice, which is very similar to an model whereby they select from available plans in a particular geographic region, it does call for more empowerment of the individual. we're asking that that that individual is able to select a plan that best fits their family. and when we do that the plans themselves that are thenned a mensterred, excuse me, managed and administered by opm, those plans will have effective management unitization tools and it becomes more cost effective not only to the families but in particular to the government chairman. >> thank you. senator reid. >> thank you very much, mr. chairman. let me direct this question to general chiarelli.

but anyone else who would like to respond. part of your recommendation is also strengthening the military treatment facilities, the traditional facilities that have to be ready to deploy if we deploy. and part of it, as i understand the proposal, is that they would be part of these health care systems. can you comment from as former vice chief on this whole issue of strengthening the military medical infrastructure along with giving individuals more choices in the health care? or if someone else wants to. >> no, i'm more than happy to. >> yes. >> i think we're in a death spiral right now from the standpoint of they just don't have the number of reps that they need to keep their doctors up to standard. and this is a way that we can bring into our military treatment facilities the kinds of cases that contribute to

battlefield medicine. that's what makes this system so different than any other system. we need well-trained doctors, not only to treat patients in hospitals but to be ready to deploy wherever we send them and provide that same kind of treatment on day one of the conflict. this will allow us to attract military treatment facilities, the kind of cases that will keep those skills up. and are so absolutely crucial to our wounds rate in the last 14 years of war. and it will do that on day one of the next conflict. and i really believe that this is something that is going to ensure that we have that combat medical readiness capability we need moving into the future. and if we don't do it we're going to have a very very difficult time being able to provide that. >> so this is not just about the benefits to the individual

military personnel, this is about the overall viability of the health care system in the military? >> absolutely. and that's one of the reasons why we look so strongly at a readiness command. because we really believe there's going to have to be somebody who is keeping an eye on this system to ensure that the services are doing the kinds of things that are necessary to keep those mtfs viable training grounds for our physicians. >> let me direct this to the chairman. you can decide who is appropriate. but i'm sure i'm not alone. but when we mobilize national guardsmen and women in reservists, those are the ones that sometimes have the most differenty getting into the health care plan, making sure that their family who is not close to a medical facility in fact who may be far removed. it seems to me that this approach that you're suggesting choosing among a set of private

insurance plans would be much more easily accessed by reserve components. is that accurate, mr. chairman? >> that is correct. that is correct, senator reid. one of the things that happens with our proposal for the reserve components is anytime they're mobilizing or being activated, the family members normally will go without coverage. there's appear idea of time that they just don't have coverage when that happens. this will solve that problem for them because they won't have to worry about losing -- going long periods of time without coverage of health care when the reserve component member activate and deactivate. >> senator reid, i mean, that's an excellent question. that stra teenlic reserve that we built over time really wasn't prepared operationally. we know that. you funded it. you did a lot of things to bring

it up round it out and make the total force that bet ner the 13 years of war. be u with regard to the undesirable choices that the families had to make to be part of the operations, you're absolutely right, senator. so when we looked at this and said, with regard to that total force, even though we really pressured the chiefs, do we want an operational reserve versus strategic reserve? they really do. they don't want to call it that because they don't want to fund it. what is realistic when we talk about the war after next or how to fund the war after next and caring for the people when it comes to the health care, that benefit needs to be for the total force. now so for the reserve components, the continuity of care that your question goes to it is so disrupted for the family. if we say from day one when you join the reserve component that health care is part of that benefit, you can select the type of plan that best fits your

family. your premium is 25%. we capped it at 25% for the premium. then there's no disruption in the continuity. they like their local providers. and then if they're on for a longer period of time they've come gone on active duty, they're part of the contingency operation, then they go on to the active duty plan receive their basic allowance for health care that takes care of the premium for that of their family. >> thank you very much. >> senator reid, if you don't mind i would like to have another member of our commission spoke speak to that as a reservist, please. commissioner carney. >> thank you. mr. reid, those of us who lived in sort of rural areas and were on reserve duty. it wasn't tricare exactly. it was more like try to find care. and this takes care of that. what we're offering now is a system that provides a network that is robust enough to care

not only for the member when they are on their civilian side but also for the families when the member is deployed. that's exactly what we're trying to do here and do it in a way that is fiscally sustainable. medical readiness are critical as sects of the overall readiness mission. if we can do this with a tricare choice system, then i think this is a good step forward. >> thank you very much. >> thank you. >> thank you, mr. chairman. >> to my good friend steve buyer who i used to sit next to i agree with you except i'm more concerned about today's war than i am the war after next. right now is when we're having the problems that we're having. and we had a hearing last week. we had slesen jer, we had george schultz, madeleine all bright.

and they reminisced about what our capabilities were at that time, and what is expected and even read the charge that president reagan had made at one time and determined what a defense budget should be. the reason i'm saying this is i look and i agree with senator reid who talked about the inadequacy in meeting the threats. i read that director clapper, when he says looking back over my now more than half a century in intelligence, i've not experienced a time when we've been beset by more crisis and threats around the globe than we are right now. in light of the fact that we have the force structure problems that i'm very proud of all of our chiefs. the general has been before us, and all of the rest of them, talking about how significant this is and it's something that's unprecedented. the reason i bring this up we've got a quality group here,

mr. chairman. and i just think after this is over you should reconvene and get into this thing as to the current threat that's out there and the inadequacy that we're facing. it's one thing for the chiefs to come forward and talk about what's going to happen with sequestration. but when you folks with your backgrounds come forth to me that gives a different sense of meaning. and i would hope that we might consider that. i was a product of the draft and look at things a little different than than others. i was one that was not at all optimistic that the all volunteer force would be the quality force that it is now. i was wrong. although there are some advantages to the draft at that time. i think that when you are examining the charges that were given to you, you would say that -- i would ask you the question. what have you decided motivates the young people to serve in the all-volunteer force, and then why are so many of them leaving?

what is -- if you could zero in on two or three reasons as to why they don't stay on. you know quite often we go back and talk about how much cheaper it is for us to retain than to retrain. the extreme example is to get a pilot to the point where they can go an f-22 quality and it's -- the reenlistment bonus is 250,000 but the cost to retrain is $17 million. now scale that down to whatever forces that we have here. what is the reason that, major reason that they come in and then they leave? >> thank you for the question senator. we spent a lot of time looking at that, that specific issue that you address. it's a very important one. as we think about how to

modernize the compensation programs compensation programs for tomorrow, we are thinking about exactly what is required for the military to be able to recruit and retain people. and we have to think about the white new generation, that they value and prefer. those are the kind of things that we listened to and heard as we talked to people. as it was already indicated to today, 83% of the enlisted force actually wind up leaving without any kind of retirement benefitingsbenefits which is why we made the recommendation that we did, to be able to extend some of the tiernlt benefits for those service members who will serve and then move on to do other things from 17% to 75%. and i'd also like to point out that a couple of things that we were told, specifically by the service members is that

there's -- they're concerned about the service to their country and the gi bill. those are two things that were very important to them in terms of why they would come in, what they were looking for. get an education benefit, be able to take advantage of that which is a strong recruiting tool, and then move on to something else. >> very good. thank you mr. chairman. >> thank you mr. chairman. thank you all for being here. i guess this would be to anybody who wants to answer the question. but my thing is is that it's vsh difficult position you're being put into and we all are because i don't think anyone questions the commitment the service people and all people in military have to the united states of america. i know in west virginia we feel very strongly about that, people willing to take a bullet. i've always been able to explain when i was governor, when they would explain or complain about whether it be our state police retirement or our fireman's retirement, they're willing to put their life on the line for

you. people are willing to pay a higher price for that but they still want it to be fairly comparable. do you all look at that from the standpoint -- in most all state budgets or municipality budgets, the firemen and police budgets are out of whack, they're under water and they're trying to get them back. there's going to have to be some sacrifices to the point ma we have to recognize the sacrifice they're making for us. how do you balance this out? what would i tell the national guardsmen of my state that have been deployed three and four times and we're looking at changing some of the compensation and what type of literacy training are we giving to thel. them on their retirement. and why do we have so many that leave at ten years of service in the military to go into private contracting for the extra pay overseas in afghanistan and iraq. what's the magic number of ten years? i find most of our soldiers that leave our military that we've spent an awful lot of time and energy training them leaving going for the higher pay.

can you give me that magic thing at ten years what they lock in and what gives them that freedom to do that? whoever wants to chime in on this. >> yes yes yes, senator. senator, thank you very much for that question. we certainly have spent a lot of time talking about that. i'm going to ask commissioner kerrey, bob kerrey to share the specifics of that. [ laughter ] >> well, first of all, i think you would be having a difficult time retraining men and women to serve in the military had this congress not made all of the changes that it made since we've been fighting this war for the last 14 years. i mean if you just look at what you've done with pay and compensation, it is now better than market. and it needs to be. the changes that have been enacted by republicans and democrats have not been given enough praise in my view. had nose changes not been done given the stress on families today, you know i'm a prr proud

geyser father i've got a 13 years. if we think about having to move our son once every four or five years, it's a traumatic thing inside of our household. that's way more stability that anybody in the military gets. so the stress on the families has increased over the past 14 years. and thanks to congressional action the pay and benefits are quite strong and they need to be in my opinion, otherwise we're going to have a difficult time retaining men and women. second thing that's happened, the american people now are quite proud of their military. and they're quite confident that they're getting the kind of support that they need. but americans are a lot more patriotic and they care deeply about the men and women who are serving. and i think that attitude make as big difference. people's willingness to serve. i would say the combination of

patriotism and the combination of paying benefits, those two things together have made a big difference. when i looked at the recommendations, senator, that we're making, the two big questions that i ask are are we keeping faith with the men and women who have served. and those of you who have understand you give up your freedom. if you get ordered to do something or go some place you do it. so are we keeping faith with who those have served and have serving. i answer emphatically yes. secondly to the recommendations that we make, will it enable us to continue to recruit and retain. and i answer yes. it is something that you constantly have to pay attention to. i think there's a qualitative difference in the pensions of the fire and police level. they don't have a commander in chief that tells them exactly what to do. i've got ordered report to so

and solo location, i say yes, sir and go. in negotiation with the fire union and the police union, you have serious negotiations. i think there's a qualitative difference between the relationship of the american people and the men and women who have signed unand sworn that oath given up their freedoms and even in training kpesh sizes put their lives at risk. >> most states around the country are very committed to our military force and they want to make sure they're compensated and takening care of. they want to make sure we're doing anytime a sufficient manner. if we're giving them the literacy training to make decisions. >> well i would say, senator i think the moment that ends, no mat esh what you pay men and women, they're not going to sign up. the moment that that attitude changes, as it was in the 1970s, it's going to be difficult to recruit people to service. >> on our indian reservations, a lot of people serve three or

four years and very rarery go for a career. i had a difficult time getting our native americans to go to the military academies. but it seems that aside from whatever we do there is a tradition in our country of a lot of people wanting to serve three to five years. of course we need those people. and that's a particularly true in rural areas in states such as mine and with native americans. >> thank you, mr. chairman. >> thank you, senator mccain. mr. chairman you've mentioned flexibility a couple of times here in your statements. and in the report it says that the force may benefit from a flexible retirement system that incentivizes them to remain in service longer than other occupational specialties when with regard to doctors cyber personnel. do you have specific proposals? i'd like to dig down a little bit into this.

do you have any specific proposals that the commission recommended? and do you see each service setting a different requirement there? and if so, do you anticipate any problems? do you see competition among the services? >> thank you very much, senator for the question. i'm going to ask commissioner die cam to respond to the specifics of your question, first. >> thank you, mr. chairman. snasht senator, as you know, each of the services has different types of benefits to keep them on. our proposal does not tell the services how they need do it. what we're trying to do here is give them maximum flexibility so that if there are, as you

pointed out, certain specialties that frankly like doctors you actually get better with more time in your practice, then the services up front can decide that they want to recruit an individual and have that individual stay on longer than the normal term. essentially this is -- but it works both ways actually. it's not just to keep people longer. they can sign up with less. we wanted to give them mechanics mum flexibility. at the same time we're giving the individual choice, we're giving the services flexibility. again it goes back to the question about what kind of a forbes do you want to shape? the services are the ones who know that best, of course. >> when you looked at the surveys, were there any issues identified that the commission did not make recommendations on? i guess i'm thinking specifically of the housing allowance and that has been a big issue in the past.

the president has made proposals but yet it was not addressed by the commission. are there other instances there? and really why didn't you address the housing? we hear about that a lot. >> senator, thank you so much for the question. we indeed took a very very hard look at the housing bah and b.a.s., and we actually looked at the pay table. we looked at the structure of all of those programs. and we clearly asked ourselves three questions. number one, were these programs delivering the benefits that they were intended to? number two, were the benefits being delivered in the most cost effective way possible? and thirdly, could this commission design a clear path for modernization to those programs in terms of improving those programs. and after looking at those, we did not feel that we could

design a clear path to modernad modernization for those programs and instead we would provide a much better benefit to the service members and do it in the most cost effective way by making the recommendations that we've made. >> would it be fair to say that commission supports with what the congress did then with the housing allowance? or do you support the president's proposal? >> senator, again thank you for the question. i'm going to ask commissioner higgins to respond to the specifics of that question. >> thank you. >> thank you mr. chairman senator. clearly b.a.h. in our view is operating effectively to provide the housing that our service members need. there are a number of the elements of the compensation system that drew our attention

very dramatically, that we did not elect to medal indle in if you will. because we believe they are operating effectively. others would include the pay raise mechanism. the pay table itself we believe is operating correctly. special pays and allowances. m. and b.a.h. i think along with that. now on each is if you believe that you need to save money then obviously the congress could act to produce programs. and that is your choice. we were targeting our objective was modernization. and systemized modernization where we go into the structure of a program. we do not believe that the structure of those programs were deserving of modernization. if i could go back to your other question as well, senator.

the service chiefs ask for flexibility. one of the primary complaints about the retirement system as exists today is that it is overtly rigid, inflexible. service chiefs implored us to seek opportunities for greater flexibility. and we delivered that section you are referring to. are there some potential frictions between the services? would it cause some concern? do we believe it is going to be used instantaneously? no. there will be uncertainty. and i think that will keep that proposal in check, perhaps for years. but there will come a day when greater flexibility in the retirement system will be needed. and that provision will be there to deliver that to the managers.

>> and it would also allow the services then to compete for the men and women that they need to perform in different areas, correct. >> always a difficult issue. controlling competition between the services. the service cultures are indeed incredibly strong. you always want to endeavor to limit competition and create systems that operate for the best interest of the total force. but there will be some insecurity there. and i think that will cause this as enticing as it may be to some people inside the pentagon, you know, whether or not it rises to a level where it's implemented is a serious question that is going to take time to resolve. >> thank you sir. thank you mr. chair.

>> thank you all for your very hard work. one of the most important considerations for me in terms of potential changes to benefits and compensation is that the approach will holistic and we ensure the lower enlisted troops and families do not disproportionately feel the impact. walk me through why you believe this is holistic and how it will impact lower troops and their families. anyone can answer. >> thank you senator for your question. commissioner chiarelli if you would please respond to the question. >> i think we've done everything we possibly can to make it holistic and apply to everyone. we've got two charts that go into the retirement. one listed e-7 to show his retirement under the current system. and what it would be under the new system. and i think you can see that it is clear that he or she would do much better under our proposed

system than they would under the current system. we have one for officers that shows the same thing. i think -- and i don't think just the retirement system you should look at at. i think you should look at what we're doing with healthcare. we're giving them the ability in healthcare to go out and immediately go to see private provider that is in their insurance network. or if they would rather choose to go to the mtf because that's where they feel they can get the best care they can go to the military treatment facility. today under most try care programs it takes a period of time to get that referral and it's to 30 or 40 days if you can find a provider. this applies not only to officers and warrant officers but it applies to our enlisted soldiers. so i think everything in our

recommendations was geared to ensure that whatever we recommended was holistic and applied to both officer and non commissioned officer in the same way. >> in a holistic sense we included exceptional family provisions and child care issues in our report, which normally might not be in such a report. but a lot of the lower ranking service members have a very hard time with waiting lists on the child care and so forth. so we tried to be holistic in that sense. >> ma'am holistic was not only off the moment we were very reverent to the past of the holistic traditions in heritable. >> thank you. >> if i could. >> please. >> one area we've not talked about. first of all you completely destroyed me because i tried to get the chairman and the commissioners to stop using the world holistic -- >> sorry. obviously i failed in that effort. among the other things you really need to think about is

all these men and women at some point are going to transition back into the civilian life. and the changes we're recommending in the healthcare side and on the retirement side make it much easy yesh do that. there isn't an abrupt differential between what we're recommending and what the civilian population is doing. >> to continue along that line i'd love to understand better the healthcare proposal. part of the recommendation is the create base allowance to cover the cost of premiums and the co-pays. so how do you account for families with extraordinary needs? will they pay more? and i'm especially concerned about families with the special needs dependence childrens with special needs specifically. >> senator thank you for the question. we spend an inordinate amount of time talking to families across the country about the challenges they had with exceptional family members.

and i'm going to as commissioner boy tore speak to that. >> i'm do the healthcare and then the extraordinary families piece. to the basic allowance for healthcare you are correct. we want to -- in order to take that determination we'll -- it will be decided by o.p.m. o opm of whom will manage the plans and take the average of the premiums of the plans selected in the prior year and also look at that toe come one the co-pays and the deductibles. >> and do they help families navigate it? because this is a new system for them. >> you know, part of our recommendations with regard to literacy training, literacy is not only for financial literacy. because now as we move into the thrift savings plan and government contribution there is a financial literacy piece. but there is also a health piece

to help people navigate. and this really is calling for more empowerment of the individual. goes that opening question that mr. higgins really opposed to all of us on day one. we're very used to our military being paternalistic. so we as look at the what's happening in society and how dynamic these -- this -- i want to say the new generation is, not that they are the selfie generation. they are the generation they want greater controls about themselves. they watch their peers making contributions into to 401(k). how about me. i'm in the middlery i want to participate too. so we've come one that blended and also in healthcare educating about the choice and how important it is to make the best plan for themselves and their family. when we give them the financial literacy and the health literacy, when they leave the service it is a better individual and it is a better family.

>> senator i'd like to have commissioner higgins follow up on the latter part. >> my time is expired. it is up to the chairman. >> that's okay. go ahead manyr. higgins. >> thank you. senator, we had a great deal of concern about exceptional family members and how we would care for them. we have a proposal of course that would add a new level of benefits for those families. and we would -- one of those areas where we would increase costs. so we were not all about cut cutting. we were about making life better for service members. in addition, if you had a catastrophic situation in a family where you had extreme costs that was related to an exceptional family member there is also a fund that we would propose to ensure that those out of pocket costs did not get

excessive. and we plan on that for about 5% of the people. so there is help there. >> senator ayotte. >> thank you chairman. i want to thank you for the hard work and thoughtfulness you put into this commission and for having this important discussion with us. i do have to say today i'm walking back and forth between this committee and the budget committee. and as i look at where we were senator kerrey, to use the word "holistic" in a way that i think the point needs to be made here, is that if you look at where we are. for example the president's budget that was just submitted. by 2021, our interests costs what we're paying in interest is going to exceed the defense budget. and as i look at the work that

you have done, bipartisan commission. and we look at what the biggest drivers in our debt are overall looking at the big budget. mandatory spending programs that we need to have similar looks at. medicare, social security. they are very, very important programs to people. i appreciate that you have done all this work. i think we're looking at our military stepping forward first in making many changes. and i think that we need to look across the spire budgetentire budget too. because where we are, we are going in 2016 to defense budget only 3.1% of gdp and 14.3 of federal spending, which is the bottom of historic range since 1950. and the reason i want to put that in perspective in the big picture for everyone, we look at the sacrifices that our men and women in uniform make. the separations from family. the -- obviously the sacrifices

they make putting their lives on the line. all of that. and i think that the work you have done is really important and we look forward to delving into it more deeply. but i hope in the bigger congress as we scoop into the budget here today that we look at the big picture and we gloeptwon't fw in a situation where we continue to shrink the other nation because we o won't take on the bigger challenges and it would be great to see a group like you look at the bigger picture as well. i just wanted to say that and thank all of you for your work. in terms of the specific question i wanted to follow up on the reattentiontention issue. because that is important to all of us in terms of keeping the very best military in the world and wanting our best and brightest to join the military. as we look at your proposals on recruitment and retention. what assumptions did the commission use regarding economic conditions in the

country and operational tempo? what did you assume would be our -- the rest of the private economic growth? because that always drives, obviously what opportunities our best and brightest have. and also operational tempo? >> senator thank you very much for the question. we took quite a bit of time actually looking at that and deliberating over those issues. and we actually had experts to come in and talk to us about the millennial and what that means. as well as what it means with the social environment and those kind of societal changes that have taken place and how that would effect retention. i'm going to ask commissioner chiarelli to speak to the specifics of your question. >> i would totally agree with the chairman, senator. we did. and in a good example where we provided flexibility at the 12-year mark with continuation pay. that is not a fixed amount. we were going to allow the services to set that amount

based on the economic conditions that they have at the particular time to maintain the retention rates. not only the total retention rate but the retention rates by specialties that they need to continue past that 12 year mark. everything we did was based around an operational tempo of from peacetime to the fact that we would have to deploy the entire force. you know, if you had told me when i was in the army operation center on 911 that we would be able to maintain the all-volunteer force at the op tempo that by did for 13 years i would have told you there was no way whatsoever. and we did. i had '88ers that literally knew that the 367th day of the year they were going to be back down range. they would stay down for a year and come back and get another year at home before they were going back down range. and why they did that?

a lot of that is pure patriotism, love of country and a mission they believed in. and i think it's absolutely critical that in times where we don't have that operational tempo we give the services the tools they need. and i think you will find throughout our report we have done that. everything we can to give them that flexibility to maintain those retention rates. i would argue in earlier question, as i live around fort lewis washington today, the big on retention today is uncertainty. they just don't know whether they are going to have a job tomorrow. and there is real concern in the force as you wander around the post and see folks, how far is the cut going to go. is there a future for me here? and i think our retirement plan speaks to that and put us in much better position should we ever have to cut the force again to provide people who are leaving something when they leave. >> i want to thank all of you.

i have some additional questions i'll i submit for the record. and i would just say general to your point, that goes to the sequester issue in terms of continuing to diminish what we're going to spend on overall force and readiness and that is han issue we already had hears on and we need to do something about. thank you. >> senator. there was a modelling component for your question. i'd like to take that for the record and then get back to you too. because we do have very specific datas and details for that. >> thank you. >> general chiarelli u i wish that every member of the senate could have heard your last comment. because as, you know you know we're going to be in a very significant struggle here in regards to sequestration. and we reflect the views that were suppressexpressed to this committee by our four service chiefs last week. and i thank you for that. senator donnelly. >> thank you mr. chairman. i want to thank all after you.

you have all done so many extraordinary things for us. i also want to say the importance of the extended care you are providing if are compensational family members, what you have done in that area is really significant. and will change lives for family after family. general chiarelli, i want to ask you about the unified drug formulary between d.o.d. and v.a. you have done exceptional work in trying to stop discourage of suicide. and you have worked tirelessly to provide solutions and answers here. and you would tell us a little bit to challenge when you transfer from d.o.d. to v.a. with the drug formulary and what that is causing. >> thank you for that question

senator. i really appreciate that. when i was vice chief of staff in the army i had no idea there were two different drug formularyies between d.o.d. and v.a. i really believed every single soldier who used krugs the way they were supposed to and the had posttraumatic --. that was -- that the doctor had to work through a bunch of the different druks sdrugs to the right one. that when they showed up on the va in day one they would automatically be able to refill it. that is not the case. we with have two different drug formularies. t dod has anything about approved. and when a individual gets on the right drug and dosage and goes to the v.a. many times antipsychotics and antidepressants and the antipain medications the doctor looks at them and says i'm sorry i cannot refill that precipitation.

you are going to hear a lot of different stories from folks. but i continue to have soldiers come to me sailors ss ss airmen and marines today. just last week. and if there is anything we can fix to get at this suicide problem soo it would be ensure once question once we get a kid on the right drug and dosage where he goes in the system he can get that drug. >> isn't there also a confidence factor for that person that they feel comfortable with the drugs they're receive inging and the treatment they are on and changing it up is like a life-changing experience. >> most don't senator. they find a private doc to give them the precipitation and they pay for it out of pocket. so here we've told them we're

going to take care of you. we really care for your service. this is your benefit and they go over and say i'm sorry you can't have that drug. and i'm telling you, no one cares if you get saint joe's f aspirin in d.o.d. and bayer as prison in the army. that's not an issue. but for these antipsychotics and pain medications these things you have to be weaned off. we should not put our men in this situation. and if it's no at temperature drug -- not on the drug formulary somebody should hand them a card and say go to your local pharmacy and get the drug. >> we're losing 22 veterans a day to suicide. in the active duty we lost 132 young men and women in combat in 2013. we lost almost four times as many to suicide.

so your efforts on this are life-changing. and i would like to then follow up with a question. as we transition from dod to va for a number of our young men and women. obviously there are electronic health challenges. what do you think is this next largest challenge we have to tackle and knock out? >> senator donnelly, thank you very much for the question. we spend a lot of time talking about the dod collaboration and what that really means, what ekt effect it has on the healthcare for veterans. i'm going to ask commissioner boyar to speak to the specifics of that questions before. when you look at recommendation eight we're asking that the committee has authority it doesn't have power now. we're asking that you give it statutory power to implement the

recommendations. and when we met with secretary mcdonnell. two things we learned. one we agree with the commission. but could you alwaysso -- this wasn't in our recommendation and i throw this to you because i anticipate the secretary of the va would like to have parity. so when the deputy of the va means with the undersecretary personnel. it is not the same. and if you raise that so that the deputy secretary of the va and the deputy secretary of the dod meet at the joint executive committee and give them the authority with the power to implement, big difference. so with regard to the blended recommendations and the exact antidepressants or antipsychotics general chiarelli spoke of or the pain medications, let the experts make that decision with regard to where in the formulary it should be blended. with respect to large capital

projects. never again should we have the scenario where we all struggled to the to get the time lines of the a army hospital and a va hospital hospital. that should occur to us again. with regards to your specific question. what do you really anticipate the biggy that is going to happen next? it really is this challenge where as the country moves to set these national standards nor the electronic health record. so we have the scenario whereby you are responsive with regard to the va and scheduling debacle. we said that we'll move to this choice program, senator mccain, that you talked about. and we'll have this increase of more non-va care. when you are on the committee in '04 in the house of veterans affairs around that time frame we were spending about 400 million for non-v.a. care. today, 6 billion. it is only going up. so think of this dod once has a

contract let to create their own new version of their electronic health record. va is doing the evolution of vista. and they want to make sure as they move to their new programs that they have data standards so they can be bidirectional. at the same time the va is doing more non-va based care in the private sector. and in order for there to be continuity of care those private docs have to be able to communicate then with the va. so we're talking about bidirectional so they can communicate. that is a huge challenge. now in dod, as they move to their new electronic health record and as we make registrations to you to move towards the selection of plans, we're also meaning there is going to be a lot of care provided in the private sector. so this setting o of national standards on how the country will communicate is extremely

important. and that is what i see as what is the biggy that is about to come. it is about your leadership about those setting those national standards. >> thank you to all of you and thank you for your extraordinary service across the board. thank you mr. chairman. >> senator sullivan. >> thank you mr. chairman. and i wanted to also thank the members of the commission. the great work that you have been doing for the country. now and before. i first want to get a sense of kind of the big macro issues, the competing issues that you have seen mr. chairman, as part of your amandamandate. and in particular what i was interested in is is there a concern about the projected growth of benefits, of retirement, that ultimately will be or could be taking away from training and readiness? i think we all want to make sure we're taking care of our troops. i think though sometimes what gets lost is ultimately the best

way to take care of them is to make sure if and when they need to go fight that they come home alive. and with was -- is that an issue that the committee, the commission has had to deal with on a broad scale? this kind of tension between competing issues that we're looking at with regard to military expenditures. >> mr. chairman, can i take that question? >> senator sullivan, thank you very much for your question. i knew that commissioner kerrey would want to answer this question. a i'm going to ask him to respond. >> since i'm notoriously holistic in my thinking of such things. i argue and i think commissioners were persuaded that for us to address this problem that you have identified without addressing the big one -- the big one is social security and medicare. that is crushing a you will inging

all the appropriation's accounts. and it would be unfair to identify military retirement as the big problem. because it isn't. the big problem is social security and medicare. so it seems to me to address military retirement without going after social security and medicare is basically saying we're going to balance the budget on the back of the military retirees and i think would be a wrong this inning to do is a send a terrible signal. >> can i jump in here? >> yes, sir. >> since i had to deal with exactly that question when dod as comptroller. first there is if huge misunderstanding as to how much is being spent on military as far as defense budget. people think it is 50%. it is not. it's 29%. we write about that in the report. if you add the defense civilians that brings it up to about 40%. but that is a whole other category. that is not something we focused on. the real issue is can you modernize what you are offering

to your military at the amount of money that you are spending? and if you can spend a little less and modernize a little more, so much the better. and that is where we started. we started with modernizing and with choice and with what my fellow commissioner doesn't like, holistic approaches and that where we began and we looked how it fell out. and it turned out you could actually save the government money as well. do better by your people and still save the government money and which tells you how inefficient the situation is. it's not as deliberate so. when the all-volunteer force started who was in it? mostly young men unmarried. now look at what we have. a completely different force. we have to be concerned about echo programs and child care. we have to be concerned about a lot of different things that just weren't paramount in 1975.

that's how we approached it. and we did save some money. but that wasn't the driver. and it shouldn't be. >> senator -- >> -- >> i'd be very careful about getting sucked into this debate of people versus procurement. >> i'm not talking about just procurement. i'm talking about hard training for our troops. >> again this isn't the way -- frankly, it is not the issue. because the amount of spending on personnel has been level. the real problem and i think senator ayotte pointed it out and several others is there is just not enough money going to defense, full stop. that is the issue. >> when you hear personal costs are unsustainable, the baseline used for that is year 2000. the question you should and is why was 2000 chosen as the baseline to prove that somehow personal costs were unsustainable. congress made a lot of the

conscious decisions to improve the personnel system. we dead did redux fomplreform. we did the va reform. and the changed the pay tables and we did tricare for life. and as you go into war we did the g.i. bill and the pay raisis. so there was a clever reason the 2000 was chosen. >> my staff asked me to come up here 21 times. and if you back, i always quoted the fully cost of the soldier. the cost hasn't really gone occupy up. it's what you hang on that soldier. look at arn m 16 and what it looked like in vietnam and the same weapon system today with all the sights and bells and whistles we're putting on the it and when you look at the fully

burdened costs you are rolling in the addition of other things and applying that to personnel accounts, which i was totally wrong in doing that. and i apologize. >> and one last point which is really important. general chiarelli pointed out that he couldn't imagine and neither could i, that we'd be at war for 13 years and be able to keep all the people we kept. well if congress and the executive branch had not done what it done in 2001, 2002, do you think we would have kept them? >> let me add to that. that when this legislation was created, legislatively we were very limited in sense we had to assume an all volunteer force and would not take anything away from anybody who has it now in certain areas. so we really a lot of the commissioners might have had great grand ideas with but we tried to stay within the confines of our legislative

directives. >> thank you mr. chairman. >> it's very rare we get an apology from a general before this committee. and i hope we'll mark this as an historic moment. i this thank you. >> i'm surprises balloons and confetti didn't drop from the sky. [ laughter ] >> senator heinrich. >> thank you chairman. i want to thank all of you. lord knows what a difficult charge this was. and coming from a state with incredibly high rates of volunteerism. i want to say how much i appreciate the fact that you came to these recommendations unanimously. serving in this body right now we don't hear that word "unanimously" as often as we would like to. but i wanted to ask you if you could elaborate a little more for everyone here and certainly for this panel about the process you used in terms of gathering feedback from our service members, from their families at military installations and that

v.s.o.s, veterans service sorgs organizations. that was one of the things i was concerned about but was quite impressed with the level of feedback as you move towards your recommendations. >> senator thank you so much for the question. we spend a lot of time traveling across the country meeting -- meeting at different military installations. we met with service members that is active service mek members, reserve component meks and retee ryes. and we held sense conceptions and held public hearings as we traveled. and we would spend a lot of time trying -- really listening. we listened very careful to the comments that the service members and their families shared with this commission.

about things that they really were concerned about. they talked about up tempo, the challenges with that. they talked about the long waiting list of trying to get their child into a child care center. they talked about the not getting access to healthcare and the problems that they had with trying to get specialty care and waiting to get through the referral system. all of those kind of things is what we used. and we received tens of thousands of comments that came in from across the country from service members about things they were concerned about. and then we also received the many, many responses from the survey. the survey was a very, very instrumental part of this process. and we sent out survey to over 1.3 million retirees. we sent it out to our active

components in reserves. we received over 150,000 responses back that says here is what it is that is important to us. here is what we prefer. here is what we value. they basically stacked order one benefit over the other. so we have a pretty good indication of exactly what is important to them. >> i want to thank you for that. i want to move my next question to senator pressler because i really appreciated your comments about the culture of service that exists in our native american communities. and certainly that is one of the reasons why new mexico has had such an enormous overall rate of volunteerism, military volunteerism over the years. and i was wondering if you had look at the recommendations in terms of having the sort of t.s.p. model and a contribution

portion at if you serve as an enlisted person for four years, very much at the beginning of your lifetime career and you build that early nest egg through this process what that looks like at aged 65 plus, whenever you actually retire. and what impact that would have an tribal communities as well as on rural communities where there are very, very high rates of volunteerism. >> well -- excuse me. i have analogy not a cold. so you won't catch it. we we do have a sense in terms of the native americans. i just couldn't get mine to go through the academy but they do join the service for four years and have a a high rate of service and they are very proud of it. in your state they have american veterans and vietnam veterans

groups and so forth. this component that they would take out at least, and most of them go with no retirement. but they would have at least one percent the government would contribute. and after two years they can contribute up to 6% match. but then they are elderly they will have something. something. it won't the bishop-- because it depends how our stock markets work out. in our country we have to the depend on the citizen soldier. in my view it isn't to retain everybody for 20 years. it is for three, five, six. in my case i served for three years. i got no retirement but my percentage counted when my federal civil service retirement game. ao i got 2% a year for the time i was in the military. most native americans don't get to that. and we also have the compounded

thing that most of them do not go back to careers. they go back to unemployment and they do videohave all the problems that you know about it. but for them to have some connection to some small retirement benefit at the end i think would be a very good thing in our country. >> senator i'd like commissioner higgins to also follow up on that question if you don't mind very quickly. >> chairman i'm out of time. would you be willing to indulge? thank you. >> thank you mr. chairman. >> mr. higgins. >> thank you mr. chairman. senator, tapping into the economic power of the united states through the thrift savings plan indeed a really powerful financial incentive. we looked at your point about examining what kind of growth would be experienced when the individual arrived at retirement age, say 67. and the individual who had done

no personal contributions would still if they leave at eight years of service would still have 18,000 dollars available to them in the their thrift savings plan. but if they contributed and received the full matching of a 5% of their base pay, they receive at age 67 over $90,000 in benefit that would be available to them. so it is a pretty powerful mechanism. and i think would serve any community, including native american. >> thank you mr. chairman. and gentlemen i most certainly echo the message from the rest of the committee up here when we talk about the work that you have done. senator pressler and i have been on the campaign trail together for a couple of months in the last year and we've met with a lot of members of the native american tribes. and they truly are a warrior society and we have respected

what they have provided to our country in terms of service to the armed forces. my question to you today is that you are trying to put together a system that while it is similar -- or at least you want similarities for services being provided, you are trying to provide these services and benefits to a whole lot of different groups. you have got the folks that are over the anyone of 65. those between 60 and 65. retirees who have left with 20 years of service but not yet reached retirement age. and also looking at those individuals that are still there within the military. and then you are looking at -- looking at those who are coming into the military. how do you transition this from what it is today? i got a letter from a man who served over in iraq and he had 20 years in. came back. he says after sequestration the

message he gets is my retirement because i've done my 20 years but i'm not yet 60 is i get my retirement. but instead of having an inflation factor i get inflation factor minus 1%. the savings to us was 6 billion dollars. but in the middle of sequestration the first thing people do is come back to the men and women that have served to be the first to give back. why are we the first in line to get cut? and now today i think the challenge this commission has and the challenge that this committee is going to have is to go back to a lot of those individuals and say look here is $12 billion that is being reduced, or at least being reallocated. are they doing it on our backs? and those who came in and thought we had a deal, knew what we had for retirement and healthcare, what is it? how are we being taken care of

and. >> a transition plan that says we can choose a or b? if we skould please, i think the work you are doing here is important do. but i think the challenge we're going to to have is how do you convince these men that are serving or have served have some options available? and is there a transition plan you have thought about for those individuals. >> we indeed spend quite a wit of time talking about that very issue that you raised in your question. and as we thought through all the transition assistant kind of challenges that a service member face when they are transitioning out we took all of that into consideration. and i'm going to ask commissioner carney to talk to the specifics of that. >> thank you mr. chairman. once again, you know, with my colleague right here to my right the holistic approach that we took to consider the retirement

and to make sure that we first of all did no harm. was one of the mandates given us to. and and senator kerrey also mentioned something very important. and that is that we don't try and balance the bank on the backs of the military. and we tried to not do that. so in terms of specifics, some of the programs that we -- and we could talk about this in further committees later on if you want to. but when we talk about ramp programs. so we don't transition automatically into something that might cost a little more to a retiree or the service member. that they would be built you will over 15 years for example. but one of the things that we thought was vitally important in all this things we recommend is a good sense of financial literacy. so if our recommendations are

adopted there would be a very robust financial literacy component for all the troops. and that starts at their -- when they are in boot camp. a sailor or basic training. and at various points in their career. so they can make good financial decisions going forward. what the federal government does often impacts them. and that cannot always be accounted for. you know promises have been made. and sometimes promises have beenbeen been, i don't want to say broken, but perhaps bent a little bit. when you do the financial planning, when you enable the service member to have the tools at their disposal to make good financial decisions the impact of the bending of the promise by the government may be reduced somewhat. so i have a son whose a lance corporal in the marine corps. he's making a little money now

and came to me on his last leave and said dad what do you know about ford f-250s? i said i don't know much but i know you can't afford one. but a lot of kipds aren't making those decisions. they are going ahead and buying that expensive vehicle so they don't have the money necessary later on. we want to have a robust as i said before financial training system so they understand the value of money, they understand the value of money later in their careers. so when they hit the 12 year mark and they are making that decision, do i want to stay in and continue on or do i want to go off -- the money is there to make a good financial for them. so to try to reduce the impact of maybe a bent promise, we want to empower the service member with the ability to make good financial decisions to kind of reduce some of that. >> i would only add also that

the specific thing you said sir about somebody who's served 20 and is retired is grandfathered in the current system. they will not be part of this system. now, in the area of benefits that may fluctuate and change. that might effect them. co-pays but that is done over a period of the 15 year ramp, medical co-pays. but that 20 year person is grandfathered in the current system. and two you would notit would not change. >> thank you mr. chairman. i would just say i hope when we're all done with this that the thought of the bending the promises is one that we try to get away from. >> that was certainly our intent, senator. yeah. >> and i think you should see the recommendations too, senator. as a continuation of what congress has done for the last 13 years. our goal is to improve the quality of paying benefits for our military. that was the primary objective of the commission. and we've set a group of

holistic recommendations to you that we do think accomplish that objective. >> senator, we really honest to god tried to keep the faith. >> senator, let me just say that i think in summarizing what my colleagues have said here. is that, everything that we did was totally done to protect the benefits, protect the interests of the service members. i wouldn't want anyone to get the impression that we're implying that we were actually cutting benefits of the service members. it was quite the contrary. even though we yield savings as a result of the approach that we took in reforming the structure of those programs there is absolutely no interest on our part to reduce the benefits of the service members. in fact it was to support those and improve those benefits. and i i'd just like to make that point. >> senator kaine. >> thank you mr. chairman.

thank you all for your service. this is an incredible topic. a difficult one and maybe even a thankless one. i've had a chance to review the recommendations and i see a lot of real positive. focus on matters like financial literacy the transition from veteran status to civilian live in terms of employment training and assistance. these are for a-reaching recommendations. very much appreciate your work. i'm going to make a an editorial comment that has nothing to do with any of you. . you were all asked to serve on this and said yes and did a good job. i'm not a sensitive person. but when i walk in and it's a panel and we're supposed to talk about military compensation and there's not one woman sitting here. i'm like wow. really? one of the first things that happened was the -- we got so many women serving in the armed services now. and on these issues military compensation, the role of military families and their thought about these things are critical. i have a youngster in the marine

corps too. and as he's talking to his guys they are often talking about what their own families are saying to them about commissaries, retirement, healthcare, salary. so we send a signal. and you didn't form the committee in terms of the membership. it was probably on us for the executive. but i just got to say that it seems so obvious that if we are really trying to have a military open to women. >> -- it was you and the executive. >> okay. so i'll make it a the point obviously not critical to any of you who said yes but to us. another. stunned. that's my editorial comment. yes. >> i would invite you do actually meet the women who serve on the staff. they are sharp, tight. >> i'm a hundred percent certain about that but it is no substitution for being sitting at that. because we always have panels in the committee that look just like this where the folks backing up the panelists are the

smart talented incredibly competent women. and i just want to see some women at the table. >> raising the caucus senator. >> yes. let me ask about collaboration opportunities. i don't think this was gotten into the significant detail when i was gone but what are the collaboration opportunity wes can harvest between the dod health system and the va? looking down the road there will have to be some economies of scale on the cost side but also have to be improvements in quality of care at both ends as we do additional collaboration. did you get into that at all or what thoughts would you have for us? >> senator kaine thank you for the question. we 135e7bdspend a lot of time talk about the dod/va collaboration. it was mentioned earlier by one of my colleagues by benefit of the having issues. and shared services and we talked about the need to do better standardization, have

standardized policies and we've actually had conversations with the secretary of va about that and we talked to people at the department of defense about that. i'm going to ask commissioner boyer to talk a little bit about some of the additional specifics here as we -- as to how we respond to the challenge of that and what we did about it within our recommendations. commissioner boyer. >> thank you. senator, earlier we talked about the real empowerment of the joint executive committee. and it really lies to the heart of ensuring that two departments of government work together seamlessly. so as that solder sailor, and marine transfer into the va they shouldn't feel it. they should feel that medical record is there and the doctor who's just taken other my care that there is true continuity of that care. and that joint executive

committee that has authority, it doesn't have the power to implement. so they can just create a lot of paper. and so we're recommending that you actually give the joint executive committee. not only do we create parity between the dod and va of who lead the committee but also give it the power to actually implement. and implement what. so the recommendations of blending the formularies with regard to the antipsychotics call it the mental health drugs. let them stet classifications of those drugs and how it should be blended. extremely important. and general chiarelli spoke to that earlier. the other would be on capital projects. a lot of whether it's billing of military hospitals or a va hospital in close proximity or outpatient or super clinics. have some resource sharing. a lot of sharing initiatives that you find when you go around are a lot of local agreements.

it's based on personality driven but there are a lot of things that work and effective from those crucibles and the committee can effect li centralize those decisions rather than being decentralized. with regard to the medical information, that is the it issuei.t. issue. the joint committee can really drive how the electronic health record is developed and through its evolutionary process between the evolution of vista and this new electronic health record that is about to come out of d.o.d. and how we then communicate with the civilian doctors who are providing the non military based care to the va and then if you adopt what we're recommending this choice of civilian plans you have doctors out there that are providing that care. and that electronic record needs to ensure that it is interoperable between, you know, your doctor back at home and that doctor from the mtf.

but guess what. when they transition then over into the va you want to make sure it is interoperable too. >> my sense is with secretary mcdonald at the va, he is a guy who understands collaboration. so there is a collaboration moment that is coinciding with the issuance of these recommendations and we ought do what we can to take advantages of it. >> when we met with the secretary and the deputy secretary, they had already met with us previously and also had initiated a policy paper. haven't had to chance to talk to general chiarelli about it. but they are asking that doctors of whom that that they default of the precipitation that dod doctor had written. it's kind of nice to put it on paper. i'd feel much more comfortable if it were something that the joint executive committee looked at and gave it the

implementation of authority to ensure that if you had a subscription on active duty, a mental health drug, when you go to dod, to ensure that you are going to get that drug is extremely important. because there are a lot of social ills that occur if he falls backwards. >> right. thank you. >> can i just add something. at the beginning senator kaine, chairman invited us to speak ouren minds which was dangerous in my case. i think this collaboration idea is not going to work. i don't think you are going to get where you want to go unless you start considering actually putting these two systems together. and because of the readiness component it is going to be dod whose going to be in charge of it. and i think you have to go further. i would give this committee authorizing authority so they can't basically rope adope you. you have to have substantial change in order to what you

quantity. 70th anniversary of the walter reid. both of us had been trmped so what do we need to kosmt i spent a fair amount of time thinking about this. we got a good recommendation in there and you got to approve collaboration but unless you approve putting these two together and changing rules so this committee authorizes and appropriates, it seems to me unless you at least consider those two things it is going to be very difficult to get the kind of changes that you want. >> senator we've always agreed with that by the way. >> i want to go back to a question or follow up on a question that senator manchin asked about the perception and senator kerrey i think you responded to it the perception that we're losing people because we're not competitive with the market. and i think you made the comment that we're at or above market.

could you expand o that. >> i did say it and i can't no expand. it came from the analysis we kiddid nit the commission. we are at our above the sector. >> so the perception that people are leaving at year ten based on pay or benefits may not be right. there may notbe other reasons they are leaving. lifestyle or other but not pay and benefits. >> it is likely you can have individual cases, particularly technical individuals. and earlier dov is talking about one of the problems we've got is a lot of these new civilian companies forming up. and they will pay for security clearance. and they are apt to bid up what the military is going -- i think you will find exceptions to it. but i think in the aggregate you will see that the military pay is at or exceeds what is available in the civilian world and the benefit package as well. and i'm for that.

i don't regard -- chiarelli talked about it earlier. i don't believe we have a real problem with paying benefits. that is not the problem. it has do a lot more with the retirement issues and there as i said earlier i think it would be groes grossly unfair to address military retirement without taking on the big ones which are social security and medicare. >> let me me follow up by having commissioner higgins talk because we did quite a bit of analysis and review around that. i want him to talk specific i on that. >> thank you mr. chairman. senator, i believe in a general sense retention today is probably as good as the military has ever seen it. having said that there are select skills that are always been historically very difficult to maintain.

some of the stories that you here often are let's say nuclear skilled individuals in the navy are always difficult to retain. because once they acquire once they acquire those skills they are very lucrative on the outside. in recent years in the war years what emerged was the ten year departure of special anticipateoperateorsperators. and now they have very high values placed on them in the private sector. and the military responded to that with a cig bonus. and the navy has always struggled with additional bonuses and several high demand skills. i think has a general rule and it may rely mostly on the

economy, and the unemployment rate, but as we move through these last few years retention has been quite good. >> one final question for the chairman, or as directed by the chairman, the recommendations that you put forth, how have they been embraced by the stakeholder community. i heard that we're providing for efficiency and value. are there areas out there that there are concern amongst some of the stakeholder groups? >> mr. chairman i think at this point the feedback we have gotten from the vsos, and the stakeholders of that like, they're very receptive to what we're doing at that time. it would be premature to say they're 100% on board for this because they're still looking at the details of the report, and

they have to do their analysis as well. i think d.o.d., the department of defense is doing the same kind of thing, i think the members of the joint staff and others is they understand the merits of our report and what we're recommending, how those recommendations support fiscal sustainability of the compensation programs and the fact that we have been able to achieve efficiencies by the structures of those programs without taking away any benefits, in fact adding benefits. >> thank you, mr. chair. >> thank you, mr. chairman. i do want to commend senator cane for his observation that it is always good to have women at the table and at the committee. i'm looking at your retirement

plan, and i thank you all for your service and i'm looking at the retirement plan that significantly increases the number of members that will receive benefits. the plan does require contributions, basically mandatory 3% deductions from the service member's pay as well as depending on investment return. so do you can you share with me what the current service members think about a basically mandatory 3% contribution, and what concerns you have about volatility in the market that will probably and the charts regarding your benefits.

>> thank you, senator, for the question. on each of those counts that you mentioned, we looked at those and the response to the first part of your question i think we were informed that service members felt very strongly that this is an increased benefit. this is kind of what they're wanting, this is what they're looking for. i think they told us through the survey responses that they really want choice. they want the flexibility in being involved and design a conversation package they prefer, and then how they would receive pay. those things are very important to them and they mentioned that to us. i am going to ask the commissioner to talk to that question and those benefits. >> thank you, mr. chairman.

senator, first of all, in the united states generally, 97% of those put automatically into a plan stay in that plan. that already gives you one indicator. another is that right now 30% of the military are voluntarily contributing. it is four out of ten without any kind of automaticity or government matching are putting their money into tsp. if you take those two figures and put them together you're going to get an answer that tells you that they will all see the benefit of this. >> i understand. that part i think i am reassured reassured. on the market volatility. what we assumed is that the money would be invested in very very conservative kinds of

funds. obviously, again in tsp as you know you can choose from a variety of funds but our assumptions were that this would be a -- there is one particular fund that would essentially follow people's lifestyle so when you're younger and you're ready to take your risk as you're older you get more conservative. again, i think the record of tsp itself, and the fact that people, that the civilians stale in the military voluntarily go in tells you that they trust the fund managers and of course, are making their own choices. so i think we felt very comfortable with the recommendation in terms of market volatility. >> thank you that is reassuring. i'm looking at one of your other charts chart nine. pregnancy, child birth, and

care if they move to the private sector insurance market, what kind of effects will occur as a result of that in terms of cost and other impacts? these are huge numbers for these two procedures. >> senator, thank you commissioner would you take that question? >> i think this chart when you look at it it is surprising. it will be surprising to a lot of people when they look at this. there is an assumption that the medical providers at the mdf are providing procedures that really hone in the skills that make those doctors and nurses combat ready. then you say i suppose building

the cohesion of the medical team, that is an added plus. with regard to the skill sets needed, something is missing here. what i will do is tag team here because there are two pieces of this. as we move to a selection of plans, we want the mtf to be part of the network because the procedures that the mtf needs are not these procedures that you see in the chart. and so the creation of the jointness and the essential medical capabilities, i will pass it other to the general if i could. >> i think it is absolutely critical that you understand the concept of emc, essential military capability. that is built into what we're doing here. those are those things simply stated that transfer to the

battlefield. when you get the surgeon generals in here, you will argue that hey we get a lot of great training out after taking care of all of those child bearing issues and child care issues. all we're saying is that you do, but there is a way, if we could rearrange your workload, to give you more of the kinds of things, as a retired person i'm looking at how are you going to provide care for me in my golden years. if you get stuck on that, you will miss the essential piece of what we have to do in the medical area. that is care for our men and women when they're sent into harms way. and ensure that we have people who are trained to do that based on the kinds of wounds they're going to get. >> thank you mr. chair.

>> thank you senator lee? >> thank you to everyone appearing here today in this commission to make recommendations that are so important. this will have a profound impact on those that have previously certained in served in our military. i hope they can take the time to give these recommendations the thorough consideration they deserve. and they can become part of a debate that we need to have to help figure out how we can provide better for the needs of those who serve us and have served us in the past and simultaneously help us to maintain the strength, the divideability of our military. i will ask